Jimquisition: Videogames Are A Luxury

[Blade_125]

Very good video Jim, and a good tie in to your video last week.

People making the argument that games are a luxery are actually arguing for lower prices. Video games are not yachts. A company cannot charge all their expenses for the single unit. Games recoup their costs and make profit from mass sales. In order to make mass sales they need to price the game so that the maximum number of people will buy the game. This is simple economics. There is a price point where more people will buy the game and theyfore the developer will more more overall profit (less profit per game but more total games sold).

Perhaps the current pricing model worked for developers when there was less competition, but now that the market is saturated a company cannot survive with this pricing.

Kingdoms of Amalur came out in early Feb. I tried the demo, thought it was interesting, but I didn't want to spend $60 on it. Plus I was still playing Skyrim, Heroes of might and Magic 6, Arkham City and a few other mainstay games. So I figured there was no need to run out and get a game, since I have lots of others to keep me occupied. So early May the game drops to $40 at future shop, and that is 3 months after release. That isn't even counting the sales on gamestop and steam ealier in April (I wanted this game for the PS3 as I found the controls better than on a keyboard).

My point is that it is no longer viable to expect everyone will buy your game at full price. It is better for us as consumers to wait a few months for the sales to happen. Maybe then the developers will relealize that we won't pay full price, and if they want to make sure they get the sales they need to lower the price at the get go, before people forget about their games.

Also the picture of that racist puppet guy coming up as speaking of not neccessary. Pure gold.

 

[Blade_125]

It's not just, that videogames are to expensive, they have been getting worse and worse over the last few years. So much stuff got dumbed down so that the game can reach a bigger audience that as a player who appreciates a good challenge I can't enjoy most of the games anymore.

World of Warcraft? Dumbed down to a point where it's gotten really boring (example: skilltrees, different difficulties for the same dungeons and so on)
Civilization 5? Lost a lot of features compared to it's predecessors
Shooters? All the same, it doesn't matter if it's Crysis 2, CoD:groundhog day or whatsoever

But they all demand more and more money for stuff older players got free a few years back and they deliver less and less at the same time.

CoD Mappacks for 10 Dollars (5 maps!!!!!!). These morons can go and f*** themselves. I wont support these business models.

I've effectively stopped buying games from companies like EA, UbiSoft, Activision and Blizzard as well.

It's not just the money ripoff. It's the "Online-Services" as well. I don't want to have 4-5 freakin programs (Steam, Origin, UbiLauncher, Battlenet -yeah I know it's not an actual seperate software, but still-)on my PC just so I can actually run the games connected to them.

Great post. This is what we all need to do. Vote with our wallets. If no buys these crappy games then they won't be made anymore.

 

[Epona]

Every time i see someone say 'first world problems' i just want to burn them alive as i shout 'first world problems!' in their face as i dance around them. Course i usually see it when browsing news articles that have to do with the horrid stuff the US is doing to its people/wants to do.

Good point as usual. Hate when people use the word luxury as if it meant you weren't meant to have the product. Shows even less understanding of economics than most people i argue with.

I wonder if it's true for games too.

Doubtful. Games are likely to be played once in a few years or a decent space of time. For instance, if i beat HL2 yesterday i probably wont go play it again for a while. But if i listen to ANY song i have, i will likely listen again within the week.

I don't see how that changes anything. Games aren't 5 minutes long either.

 

[Epona]

Retailers wanted nothing to do with games, game consoles or computers during that period. One game, ET for the Atari 2600 was so overprinted that they buried the extra copies in the desert because the market was dead and there was no way they were ever going to sell them.

In order for Nintendo to sell the NES they had to lie to retailers and tell them that their product was a toy, that is where the little robot came from. They named it Nintendo Entertainment System to make it seem more like a VCR and the front loading tapes were designed to that end. Most of the space inside those "tapes" was wasted.

It can happen again if people just stop buying.

The videogame industry effectively died until the birth of the NES several years later. Not good. Very bad.

So....let me just get this straight....retailers weren't interested in selling computer-related materials and, subsequently, it was impossible for game developers to make anything, games became massively unprofitable and, as a result, they weren't made any more? Is that right?

Oh and:

One game, ET for the Atari 2600 was so overprinted that they buried the extra copies in the desert

Frankly, I think this would have happened anyway....

I don't care for your tone (it's text, maybe I am misreading it though). Go look this stuff up for yourself if you don't want to believe anyone else.

I think he was saying it sucked so bad that they could have tried giving it away for free and most copies would have still wound up in a landfill somewhere -- which is true, there's a reason that and Superman 64 are always the top two games on any list of the worst games of all time.

Honestly, the problem the first time around was a market oversaturated with crap, not so much price. It's why Nintendo was so strict with their licensing policies in the NES days; consumer confidence was low, and that Nintendo Seal of Approval actually meant something.
That's not to say greed run amok wasn't the reason that it crashed last time, it just took the form of obscene amounts of shovelware moreso than obscene pricing.

