Activision's Bobby Kotick wants more expensive games

[tuna]

Well the jerks are charging $60 for Modern Warfare 2 on PC.......so lame.........and that's for nothing special, just a regular edition.

Because they belive they will make more profit that way.

 

[Silent_Buddha]

Yeesh, take inflation into account and games ARE getting cheaper.

Hell, when's the last time you paid 49 cents (US) for a hamburger in the US? That's how much those were when I was paying 50-60 USD for a computer game in the early 90's.

Heck a 50 USD game then would be over 80 USD in today's money. Myself, I'm actually quite surprised games don't cost more. Then again, part of the reason they've been able to constantly keep costs down is by reducing packaging and add in costs when able.

IE - gone are the real cloth maps, design schematics, 300 page manuals, etc... Now that it's usually just a DVD case + DVD. There isn't exactly much more cost to cut, eh? So raising prices is finally the only option left.

Regards,
SB

 

[Richard]

I think that image has cut off the bottom of the survey. There's a slider shown on the right and the row title is truncated, ending with an open 'or', while also being formatted at the bottom of the cell instead of centre.

I believe you're right, thanks for the correction.

Yeesh, take inflation into account and games ARE getting cheaper.

Hell, when's the last time you paid 49 cents (US) for a hamburger in the US? That's how much those were when I was paying 50-60 USD for a computer game in the early 90's.

That much? Here in Europe it was the equivalent of 40 euros for a really top of the line game and most games were the equivalent of 30-35 euros. I just checked my copy of Quake 2, which I bought in Denmark, and it cost the equivalent to 31 euros.

I did pay (or my parents did) the equivalent of 80 euros for Donkey Kong Country for the SNES though.

 

[RobertR1]

Yeesh, take inflation into account and games ARE getting cheaper.

Hell, when's the last time you paid 49 cents (US) for a hamburger in the US? That's how much those were when I was paying 50-60 USD for a computer game in the early 90's.

Heck a 50 USD game then would be over 80 USD in today's money. Myself, I'm actually quite surprised games don't cost more. Then again, part of the reason they've been able to constantly keep costs down is by reducing packaging and add in costs when able.

IE - gone are the real cloth maps, design schematics, 300 page manuals, etc... Now that it's usually just a DVD case + DVD. There isn't exactly much more cost to cut, eh? So raising prices is finally the only option left.

Regards,
SB

Consumers become conditioned to price points. They don't sit there and calculate rates of inflation on a yearly basis to justify pricing. If you noticed the prices jumped up by an average of $10 per game for the HD consoles from the previous generation. For consumers, price can often be more of a psychological barrier than a fiscal one. If the gaming industry wants to shift from a high volume to a luxury model, we'll see a lot of casualties along the way.

 

[TheWretched]

In Germany (Europe probably too) game prices rose from PS1 to PS2 from 50 to 60€ (or rather DM it was then) and from PS2 to PS3 from 60€ to 70€.

I remember I bought Wing Commander 3 for 130DM (65€) in 1994 or 95, not sure anymore. PC games back in the day always did cost between 80DM and 120DM (40€ and 60€), so game prices more or less stayed put. BUT, as said before they don't include no more manuals, nice packagin and several other goodies anymore. Now it's just the BD Case and a leaflet that isn't really a manual at all, but just a "how to control" guide. I mean, looking back at Fighter Bomber on the Amiga (Flight Sim), it really had a 500 page manual, which described EVERYTHING. Given, todays games are mostly quite simple compared to FB back then, they don't need such a compendium. Still, it was nice to have.

Other thing is... I never buy my games full price, as I simply refuse to pay so much money for them. The only game I bought full price this generation was MGS4:LE (European Limited Edition with the figurine ), which was well worth it, but other than that? No dice! It's either imported from the US or the UK or I waited to get it in the bargain bin.

Most games (I am mostly a SP only player) don't offer much beyond the 10 to 15 hours on the first play... So why should I pay that much money for so little entertainement?

 

[Silent_Buddha]

Most games (I am mostly a SP only player) don't offer much beyond the 10 to 15 hours on the first play... So why should I pay that much money for so little entertainement?

It's all in your mind. Pick something some enjoys and they'll be willing to pay what seems exhorbitant amounts of money to other people.

Take smoking for example. Or drinking. Or add them both together. I have friends that spend between 20-400 USD a week just one on or the other or both. Or in a month about 100-1600 USD. Suddenly my occasional gaming purchases and MMO monthly fees seem like a bargain.

Or going to the movies. 1-2 hours entertainment for 9-15 dollars a person. Why I hardly ever go to the theatre's anymore.

Anyway, the point I've tried to make is that the cost of games isn't entirely unreasonable even for games that turned out disappointing. Back when I used to go to the movies. There were plenty of movies I saw that I was disappointed it, but the good ones always kept me going back hoping for another gem.

