Video Game Pricing [video]
youtube.com
youtube.com
This 6 min video explains from game dev perspective why (AAA) games have been pegged at $60 on release, even though they should be priced higher to be sustainable ($85-$90 in 2018).
So game developers tried various ideas to make up for this gap: DLC, perpetual experiences (map packs & expansions), loot boxes, microtransactions...
There's also "ultimate" editions, which bridge the gap at sales time.
Sure, you could buy Forza Horizon 5 for $60, but you could also buy the Deluxe Edition for $80 to get some extra cars or the Premium Edition for $100 to get the same extra cars + the DLC when it comes out and some extra goodies.
Framing this DLC as an "ultimate" edition seems like a great idea!
"Would you like the ripoff edition or the inferior edition?"
Actually, I don't want to buy the game anymore.
> In World of Warcraft what they did when they first designed the game was they had an experience system that would, over time, lower the amount of experience you got because [Blizzard] wanted to encourage people to play for like two hours at a time instead of twelve hours at a time. So the longer you played you’d get this experience degradation and then it would bottom out and at that point it would be a fixed rate of experience. And people just hated it.
> And so they went back and [Blizzard’s Rob Pardo] was like all right, basically what we did was we made everything in the game take twice as much experience to achieve as before and then we flipped it. So actually what happens is you start getting 200% experience and eventually it goes back down to 100%. So that effectively now how they spin it is that if you log out for a while you get this 200% boost when you log back in! And then over time it goes away and you just get regular 100% experience. It’s EXACTLY the same as it was before, except NOW everyone is like “Fuck yeah, Blizzard, this is exactly what I want!”
However, I think they did try to account for things like that: they started with an estimate games should cost $225-$300 before accounting for larger audience size.
Larger market size and efficiencies like reusable game engines are balanced by increased productions costs. The first versions of Final Fantasy just had text captions in 2D. Now they are in full 3D with fully acted voice actors.
Starts here: https://youtu.be/VhWGQCzAtl8?t=96
And the length of games plays big part too - my wife took 100h to complete Assassin’s Creed Valhalla and there’s still tonnes to do, it just meant that she wasn’t ready to buy another big AAA game for like 3-4 months.
What's the criteria for "AAA"? 100+ AAA releases per year seems a bit on the high side.
because it's a bad video made by someone who understands nothing about economics.
Pokemon's merch revenue completely dwarfs game revenue: https://youtube.com/clip/UgxvU_ygdejMiTGyChN4AaABCQ
Merch is great because it allows "whales" to spend as much as they want without the questionable gambling aspect of loot boxes/gacha.
I agree some games are less amenable to the merch model, but that is within the control of the game designers.
In fact, some games were designed explicitly to support the sale of merchandise. I think Rovio's Angry Birds and/or Seriously's Best Fiends used this strategy, but I can't find the source, now...
Apparently Garfield is a cartoon that was created solely to sell merchandise. It's quite blatant: https://youtu.be/1ei_eNTmCsU?t=33
I don't see why the merch strategy can't be applied to games, too.
Japanese releases:
Game: early 1996, second late 1996
TCG: late 1996
TV series: 1997
movies: 1998
At this point, I think it’s more about IP and who your target is. If your target is general audience/kids, you could probably sell a whole variety of merch, even if it’s not directly tied to the game. But if the target is hardcore gamers (collectibles, exclusive t-shirts, memorabilia, etc), the market seems smaller.
Sell what people want to people who want it. (Vs what you want to make to who you want to sell it to.)
Might the move to digital distribution, even if not complete yet, already be giving publishers substantially increased profits per unit sold?
A decade ago, an article suggested publishers made $27 on a $60 physical game, and the platform holder a $7 royalty[1]. With digital, retailers lose out and no longer get a cut, cost of goods is reduced, and returns go away.
With a $60 digital game, don't Sony/Microsoft/Nintendo/Steam all charge a 30% platform fee for infrastructure/store costs and their profit? They'd take $18 (+157%) and leave $42 for the publisher (+55%) (edit:math). Is that the extent of the pie or is it divided more?
Multiplayer still requires a $60/year fee on console systems too, correct? And all the extra and ongoing costs mentioned in the parent post are unlikely to go away with increased base price, right? I don't mean to be skeptical but feel we're going to see some price increases (beyond gaming too) just because businesses can.
