Jimquisition: Videogames Are A Luxury

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HellsingerAngel

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There are so many things wrong with this video I don't even know where to start...

I agree, video games are expensive. You know what else is expensive that'd I'd really love to have? Gold. A shit load of gold. I think the price of gold should be brought down simply because a large amount of people like having things made of gold. It would make the overall sales of gold so much more! Don't even get me started on how many cool things you could do with gold if you had a large supply of it. Jewelry for days, my friends.

Do you start to see where it sounds a little ridiculous? games are expensive, yes, but that doesn't automatically mean the prices should drop. Can you give solid evidence that a less expensive product will provide more profit on a consistent basis within the industry, or is the reality more so that it'll sell more copies but have no real effect on the dividends? This is where your logic falls short, Mr. Sterling, in that you voice an opinion but have no real proof of the model.

Then the example. Oh boy, the example! Games sales are down from last year? No shit Jim! MvC3, Portal 2, Mortal Kombat, Dragon Age 2, Crysis 2, Bulletstorm, Rift, DC Universe Online, Dead Space 2, Magicka & a Call of duty Map Pack. What have we had this year? Soul Caliber V, FFXIII-2, The Darkness 2, Kingdoms of Amalur: Reckoning, Mass Effect 3, Street Fighter x Tekken, Ninja Gaiden 3, Armored Core 5, Xenoblade Chronicles & Prototype 2. To me, this year's line-up isn't as bombastic. Yeah, they're solid games, but only three of those had a huge hype train. Even having less overall blockbuster titles, the games in 2011 were far more significant than the games in 2012 as an industry. Last year was just better, period. I would dare say it'll have better profit margins for quite a few years just because of the titles that came out throughout the entire year. Using 2011 as your benchmark is just idiotic. It was a perfect storm of AAA titles and nothing more.

The last thing I found very ignorant was the complete overlook of the trends in other media. You know what else used to be expensive? Books, movies and music! A lot of things have gone down in cost because A) We've perfected the production of them over many, MANY decades -and- B) They've gone wholly digital as their main source of acquisition. I could be wrong in the latter point but I'm pretty sure the majority of consumers still get boxed copies of games, where as most consumers in other areas almost always get their products digitally. Movies are possibly the exception (though in five years that statement will probably be 100% true), then again, movie theaters provide the possible niche service to cover those costs. The problem with video games is that even though there are some digital services, the majority of copies are still in hard copy form. Look at a lot of wholly digital games, however. They almost always hit the black because they have little to no production costs. Lots of MMOs that run free-to-play that are mediocre at best run smoothly because of low production costs. I don't think going 100% digital will solve the problem we face with pricing, I'm just saying it'd help quite a bit and is probably the quickest solution to the growing costs of games.

Then again, we have the huge outcry of not owning our video games when they're digital, so apparently developers just can't win either way sometimes...

All in all, your episode -- and, in fact, the past few episodes -- had a questionable message and your sloppy presentation and lack of data just leaves me aghast and questioning whether your opinions are even grounded or if it's all just more sycophantic pandering to the public by another "internet celebrity".
 

Something Amyss

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Dec 3, 2008
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Mangod said:
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.
It also takes an incredibly simplistic view of the way games are sold. Since companies do not see all of that money due to markup, it's not that easy.
 

Epona

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Jun 24, 2011
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The more I think about the crash in 1983, the more I see Indies as the train driving us there. Bad or samey games with little oversight (ie, lack of quality control) ultimately led to the loss of consumer confidence. Nintendo's Seal of Quality was there to tell consumers that this game has been checked and it works, still alot of samey game though.
 

DonTsetsi

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Sober Thal said:
Zom-B said:
Sober Thal said:
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.
What an ignorant comment. You clearly don't understand that for many, many people who would like to play video games that that "one days worth of work, for minimal wage" can mean the difference between paying a bill or eating for a week or making rent. It wouldn't surprise me to learn that you still live at home and have no idea what real day to day living expenses are like.
You omitted the first line of my post, is it because you think being the first kid on the block to play a new AAA game is somehow important?
Hm, here prices don't deteriorate that fast. A game can often be sold for 40 Euros a year after release and since the minimal wage is about 150 Euros per month.....
 

Something Amyss

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Dec 3, 2008
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HellsingerAngel said:
I agree, video games are expensive. You know what else is expensive that'd I'd really love to have? Gold. A shit load of gold. I think the price of gold should be brought down simply because a large amount of people like having things made of gold. It would make the overall sales of gold so much more! Don't even get me started on how many cool things you could do with gold if you had a large supply of it. Jewelry for days, my friends.
Bad analogy.

First off, gold is a finite resource.
Second, gold is actually useful in uses outside of possession.
Third, there is no real first-hand interest in getting you to buy gold.

Do you start to see where it sounds a little ridiculous? games are expensive, yes, but that doesn't automatically mean the prices should drop. Can you give solid evidence that a less expensive product will provide more profit on a consistent basis within the industry, or is the reality more so that it'll sell more copies but have no real effect on the dividends? This is where your logic falls short, Mr. Sterling, in that you voice an opinion but have no real proof of the model.
Games being expensive doesn't justify a drop, but it does mean that if they want to sell more, they might want to consider actually dropping the prices or consider other revenue streams (used games boost new sales). There's no real benefit in keeping game prices high, as scarcity is not an issue with games as it is with gold.