And to RobertR1.

Yes, I realize that consumers are price conscious, especially now with the economy out of whack. However, at some point companies are going to have to either...

1. Cut costs in order to keep prices static. And since there isn't anything left to cut unless you go full digital distribution that would likely mean cutting dev time which would probably negatively affect the perceived quality of most titles.

2. Raise prices, and hope that people realize that just as your rent and cost of living go up over time, so must games at some point. Programmers and publishers need to eat too.

Regards,
SB

 

[TheWretched]

But Kotick wants to raise prices on a game, that will break even on day one w/o a price cut, which is PURE greed. I'd understand if they'd raise the price for niche games, but those wouldn't sell if they did.

And your cinema comparison. In Germany, you pay about 10€ per movie on a weekend for 2 hrs of "fun" (plus MANY ads). Calculating that up to a games price, this equals about 14hrs, which is about correct for many games. I don't go to the movies anymore AND I am NOT paying that much for that little entertainement anymore. I simply refuse to do so.

It's also... in Germany, we don't see prices fall that fast as compared to the UK for example. That is why I usually import. I mean, the 50 Pounds plus shipping would come to something along 60€+ at the moment, but NO retailer sells games at those prices in the UK. I got RE5 from the UK (Amazon) day one for 30 Pounds (+H&S), whereas I would've had to pay at least 60€ in Germany, which is exorbitantly more for the same thing (it is indeed the exact same game disc in both packages, my brother has the german version).

Game development got more expensive, but so did the gamer base get bigger too. We've all heard, that gaming is overtaking music and movies in their annual results. But games still are MUCH cheaper (talking high budget here) than movies are to make, yet we pay often more (looking at Heavenly Sword for example).

 

[Shifty Geezer]

Game development got more expensive, but so did the gamer base get bigger too. We've all heard, that gaming is overtaking music and movies in their annual results. But games still are MUCH cheaper (talking high budget here) than movies are to make, yet we pay often more (looking at Heavenly Sword for example).

You're comparing two different markets here. Yes, gaming may generate more revenue than music, but the costs are higher and the profits lower. Whereas comparing them to movies, games may cost less to make but they generate fewer sales, plus the movie industry isn't in a particularly healthy state AFAIK. Plenty of 'blockbusters' aren't making huge amounts of money. Franchising helps a great deal, with non-film content boosting revenue and making the film industry workable.

We have to be careful that we pay a fair amount for other people's labours. If everyone waited until games were cheaper, then publishers would have to invest less into games, meaning the gaming landscape would be very different. What we have here is Activision Blizzard looking to make as much as possible back on the key francises to support the lesser titles. Many gamers grumble about the same old thing and lack of originality in games. If we're to have originality, that's going to need to be funded. What happens is the top-selling titles subsidise other developments and support other developers. If we go cheap, all we will have are key franchises ad nauseum, and many smaller developers going out of business.

That's not to say Kotick's right on this. He may be asking too much. I don't know where the sweet-spot lies between fair returns and fat-cat profits, and of course Kotick and everyone else really wants fat-cat profits! Just don't be too quick to call foul on what appear to be higher prices.

And of course, the regional price differences are mostly unfair, but that's different to overall pricing. Regional price hikes are complicated when you factor in all the people involved. How much of your €60s goes to the publisher and how much is kept by the retailer? If they just have a larger markup, you can't hold the publisher to blame. This is where DLC should be the great equaliser, as there are no varying costs for different areas, and DLC should be a fixed price regardless of territory, tied to exchange rates. The fact it isn't shows companies still have an Old World view, and that likely won't change for a good long while without serious consumer pressure.

 

[Squilliam]

@Shifty:

Isn't there another side to the pricing debate in that the price of games mean that people tend to be more cautious with the titles they purchase and therefore the pricing structure tends to favour derivative and franchised games? Im personally more risk averse because the cost of the titles are quite high and the prices stay higher for longer. This isn't just a case where they could price some titles lower as the price in general also sends a message as to the quality of the title and the market doesn't neccessarily respond to lower prices for individual titles at launch because of it.

Surely the higher price of titles is one of the reasons why the sales are even more concentrated amongst the top 10 and the rest be damned. If the prices were lower, im pretty sure there would be more titles purchased overall and even if revenue was lower it would likely be spread over a wider base of releases.

I think the reason why someone like Kotick wants higher priced games is that it suits his blockbuster model perfectly, it would mean higher revenues for him at the expense likely of the smaller developers and publishers whom could not keep up.

 

[Nesh]

Such a raise in prices sounds more like a cartel.

Does anyone know why prices are so high in Europe btw?

There are also large price differences between EU terittories which totally contradicts the purpose of the European Union.

