Editorial on the gaming "industry" and pricing

[Bofast]

A very interesting read on the game industry, pricing and such.

http://www.gamesindustry.biz/articles/price-pressures-editorial

The question of pricing for videogames is a perennial conversation piece within the industry. That's hardly surprising, given the variation we've seen over the decades - from cassette games for home computers selling for two or three pounds in the early eighties through to the latter days of the Nintendo 64, when cartridge price tags could hit fifty or sixty pounds, right through to the modern day when consumers happily spend well over a hundred pounds on a box full of plastic instruments for Rock Band.

[...] all of this talk about price hikes flies totally in the face of what we're actually seeing happen among consumers - where the perceived value of media in general, including games, is steadily dropping off rather than rising. Piracy doesn't help, obviously, and a whole generation of consumers now feels that paying significant money for a media product is frankly ridiculous - which you can huff and puff about all you like, but it's not going to change how they think, and your business model needs to adapt to your consumers rather than vice versa. Blacksmiths probably huffed and puffed when car drivers decided that keeping horses wasn't really practical any more, and it didn't do them a damned bit of good.

Also, a blog about disruptive innovation and other economic phenomena discusses this editorial here:
http://seanmalstrom.wordpress.com/2009/10/17/the-joy-of-disruption/

 

[Verd1234]

I call BS...

The Prices of everything videogaming has actually been DROPPING if we take inflation into account..

Without inflation, it may seem like the prices are increasing but they are actually decreasing...

So, paying for a $60 game in 2009 is cheaper than paying for a $50 game in 1986

 

[Sorrow]

The prices of media get really ridiculous outside the West.

A plastic disk with western music costs about 8-10 minimal hourly wages in Poland.
An average console game (again, a fucking plastic disk with a game + a booklet + a crappy plastic box) costs 38 minimal hourly wages.

It's a fucking daylight robbery. That's why I stopped buying western music, western movies and I refuse to pay more than 60 PLN (10 minimal hourly wages) for a new game.

And what do consumers value? Content. Content in the form of new experiences and new worlds, not formulas of “franchises”. The day when games began to refer to by everyone as “franchises” was when the trouble began.

Very true. I really hate the world "franchise" when it's used in relation to games/settings. Seriously, it's not McDonald or Pizza Hut or anything like that.

 

[rcorporon]

In Canada a new console game will set me back about $69.99 + taxes... way too much, IMO.

 

[Wooz]

A plastic disk with western music costs about 8-10 minimal hourly wages in Poland.

I'd advise you to finish high school one day, in order to get a better-paying job.

Thing is, guys, the amount of people involved with making an AAA video game today isn't the same amount as ten or fifteen years ago.

 

[Deleted member 53669]

The prices of media get really ridiculous outside the West.

A plastic disk with western music costs about 8-10 minimal hourly wages in Poland.
An average console game (again, a fucking plastic disk with a game + a booklet + a crappy plastic box) costs 38 minimal hourly wages.

It's a fucking daylight robbery. That's why I stopped buying western music, western movies and I refuse to pay more than 60 PLN (10 minimal hourly wages) for a new game.

And what do consumers value? Content. Content in the form of new experiences and new worlds, not formulas of “franchises”. The day when games began to refer to by everyone as “franchises” was when the trouble began.

Very true. I really hate the world "franchise" when it's used in relation to games/settings. Seriously, it's not McDonald or Pizza Hut or anything like that.

A televison special about starving kids in africa came on the other day. It said that "Little nugara walked 20 miles everyday for a drink of water". I thought to myself, "Little nugara should move"

 

[Dirk Magirk]

A televison special about starving kids in africa came on the other day. It said that "Little nugara walked 20 miles everyday for a drink of water". I thought to myself, "Little nugara should move"

Yeah or atleast learn how to rollerblade or something.

Prices are going to keep on rising. As long as there are people who will pay more and more then they will keep charging more and more. Anyway, I like games, they can have my moneys - I'm no Simon Greedwell.

 

[TheWesDude]

considering walking 20 miles would require more than 1 drink of water simply in evaporation and leaving due to breathing...


thats going to be a lie

 

[Sorrow]

I'd advise you to finish high school one day, in order to get a better-paying job.

Done.

Still, I'm not interested in working to pay someone's American wages.
I'm not going to get American wages here, I'm not going to pay American wages here. It includes not buying immaterial stuff so that someone could get his inflated American wage.

I'd rather keep the money for myself or buy something that has more sensible prices.

 

[Wooz]

Dude, it's not as anybody's forcing you to buy games. It's not water, it's not electricity, it's not food. It's pretty much a luxury product, and in some rare cases you pay for quality.

Agreed, most publishers abuse in applying margins to their product, but the point of the matter is that it takes a lot of people and time to make a game, in which one has to be able to pay the staff's wages. In the case of said company wanting to start simultaneous projects, the money's all the more needed.

And nobody's going to work fifty hours a week for the salary of a pizza delivery boy. Get real.

 

[Sorrow]

Dude, it's not as anybody's forcing you to buy games.