Game publishers want their games to be plentiful, to sell a lot of copies. Gold creators...Wait, there are none. Gold traders want gold to be scarce so they can continue to make money off it. If games were a precious or even semi-precious commodity, you might have a point. Scarcity is not beneficial to the games industry, thought.

Then the example. Oh boy, the example! Games sales are down from last year? No shit Jim! MvC3, Portal 2, Mortal Kombat, Dragon Age 2, Crysis 2, Bulletstorm, Rift, DC Universe Online, Dead Space 2, Magicka & a Call of duty Map Pack. What have we had this year? Soul Caliber V, FFXIII-2, The Darkness 2, Kingdoms of Amalur: Reckoning, Mass Effect 3, Street Fighter x Tekken, Ninja Gaiden 3, Armored Core 5, Xenoblade Chronicles & Prototype 2. To me, this year's line-up isn't as bombastic. Yeah, they're solid games, but only three of those had a huge hype train. Even having less overall blockbuster titles, the games in 2011 were far more significant than the games in 2012 as an industry. Last year was just better, period. I would dare say it'll have better profit margins for quite a few years just because of the titles that came out throughout the entire year. Using 2011 as your benchmark is just idiotic. It was a perfect storm of AAA titles and nothing more.
Mmm...That's either confirmation bias or teen spirit. I forget which one is the fallacy and which one is the Nirvana song.

The last thing I found very ignorant was the complete overlook of the trends in other media. You know what else used to be expensive? Books, movies and music! A lot of things have gone down in cost because A) We've perfected the production of them over many, MANY decades
Let me stop you there:

-Books have seen an increase in cost over the last decade or possibly two.
-CDs, DVDs, etc all have standardised process which should have reduced prices but have not.
-Games should have seen a simil;ar drop because we've switched from proprietary media.

They've gone wholly digital as their main source of acquisition. I could be wrong in the latter point
Yes, considering that is completely false. So two reasons. One is untrue and the other is...Untrue.

Also, since we're talking digital, ebook prices are RISING.

Then again, we have the huge outcry of not owning our video games when they're digital, so apparently developers just can't win either way sometimes...
It's almost like...Gamers are not some hivemind and actually have different desires.

Nah. That'd be crazy. Must be some catch 22.
 
Apr 28, 2008
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Zachary Amaranth said:
Crono1973 said:
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.
The country of Switzerland did a similar study and seemed to have gotten the same results.

Links: http://boingboing.net/2011/12/03/swiss-govt-study-downloadin.html

http://www.ejpd.admin.ch/content/ejpd/de/home/dokumentation/mi/2011/2011-11-30.html

So, seems there's a bit of truth to it.
 

Something Amyss

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Crono1973 said:
The more I think about the crash in 1983, the more I see Indies as the train driving us there. Bad games with little oversight (ie, lack of quality control) ultimately led to the loss of consumer confidence. Nintendo's Seal of Quality was there to tell consumers that this game has been checked and it works.
LOL.

Do you have any idea how many shitty, broken games were released with the Nintendo seal on them?
 

Something Amyss

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Irridium said:
The country of Switzerland did a similar study and seemed to have gotten the same results.

Links: http://www.forbes.com/sites/erikkain/2011/12/05/swiss-government-study-finds-internet-downloads-increase-sales/

http://www.ejpd.admin.ch/content/ejpd/de/home/dokumentation/mi/2011/2011-11-30.html

So, seems there's a bit of truth to it.
Oh, good to know. I guess you learn something new every day.

Yesterday, I learned I could fly...>.>
 

Epona

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Zachary Amaranth said:
Crono1973 said:
The more I think about the crash in 1983, the more I see Indies as the train driving us there. Bad games with little oversight (ie, lack of quality control) ultimately led to the loss of consumer confidence. Nintendo's Seal of Quality was there to tell consumers that this game has been checked and it works.
LOL.

Do you have any idea how many shitty, broken games were released with the Nintendo seal on them?
I am sure there were alot but obviously not so many as to destroy consumer confidence. You know what, when I was playing NES, I never remembered games crashing or glitching. You can find all kinds of glitches for NES games on the internet today but the vast majority of players never personally experienced these glitches.
 

Ciaran Delaney

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I dont think games will ever come down in price until as a minimum there is a "global industry standard" of hardware that is accesible to everyone across the world(for example if everyone in the world at a minimum had a smart phone or laptop) until this is achieved on a global scale, (i.e accessible to people even in whats considered today to be a third world country)

Also as a counter argument... games do get cheaper... constantly they lower in price but only over time for example you could today purchase a sega megadrive with 30 games for under a tenner thats what 30p a game not including the console & controllers itself, or as another example... go down to your local gameshop today and purchase yourself halo for xbox 360 for £2.

The only differance is time and the demand for a game on its release (key selling time) in which people want to play that game NOW and not wait till all the hype has died down which in itself is essentially greed ... but we are all of course guilty of doing this.