It is crazy. I can order some games from the UK to my country with no delivery charges and pay less than if I bought the same product directly from a store here. Prices vary from 10 Euro to "gulp" 35 euro more than the price I d pay from www.PLay.com.

Why is this?

 

[DuckThor Evil]

Why is this?

Mostly because of the weakened British Pound, just because Pound loses value, it doesn't mean that you can raise the prices in the UK to match continental European prices. Also Play and these other large online retailers seem to be able to lower their prices quite soon after the release and I quess their volumes are so large that they can do business with lower profit margins etc. Play.com is located in the Jersey islands, so if I remember correctly, they are not a part of the same European tax regions, so their prices don't include VAT.

 

[Shifty Geezer]

@Shifty:

Isn't there another side to the pricing debate in that the price of games mean that people tend to be more cautious with the titles they purchase and therefore the pricing structure tends to favour derivative and franchised games?

Yes, there's always a gamble, but I don't think the price is a huge deciding factor for shoppers. Some games have tried being cheaper, and the increase in sales doesn't instantly offset the lower per-unit profit. Didn't SEGA try this with a could of titles a while back? LBP has been available for under £15 for months, but isn't topping the charts as a result. And there's also going to be a minimum price just to cover costs. If you have a 'sure-fire' successful franchise, you'll be confident you can charge more, whereas if you're uncertain on a title, lowering the price probably has a pretty minimal affect on drumming up interest.

There are also large price differences between EU terittories which totally contradicts the purpose of the European Union.
...
Why is this?

Regional pricing in a free market economy. Petrol can cost 5p a litre more than some places a few miles up the road. Maximising profits requires charging as much as the local economy will pay according to the old supply/demand curve.

Play.com is located in the Jersey islands, so if I remember correctly, they are not a part of the same European tax regions, so their prices don't include VAT.

That used to be the case but I think they've tightened that law up. According to purchases I make from 7dayshop, VAT isn't charged on shipments under £18 in value. I think Play grew off the strength of this tax break and made a name for itself, but now is competing on a level footing and isn't the cheapest as it used to be. It's good to look around. Amazon can often have a better deal on some titles, and ShopTo.net is sometimes very cheap. Shopto.net also have better delivery than Play.

 

[Nesh]

Mostly because of the weakened British Pound, just because Pound loses value, it doesn't mean that you can raise the prices in the UK to match continental European prices. Also Play and these other large online retailers seem to be able to lower their prices quite soon after the release and I quess their volumes are so large that they can do business with lower profit margins etc. Play.com is located in the Jersey islands, so if I remember correctly, they are not a part of the same European tax regions, so their prices don't include VAT.

Considering that the UK imports the products which are priced on foreign currency most likely, at EU value the prices should have been around the same as everywhere else.

If the UK Play.com is located at Jersey islands, due to the weaker UK the corresponding abount to UK pound should have been higher. UK Play.com btw has fixed UK=EU prices.

I guess everything comes down to large volume orders and different taxes. But then again I thought that the EU imposes taxes to imports into the EU but not between EU countries. Shouldnt this products be taxed like everywhere else when imported into the EU boarders?

*scratches head*

 

[Nesh]

Regional pricing in a free market economy. Petrol can cost 5p a litre more than some places a few miles up the road. Maximising profits requires charging as much as the local economy will pay according to the old supply/demand curve.

I doubt this is the case over here. In the EU AFAIK, there are regulations that gas stations for example in a region should have the same price, for consumer protection and competition protection purposes. The aim is supposed to be transparency and a common market or an economic integration between regions.

Personally I suspect either a cartel, or a tax abuse by the government. But one thing I am sure about is that some stores do charge more than others to exploit the consumer.

edit: oh and btw I find it preposterous that PC games are priced almost as high as console games

 

[Squilliam]

Yes, there's always a gamble, but I don't think the price is a huge deciding factor for shoppers. Some games have tried being cheaper, and the increase in sales doesn't instantly offset the lower per-unit profit. Didn't SEGA try this with a could of titles a while back? LBP has been available for under £15 for months, but isn't topping the charts as a result. And there's also going to be a minimum price just to cover costs. If you have a 'sure-fire' successful franchise, you'll be confident you can charge more, whereas if you're uncertain on a title, lowering the price probably has a pretty minimal affect on drumming up interest.

I was more talking about an industry wide pricing at say $50 vs $60. You could say its a chicken and egg thing. The higher price supports the bigger blockbuster titles, however it probably helps to really cause them to exist in the first place as people become more selective as to which title to purchase. Its not something that you could look at on an individual basis because the price itself is a signaling mechanism to the market and there are numerous other factors involved which tend to be cancelled out over an industry wide snapshot.