I'm not saying that anyone is forcing me to buy games. I'm saying that I refuse to buy them above certain price, just as distributors refuse to sell them under certain price.

It's not water, it's not electricity, it's not food. It's pretty much a luxury product, and in some rare cases you pay for quality.

It is a luxury product, but not in the same way as a Mercedes car for example.

There aren't any magical raw materials in a box with a game or a music CD and costs of reproduction are very low, so low that it's possible to put a game/movie/music CD as a gift in a 8,5PLN magazine.

They aren't even high quality - most of games I have played, were rather like leaked betas than a finished exclusive product that I have paid for, unless I have bought them a few years after release.

Also, they aren't really exclusive items in the West. The prices are set to be easily accessible to western masses, including pizza delivery boys. If they were really exclusive, they would cost around 100+$ for a new game.

Agreed, most publishers abuse in applying margins to their product, but the point of the matter is that it takes a lot of people and time to make a game, in which one has to be able to pay the staff's wages. In the case of said company wanting to start simultaneous projects, the money's all the more needed.

Do they really need to have such big prices in Poland and other developing countries to pay their personnel or is it already paid and these sales outside the West are just additional profit?

As for the profit margins and additional costs like developing other games - the same applies to working customers. One works not only for current costs of living and entertainment but also should work for one's own financial security (savings).
We don't live in a country that will provide big welfare when one loses work or gets seriously ill.
Ergo, working 3 times more for a copy of digital work can have pretty serious financial implications as normally, 2/3 of that work could be dedicated to building financial security.

So, the same economic rules apply to developers and to their customers.

And nobody's going to work fifty hours a week for the salary of a pizza delivery boy. Get real.

Neither will I. I got real when I started to work - paying western prices for digital stuff stopped being fun when I realised that the money I'm paying with is my own work.
The general rule of the market is that in developing countries people pay less for work than in the West. But then, there are game developers, actors, musicans, and the rest of the menagerie that gets western prices for their "work".
Even though they don't provide anything of real value, like food, tools, development of infrastructure, housing and other stuff.
They provide entertainment and value of entertainment is very relative.
Also, they don't even need to actually work to create each next copy of their work.

If they think it would be bad to sell their "work" (or rather a licence to use their work) for local prices, then I have I have even more reasons to not buy "work" for western prices as I don't have additional incomes from the West and I actually have to work 3+ times more than a western person doing the same work.

 

[Sander]

I don't think you understand how economies and production work. The reproduction costs are irrelevant when the initial production costs are so high that you need a lot of sales to recoup those costs.

And despite what you apparently seem to be thinking, luxury products are expensive, and luxury products are also expensive in countries with lower spending power.

Also, Poland is hardly a third-world country.

 

[Sorrow]

I don't think you understand how economies and production work. The reproduction costs are irrelevant when the initial production costs are so high that you need a lot of sales to recoup those costs.

Not all digital goods have giant production costs. It's absolutely possible to release a high quality music CD for 20-30PLN (which is what I'm buying my music CDs for since I stopped buying western music) instead of 50-60PLN.

And despite what you apparently seem to be thinking, luxury products are expensive, and luxury products are also expensive in countries with lower spending power.

It's not an absolute truth. Also, looking from the opposite perspective, the product X isn't worth 3X work to me. Period. So what, are you going to force me to buy it or what ?

 

[Sander]

Not all digital goods have giant production costs. It's absolutely possible to release a high quality music CD for 20-30PLN (which is what I'm buying my music CDs for since I stopped buying western music) instead of 50-60PLN.

Well, good for the music companies. So? Relevance of this to games, which are at a much higher price point and generally have much higher production costs? 0.

It's not an absolute truth. Also, looking from the opposite perspective, the product X isn't worth 3X work to me. Period. So what, are you going to force me to buy it or what ?

What the fuck are you on? No. I'm just noting that when you live in a somewhat poorer country, you shouldn't be surprised when luxury products are expensive for you.

 

[Wooz]

Not all digital goods have giant production costs.

There are dozens of good indie games that aren't as expensive as AAA titles, because they're made by much fewer people. Moreover, depending on the game and organization, the developers might not be employed full-time.

The general rule of the market is that in developing countries people pay less for work than in the West.

Oh? I was unaware of "the general rule of the market".

But then, there are game developers, actors, musicans, and the rest of the menagerie that gets western prices for their "work".
Even though they don't provide anything of real value, like food, tools, development of infrastructure, housing and other stuff.

What does that have to do with anything? Do you believe the only people that do 'real work' are factory workers and farmers? Ridiculous.

They provide entertainment and value of entertainment is very relative.

Everybody needs some form or another of entertainment and art. The fact that some particular product or artwork might be vomitous to one person and precious to another doesn't diminish its overall importance.

Also, they don't even need to actually work to create each next copy of their work.

What Sander said. In this particular case, the initial costs of starting a studio and/or a game project are titanic. The ready games don't magically appear on devs' hard drives on their own, ready to hit print.