We have no shortage of shovelware today.

 

[Aureliano]

Oh Jim. Currently one of my favorite pro-consumer commentators out there for the video game industry. I've got no idea what those prawns are for (presumably I just didn't get the joke), but your argument simply makes boatloads of sense. Nobody's willing to back down on the prices they charge for games or the budgets they make because they believe they will indeed be special and that the falling sales will just mean more money for them. Sad, stupid times indeed.

 

[Squidbulb]

Completely agree. Firstly, making your game technically impressive is nice, but it means it's too expensive and I can't run it on my PC. So basically I can't play any new PC exclusives. They're also too damn expensive, so I have to be careful when I spend my money. This means that unless I think the game looks absolutely brilliant, I'm not going to buy it at full price. Even £30 is reasonable enough, £40 is not. You may think that £10 isn't much, but that is enough to buy an excellent indie game I will spend hours on. I'd rather pay £10-£20 for an average to good game than £40 for an excellent one. That way, I don't lose much if it's rubbish. Price is one of the first things I check when I consider purchasing a game, and for new games it's almost always too high.

 

[WoahDan]

Agree with this one, its always confused me when people say things like "games are a luxury" as if it's a problem for the person who cant buy the game; its not, its a problem for the industry.

If I cannot afford your game day one, then I'm either not gonna buy it or ill buy it way later and used thus giving the developer none of the benefit of my purchase. I don't particularly want to buy used all the time, I'd like to be able to support the developers I approve of and help the medium grow in directions I like, but under the current pricing regime I simply cannot afford to do so.

I'll get my games eventually whatever the price is, but if the industry fixed its pricing model Id be able to get my games in a way that monetarily helped the developers like they are constantly bleating at us to do. Industry people using the "luxury" excuse are basically saying: "close your wallet Woahdan we don't want your money" which is fine for me, not sure its a good way to run a business though.

 

[algalon]

This is a prawn-only zone.

 

[Redd the Sock]

In fairness, a lot of my attitude of "games are a luxury" is due to some one trying to complain they can't buy EVERY game they want. As someone that saved dimes to rent games back in the early 90s, I can sympathize with cash flow issues. It's people that somehow assume the entire library should be in their price range, not individual items that grind my gears. Granted I hear it a lot more in anime circles, but it comes up in gaming as well. We just aren't entitled to buy everything we want.

That said, the arguement is sound. I've been of the thought that gaming is vastly oversaturated with product to an overall detrement. Despite ecconomic views to the contrary, demand is not infinate, and our spare income can only go so far. Even without the choice of food or games, our gaming dollars get spread over too many games instead of getting concentrated into a few leads to projects showing losses and companies going under, and stagnant and falling wages only add the the problem as even less is there to spread around. The problem isn't limited to gaming, but all business. It's just a matter of basic logic that your product has to be in the price range of your customers, and if their means to spend fall, so must prices.

 

[Blade_125]

This is all true. But it's also true, as I've said, that the price of many games is artificially low when they have to sell in the millions to make back their production costs. I don't say that as a "woe, won't someone think of the poor publishers" statement; I just think the current way of things is unsustainable. Something's gotta give, and will, and soon...

This is how the market works. Mass produced items don't make their money back on an individual sale. Production costs on anything (phones, TV's, computers for example) are a small portion on the overall costs. This varys depending on the product, but engineering, development, and testing are very expensive.

Games are not artifically low. That isn't even a correct concept to use in this type of industry (that would be better said of most food commodeties). A company must make a profit. To do that they need to sell enough items to make more money than they invested in the product. As a small example, if something cost a milion to make then the company must make a million back to break even, then everything else is profit (I am ignoring overhead in this example). So it could be one sale at a million, 2 at $500,000, 10 at $100,000, or 16,667 at $60. Or 25000 at $40.

The key is for a company to figure out what price point will generate the most overall profit. The numbers above are just break even, but the real goal is to make as much profit as possible. So if $60 generates 100,000 saless and $40 generates 200,000 sales then it makes more sense to price at $40, as the company makes more money overall.


The issue you point to is more to do with over saturation. Too many developers all wanting our limited disposable income. With so much choice we can pick and choose, so some companies will fail because the made something that didn't have a broad enough appeal and cost them too much to make.

The market always balances out in these situations, either by adjusting their price or the company going under.

 

[chiggerwood]

Actually as a counterpoint to people who say that video games are a luxury, in some cases they're not. When I was 14 years old an asshole decided to shoulder check me into some folded up bleachers at school and it gave me brain damage (I've recovered most of the way, but I'll always have some problems). When I was at the first stage of recovery my neuropsychologist had me play video games as a form of therapy, and don't forget video games are also used in treating PTSD, and some phobias, so if it wasn't for the used game industry (I be poor as fuck) I wouldn't have been able to recover as well as I have. Mind you I still have problems, but I was able to regain a lot of my facilities, and my I.Q. with interest.

 

[Mangod]

I wonder if someone has explained this to the game developers/publishers.