The overall revenue at different price levels is a complicated issue, so I won't go into it. However the important point I would hope to make is that with slightly lower pricing the spread of the revenue would likely be wider, so whilst there wouldn't be as many super expensive games made, a lot more variety could potentially find its way to shelves. Game development seems to be an over optimistic model which tends to lose money whatever price the do charge, with that being equal it would mean the industry made/lost probably about the same amount of money. The development model fits the pricing structure and not the other way around, like what we see from Xbox Live.

 

[Shifty Geezer]

I doubt this is the case over here. In the EU AFAIK, there are regulations that gas stations for example in a region should have the same price..

Not in the UK! You can see petrol stations just down the road from each other with a penny or two difference per litre. There's a much bigger gap between north and south of the country. Recently a supermarket (ASDA I think) decided to slash 5p per litre off the price of petrol, actually passing on the savings from cheaper oil, causing a localised price war. But that didn't filter down south, and here we're still over a pound a litre. It's 105p here where I live, and about 102p in the Sainsbury's some 4ish miles away.

And the relevance to this discussion is compounded when you appreciate there are no such regulations whatsoever for games. With games, you price at whatever you can sell at and leave the consumers to decide what that price should be. Individual retailers have to weigh margins per unit with volume sold without any outside intervention. I don't think the EU was about unfirom pricing for everything. That'd be impossible with different currencies. I don't know if the Eurozone has uniform pricing? Again though, different regions have different costs. It costs more to get goods to Ireland than France, so you'd expect Ireland to cost a few more Euros.

 

[DuckThor Evil]

Considering that the UK imports the products which are priced on foreign currency most likely, at EU value the prices should have been around the same as everywhere else.

Electronic stores in the UK probably gets to buy their goods in British pounds, atleast I'm pretty sure game consoles and video games fall into that category. Publishers can't just overnight rank up the local prices despite the falling currency, now if the pound stays low for a long time, you'll see the prices eventually reach parity or close to it. Around last Christmas you could get amazing deals from the UK (when 1£ was about 1€) including consoles. If UK would use Euros, you wouldn't have such a high difference in prices and if the Pound soon retains it's former value, we won't be getting super deals from there anymore, so enjoy it while you can!

edit: What you see here is a text book case of, when the value of currency goes down, the export sector of that country will see a huge boost.

 

[dobwal]

And your cinema comparison. In Germany, you pay about 10€ per movie on a weekend for 2 hrs of "fun" (plus MANY ads). Calculating that up to a games price, this equals about 14hrs, which is about correct for many games. I don't go to the movies anymore AND I am NOT paying that much for that little entertainement anymore. I simply refuse to do so.

Now think how many euro are collected from the many additional revenue streams (none of which gaming has) from those films after they leave the theater. Rentals, DVD/BluRay sales and TV licensing fees are some the additional revenue streams contributed the ultimate profitability of a movie, which allows you to be spend just 10€ for a ticket. Imagine the cost of a movie ticket if theater ticket sales were the only source of revenue for a film.

Games are relatively cheap for the amount of entertainment gamers recieve, with profit potential being alot lower for their creators than any other comparable forms of digital entertainment. Entertaining you for 2 hours is much easier than entertaining you for 15-100s of hours, while the later being on a level of profitability that only a few game can even close to matching. A top TV show like American Idol can generate almost 1 billion dollars a season in advertising revenue without a viewer paying a dime. Publishers and devs depend directly on our purchase of software to not only fund the return of investment of that particular software but the funding of future title or titles that will be made for your consumption.

Games are created by a bunch of individuals that have no obligation to entertain us and we have no such obligation to provide a source of revenue for their creations. All you have to do is to understand that concept to realize that ultimately this is not about what pubs would like to charge or what gamers are willing to pay in and of themselves, but both. Together those two concepts form a relationship who ultimately returns the optimal price point for retail. Manufacturers and pubs don't charge what they want, they charge what they are able, while gamers don't pay what they want but pay what they are willing.

The market supports the current price points, because tons of games are sold every year and generate levels of revenue that seem to grow year in and year out. If you as a gamer are unsatisfied with the prices and are consuming less then you just aren't as willing as the vast majority of the market. If you are a dev are unsatisfied with the revenue generated, then you as a dev have failed to create a title or titles at a cost, at a quality and at a level of hype that return the profits that others titles have had no problem with generating.

 

[fearsomepirate]

If you don't think MW2 is worth $60, you don't have to buy it.

Games are created by a bunch of individuals that have no obligation to entertain us and we have no such obligation to provide a source of revenue for their creations.

You've been reading Atlas Shrugged, haven't you?

I doubt this is the case over here. In the EU AFAIK, there are regulations that gas stations for example in a region should have the same price, for consumer protection and competition protection purposes.

The Anti-Dog-Eat-Dog-Rule is law in the Eurozone?

 

[Nesh]

The Anti-Dog-Eat-Dog-Rule is law in the Eurozone?

care to be more specific?