[1] https://latimesblogs.latimes.com/entertainmentnewsbuzz/2010/...
Multiplayer fee does not go to the game maker either.
And costs are astronomically higher. A mid-market AA game with a studio of 80-100 people will cost in the order of 15-20 million USD a year to produce. Art is enormously expensive in 3D, even outsourced. My numbers are a few years old, so it's probably worse now.
It's ludicrous to assume that in the cut-throat gaming market (unless it's the 1000th iteration of a franchise) game developers are looking to increase the price "just because they can". They actually can't because gamers have shown themselves to be incredibly hostile to price increases.
The main reason there are no more mid-market games (i.e. between AAA franchises and indie small-scales) is that it is absolutely not profitable or sustainable. You can put all your money and energy into a game, but unless it's a huge hit, you will never recover the cost. It is just not worth it to most of us these days to even try.
Lots of movies, in fact the vast majority of them don’t get to go to theaters. It used to be that this meant VHS or dvd release, now it means streaming, sometimes even just YouTube or Vimeo release. If you go to any film festival circuit I no your life you will see upwards of 1000+ films in a year. But not that many of them will go to theaters anywhere in the world.
Basically the 20$M films you talk about have some reasonable chance of sucess. Gaming is a bit more of a free for all, having steam, early access, GOG. You have a Wild West capitalism type of ultra competitive env. When you launch a film in theatres, that is not what’s happening at all - you’ve already gotten a booking at the natural moated monopoly of Very Large Screens, a limited amount of which you have in the world.
Basically I would estimate that the chance to launch a game and have VERY slim returns is far higher than a film.
Yes, you do have breakout hits in that space once in a while, but not enough for studios to risk them without big name stars. Or more commonly actors who fund their own productions.
In both industries the case can be made that the market has made the choice and whiners should STFU. But then we should also make peace with what's lost in return.
There is nothing similar in Film today - people don’t open the Vimeo paid section daily looking for new stuff to watch, neither does Vimeo allow for “fund this project” drives. I have hopes crypto DAOs will emerge to solve this issue.
There isn't any less microtransactions and loot boxes on PC, even with PC-only games, where you can sell directly to customers without any store or platform cut - and most big publishers do just that. All these additional money grabs have one reason only: because they can get away with it and make more profit. If selling games for more than $60 was more profitable they would do that too.
> And costs are astronomically higher.
Only because AAA publishers choose to chase photorealistic graphics. Why? So that they can appeal to more customers, making them more money. Yet again and again there are games (mostly from independent studios) that proove that graphics are not the most important thing to many players.
> It's ludicrous to assume that in the cut-throat gaming market (unless it's the 1000th iteration of a franchise) game developers are looking to increase the price "just because they can".
It's ludicrous to believe AAA publishers' claims that games are not profitable when their CEOs can pull in $150 mil [0]
> The main reason there are no more mid-market games (i.e. between AAA franchises and indie small-scales) is that it is absolutely not profitable or sustainable.
There are mid-market games, they are just not as profitable as AAA franchises so most big pusblishers avoid them.
[0] https://www.marketwatch.com/story/activision-blizzard-pulls-...
There is also no more used market with digital only. I can’t sell a game when I’m done with it, and I can’t buy it for 1/2 or 1/6th of the price if I’m waiting long enough after release.
The popular AAA games have been making record breaking amounts of profit in recent years before you even include the microtransactions they've been adding. The market is bigger than ever. This is from the earning reports. This is just an excuse to try milk more money out of consumers.
The big yearly franchises rake in tons of cash, just as superheroes do at the movie theatre. But if you go a bit deeper, the situation is more mixed. Bioshock Infinite just about bankrupted Irrational Games, for instance, despite being very well-received.
https://www.polygon.com/2014/2/21/5431332/what-irrational-ga...
> Earlier this month, Irrational co-founder Ken Levine announced that less than a year after the release of BioShock Infinite, the studio would be "winding down," which meant that everyone but Levine and 15 others were being laid off.
According to Wikipedia, Bioshock Infinite sold 11 million copies. If your development is so costly that 11 million sales, vastly higher than most games sell, isn’t a success then maybe you should go out of business. That’s not a price point problem but a budgeting problem with unrealistic expectations.
If you look at the top selling games, the top 50 ever bottom out at 20 million sales so they were half way to being on the top 50. If your game has to be in or close to the top fifty selling games of all time in order to be profitable then you’ve planned something very wrong.