I'm not saying that I wouldnt like to see cheaper games... but merely that they all will be cheap games at some point.. so why shouldnt game development companies charge a large price for their games on release? especially when the sales of the first month of a games release will account for 90% of their earnings over the entire period of that games "life" and go on to fund further releases to that games series or a entirely different type of game.

Just a point to consider.
 

RipRoaringWaterfowl

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Very funny! Interesting too, when you think about it. Shrimp. It's such an interesting talking point. I want to eat shrimp. I like shrimp. Shrimp is tasty. Shrimp is a luxury. Shrimpie! Shrimp.

Shrimp.

SHRIMP...

captcha: good morning! What the.. captcha, it's 19:42 here in London. Your going to make me say good morning! back to you at 19:43, at night, and your going to have your good morning! bounce around like a gerbil.

I hate you.

Shrimp.
 

Jacked Assassin

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Since 2010 Video Games have been becoming more & more unimportant to me. I never thought they were a luxury. Although I had seen people who act like they are & I guess I could finally agree with them.

In fact I made a major budget cut on May 1st when I sold around 20 games leaving me with only 7 games left.

Because some game franchises like God Of War wanted to milk the hell out of me through prequels. (Spoiler: Kratos died in GoWIII) Or Assassin's Creed case coming out on a yearly basis. (And Desmond is still boring.)

-

Although I end up disagreeing with them when it comes to micro transactions on PS Home.

For anyone who's been following x7 rioting apparently $15 for a Gold Suit is "Class Warfare".

And it becomes more bizarre when these rioters can spend $60 or more in video game pre orders.

It almost reminds me how stupid this argument was back in 2009 where you have to buy a $5 pilot's jacket to get into Scorpio's VIP.
 

Aerograt

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You know, I would really like it if the RE4 Merchant worked at Gamestop and asked everyone "WHAT AR' YA' BUYIN'?!?!?"
 

Callate

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Blade_125 said:
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.
Please don't insult my intelligence by presuming that my use of the term "production costs" means only the cost of imaging a disk and putting it into a box. Of course it doesn't. The cost of production I'm talking about is the price to bring a completed game to the market, and that includes all the programming, voice acting, testing. The actual cost of putting game-on-disk and disk-in-packaging is not only negligible, but it's probably the element that has increased the least in the last twenty years- the move from floppy/cartridge to CD to DVD to Blu-Ray (and in some cases, digital distribution) is a pittance compared to the cost of increasing the programming pool for a single game twenty-, fifty-, or a hundred-fold, or hiring an entire cast of A/B-list actors to voice it.

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.
Game prices can't be "artificially low" in the sense of a food commodity being subsidized by the government or a company trying to flood a market with cheap product to kill competition. Yet there are a variety of reasons to suggest that game prices are indeed artificially low, and your "reason" for calling the term "incorrect" doesn't broach a single one of them.

The cost of creating a video game has increased dramatically, but the price a consumer is willing to pay for a video game has not, especially in the United States. The increase in price here has barely kept up with the cost of inflation, let alone the increased cost of development.

A company should make a profit, but that's not a given. Part of the thrust of Jim's argument is that game companies might be able to sell more units at a lower price. But even that's not a certainty. Games like World of Goo have done a good job of making the case that predicting around traditional market models with regard to video games isn't necessarily a good bet: even offering the a popular and well-received game for pennies wasn't proof against it being pirated.

The price of video games is artificially low from one standpoint in that a great many games are selling at a price point that won't allow them to recoup their costs and doesn't reflect the price in other markets. It's artificially high from another standpoint in that those same games are selling at a price point that may keep potential customers from buying, cause them to buy used, or wait for the price to come down. Also from the point of view that the cost difference between offering 1,000 copies of the game and 100,000 copies of the game may be negligible, so why not sell [or try to sell] 100,000 at the lower price rather than 1,000 at the higher one?

Just to add further perversity to the mix, there's also the issue of the perceived value of a game being partially based on its price. A $60 game may come with the perception that it's a blockbuster in part because it's priced like one. The same game priced at $40 may suggest to its market that it lacks the confidence that it can sell at the same price as its competition, therefore it must be an inferior offering.

Game prices are just artificial in that they are set on the basis of clearly flawed market examinations, a pricing based on how competing companies price their own goods, and an established "maximum" price based on consumers' expectations that haven't changed in step with the rising costs of creating their product.

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.
And yet there used to be more companies making more games. When single programmers and three-person teams could make a state-of-the-art game, it could be commercially viable even if it only sold on one system, and a breakaway hit if it sold 100,000 copies. Now the risk is so high that major releases can fail selling a million copies. It's only over-saturation because rather than being able to succeed off of capturing a portion of the market, game creators nearly have to capture the majority of the market. And then go back and do it again, and again, and again.

Sometimes it isn't individual companies going under; sometimes the market doesn't balance out. Sometimes it just collapses. Sometimes entire industries are annihilated. I have yet to see a good counter argument that, at least as far as the AAA-game market goes, we aren't nearly at that breaking point.