Sell games at 60 dollars, which 50 people can afford, and you make 3000 dollars.

Sell games at 40 dollars, which 100 people can afford, and you make 4000 dollars.

Sell games at 30 dollars, which 200 people can afford, and you make 6000 dollars.

Now, admittedly, this hinges on your game being able to sell enough copies to make up for the costs, but to me, at least, this seems like a better model than pricing yourself out of the market could ever be.

 

[9thRequiem]

Video does make a lot of sense.
Having said that, there is one occasion where "Videogames are a luxury" is a valid point, and that's to shoot down "I am justified in pirating games because I can't afford them".

 

[Something Amyss]

Now I'm not usually this guy, but...

People didn't already know this?

I honestly wish they did already know this.

I hear this all the time, and my thought is "so fucking what?" Not to Jim's argument, but the idea that it's a good idea to cut off revenue streams.

Games are a luxury, and as Jim magnificently puts it, they are something we can do without. So it's stupid that game companies are declaring war on used games and whatnot, then asking "well why are our sales down?"

Well, duh. Games are a luxury. You've implied it, your sycophants and apologists have stated it. Now revel in the world you've created. Maybe kicking those people who actually work for a living in the balls isn't the best way to get them to buy your games.

I'm buying less games than ever, too. Not because I can't afford them, but because few of them seem worth the price. Since games are a luxury, asking me to spend the money I do have (which is far more limited than I'd like) on your product should mandate making it look attractive. I have other luxuries I can spend money on that are more appealing than the current game crop. And when you say something dickish like "well, our games are a luxury," I'm going to say, "You're right. And I won't buy them."

And if I was completely poor, I'd be even less inclined to buy from them.

There was a study that pirates spend more on music than non pirates. http://www.independent.co.uk/news/uk/crime/illegal-downloaders-spend-the-most-on-music-says-poll-1812776.html

I wonder if it's true for games too.

If that's the study I think it is, then it's kind of an unimportant study as it was done by a torrent site. The article doesn't state directly. Since they only mention the analysis guy AS he's offering analysis and don't say he conducted or aided the study, I think it's safe to guess it is.

That's like trusting the RIAA's figures that every year, people pirated 270 gajillion dollars in music. Biased sources, as they say, are biased.

 

[ex275w]

Why are budgets for AAA games so bloated, is it because they have way too many people working on the project, is it because they don't plan production of the game well and a large part of the budget is spent on content that is cut?

Also I believe sales are down because people are less willing to spend 60$ on a game that might be crappy like Prototype 2, that's why Assassin's Creed, CoD, Valve games and Rockstar games do well, they are associated with certain types of experiences or the development company is associated with quality products.

 

[Lunar Templar]

and Jim Sterling is an incredibly sexy man...

Oh shit I actually wrote that

and your avatar makes it even better

 

[Epona]

I'm not doubting you, I'm asking because I don't know. If I was arguing with you, I'd be presenting an actual alternative to what you're saying. Unless I had a sudden desire to look incredibly stupid.

Ah. In that case, see my post above. The market crashed because it got oversaturated with really terrible shovelware, the absolute worst example of which was E.T..

Well, sorry for presenting a tone that could be seen as aggressive then. So, just to double-double confirm: lack of retail support and terrible shovelware destroyed the industry until the NES arrived, offering distribution again and bringing in decent games.

Thanks for that.

EDIT: is that a double post? I'm-I'm sorry.

Spoiler: I feel ashamed

It's cool, I read it wrong. I am sorry.

Yeah, consumers were getting crappy games because there was very little oversight. Nintendo's seal of quality meant alot to consumers back then but retailers still had to be lied to for the NES and the "tapes" to even be on the shelves.

Nintendo revived a dead market that was killed with greed. It can happen again. Did you know that Activision was one of publishers doing business leading up to the crash? They were formed from disgruntled Atari employees.

Apparently ET was an extremely rushed title due to the timing of the movie release. I think they had like 6 weeks from conception to retail. The programmers were not happy with the end result and neither were consumers.

 

[BreakfastMan]

Plenty of great games exist cheaper than the newest AAA titles.

About one days worth of work, for minimal wage, can get you the money for a new AAA game. (Even in Australia)

Sales are low when 'so so' games are being released.

*yawn

Cry me a river.

I still think game prices are reasonable, and I expect them to rise in the next 5 years. I hope they will be worth it. Or perhaps... dare I say it... we have to wait until the game goes down in price before we buy them?!? OMG!!

I think you missed the point a bit. Jim was saying that game prices are stopping people from purchasing more games, therefore making it so that pubs make less money. If I only have 100 dollars, for instance, I can only purchase 1 new game. If they were 50, I could purchase 2. If they were 40, I could purchase 2 plus some DLC. 30, 3+DLC, and so on. Making games less expensive means that you will sell more copies, which means that you make more money. That was the point Jim was getting at, I think, that high prices are bad for bottom line of devs and pubs.