I don't know about you, but I like big-budget games! I don't think Bioshock Infinite would have been as good if they had to pair back the art team that constructed that gorgeous floating city, or lowered the amount of experimental iterations which made it possible to get the gameplay feel just right!
I like some big budget games, but most of what's been released by the big publishers (EA, Activision, Ubisoft) has been, lets say, lackluster. Those are the games with the biggest budgets and quite frankly, they tend to be all flash and little substance, gameplay-wise.
Given the sacrifices that developers and especially artists have to undergo to work in the industry, I have absolutely no problem with saying that video games should monetize as much as they can, to ensure that the crew can continue to make a decent living.
For example: https://www.ign.com/articles/activision-blizzard-has-reporte... (yes, yes, that bonus was part of a contract from 5 years ago, but its still in rather bad taste to pay out hundreds of millions while laying off a load of staff)
For example, Red Dead Redemption 2's budget was US$ 70–240 million on development and a further 200–300 million on marketing: https://venturebeat.com/2018/10/31/red-dead-redemption-2-cou...
> Given the sacrifices that developers and especially artists have to undergo to work in the industry, I have absolutely no problem with saying that video games should monetize as much as they can, to ensure that the crew can continue to make a decent living.
If the money actually went to the developers, I'd agree, but largely it doesn't. It goes to the executives. Bobby Kotick got a US$200 million bonus while at the same time laying off staff. The money made by big budget AAA titles largely doesn't go to the developers who have to undergo those sacrifices, it goes to already rich executives who don't need it and make no sacrifices.
As a game developer, it's a crazy world out there.
What a wild cross-over day!
If anything I would say some of the takeaway should be reversed:
* Games are significantly cheaper than ever before
* Games are generally longer and have more content than ever before. A year of multiplayer life is pretty good for $60.
* Free to play games aren't successful as an adverse reaction to monetized non-free games. Free to play games are more monetized than most.
* Old games are great. Go play them. But don't expect a fungible experience with new games. There is no classic game equivalent for Resident Evil 8. I would say, there isn't even something particularly equivalent for Hollow Knight, which is a direct evolution off of old school metroidvania.
But definitely try to look past marketing. We can of course agree on that.
Similarly, there is no modern equivalent to Katamari Damacy. Some games are just too perfect to be recreated.
Good theme song though.
Bad writing is much much worse than no writing.
Wish dunkey did a little more focus on that, but theres tons of other videos that go more into the economy of DLC and micro-transactions.
makes sense when the marginal cost is near-zero.
Video games as a medium seem to be really, really well suited to passion projects, and I can’t explain why. None of my favorite movies are indie movies. Very little of my favorite music is indie.
I think one reason might be that being interactive lets the player contribute to the enjoyment themselves, which lowers the bar for what the developer has to achieve. Give people blocks and ways to move them and some will have endless of fun building something creative whereas with a movie the author is responsible for making sure the blocks are arranged in an interesting fashion.
For me though I think a large part is also simply that I am more into games than movies/music so have spent a lot more time looking into the indie scene there.
I really disagree with this, I think it's underselling the quality of indie games. It explains Minecraft, maybe, but there are so many incredible indie games that look gorgeous and have tons of interesting content, that aren't just relying on the player to entertain themselves.
Braid, Celeste, Hollow Knight, Ori and the Blind Forest, Limbo, Inside, Frostpunk, FTL, Outer Wilds, Spelunky 2, Rocket League, Darkest Dungeon, Disco Elysium, The Witness, Terraria, Return of the Obra Dinn, Papers Please, The Stanley Parable, Brothers - A Tale of Two Sons, Hotline Miami, Undertale, Firewatch, Dustforce. I could honestly double that list if I thought for long enough.
> For me though I think a large part is also simply that I am more into games than movies/music
Maybe. It still feels like indie games punch way above their weight compared to other forms of media, but it's true I could be biased there.
That'd depend entirely on your purchasing habits. "what people will pay" is an upper bound on the price, and "what they cost" is an lower bound. For high end/luxury products (eg. iPhone 12 pro max 256GB), prices are indeed dictated by "what people will pay", but for low end/commodity products (eg. low to mid range android phone, or everyday staples like food) it's dictated by "what they cost" due to competition.
These days games are not the only forms of addictive entertainment - there are games, social media, streaming service, youtube, tiktok, and so much more.
Maybe games are cheaper (in real-term) because entertainment in general are getting cheaper.
I recently finished Ghost of Tsushima. Brilliant, but if you ask me it would have been about as fun even at 1/3 of the length.
How about instead of padding a game with more of the same just to add length you make it shorter and reduce development costs? Probably not linearly, but still significantly.
Books are probably a better comparison to video games... which is probably also why I hate when those are too long.
Hmm books last 2-6 hours for me, depending on how bestseller-ish they're written. You're not talking about technical manuals are you?
Series can get long, but those come out one "episode" every year to couple years.
> Several years ago I played The Witcher 3. I couldn’t finish it since it had so much content.
Welcome to the club :) I've made it to the Nordic themed island so far. By the time Cyberpunk 2077 is fully patched and PS5s or new gaming PCs become available and affordable again, I might finish it!
I find it absurd the lengths that games are padded to in attempts to appease this crowd. It ends up causing the game to be a slog if the padding isn't optional.
You'll pay a few bucks for a movie that entertains you for maybe a couple of hours at best, but the idea that people are averse to paying $60 for something you get 1,000 fun hours out of really turns me off.
So the question turns into how to monetize that. And DLCs, microtransactions, and subscriptions seem to be an answer.
Because "new" trumps "great" every time. If that was not the case, we would stop watching any new movies for a long time since there's an abundance of great old movies that you could watch before even starting to watch anything new. But that's not how entertainment works. Humans crave for stuff that's new, and that's precisely why this business can exist.
Not saying it is ethical...but one can buy a max length xbox live subscription(3 year), then 'upgrade to gamepass' which gives you 3 years of gamepass for a nominal fee.
For those not in the know: There were offers of "upgrade to GamePass Ultimate for $1 for x months" which when applied to an existing XBox Live account extended GamePass for the length of your XBL subscription, for the same $1 (flat, not monthly).
Sounds like those offers are still around.
Dunkey uses the tried and true method of SaaS selling in this video too. Start with the pain, then move to the solution that you definitely didn't start your pitch with.
* Triple-A games are often-times yearly releases of a series priced at $60 (Battlefield, Call of Duty, FIFA), but are hardly ever new games with new technologies. Most times they last about a year before they're effectively EOL'd.
* Indie games are much lower in comparison and receive more love from their developers
* Nintendo are renowned for their titles and IPs, but their games are far from innovative at times, and their prices are not competitive in the slightest.
* Pricing of modern video games makes players turn to free-to-play games which receive more updates on a regular basis.
* The only way to play classic games reliably is emulation. Getting modern versions of old games from devs/pubs is very unreliable currently (Silent Hill collection, Super Mario 3D Allstars, etc)
(Well, the F2P one seems a bit weird, given the wide range of options of getting games cheap-ish if you don't insist on only playing the newest AAA titles)
I've been seriously considering selling off my collection, but I'm too lazy to do it piecemeal.
I did try it, and I think I'm doing something wrong because I can't see how they fit together. Could you expand on this?
KiwiFarms murdered the person who could bring emulation within spitting distance of real hardware. So yeah, now there's even more reason to collect gaming hardware.
You're right, but of course the nature of emulation is that it can actually be better in a lot of ways. More power efficient than original hardware, no cartridges or discs, no composite or NTSC artifacting[0], save states, networked multiplayer, automated translation, etc.
> There will always be glitches.
It is at least theoretically possible to build a perfect emulator. Practically, though, we are already so close that it is more than good enough[1] and fake it for the rest if anyone cares.
> KiwiFarms murdered the person who could bring emulation within spitting distance of real hardware.
Yeah, that was horrible and tragic without even connecting it to emulation and those fuckwits can die and rot in hell.
[0] Ok, that one being better is debatable since the art was designed with that in mind. Of course, there's always shaders.
[1] With the exception of a few systems, like my beloved Saturn.
I'm intruiged by the fpga emulation stations though. They seem to have the posibility of more accuracy with less latency, but it depends on how good the people making the cores are.
> Nintendo are renowned for their titles and IPs, but their games are far from innovative at times, and their prices are not competitive in the slightest.
They aren't priced competitively, yet they are incredibly successful (depending on the decade). Could other companies, especially indie devs, price their products similarly? I'm no game dev, but I assume it doesn't feel great to sell your game for $0.99 on Steam.