Recently Xbox and Playstation announced that their future big-budget video games will now cost $90 Canadian when released. The reason given for this is the fact that video games are becoming more and more expensive to produce.
Video games are now a mainstream media, the supply is plethoric and the demand is just as much. Players are increasingly demanding on the quality of games, their content and their functions. If they don’t like a game, it’s very easy to move on because of the choice.
However, it is a statement to be qualified:
The cost of developing a game
To make a decent and attractive game for gamers, even on mobile, it takes at least a team of 25 people for 1-2 years and a budget ranging between 2 and 5 million Canadian dollars. There are of course many exceptions, indie games that work commercially very well having been made by a single person for a lower cost.
On the other side of the spectrum are big-budget blockbuster games: the Halo Infinite, Forza Horizon 5, Horizon: Forbidden West, Last of Us Part 1, God of War Ragnarök, Red Dead Redemption 2. Some of them exceed the 100 million Canadian dollars of budget and 8 years of production.
It is therefore considerable risk to decide to develop a game. The goal is of course to be profitable.
The cost to release the game
Each platform on which the game is released takes a non-negligible share of the game’s revenues: Playstation, Xbox, Nintendo Switch, Steam on PC, Apple App Store, Google Play Store each take 30% on each sale that takes place in their ecosystem.
Epic Store takes 12% of sales revenue.
When distributing the game in physical format, it costs even more: you have to include the costs of stores, distribution, production of the disc or physical cartridge.
Except it’s the same for cinema.
When you go to see a film in the cinema, you pay between 2 and 17 Canadian dollars for your seat, and the producers of the film hope to make it profitable via thousands, millions of admissions.
There are also several distribution systems in the film industry: cinema, TV, blu-ray, video-on-demand platforms, films on planes…
The video game industry continues to grow immensely and surpasses the film and music industry. Video games have varied enormously in price between different eras, depending on the technologies used, their success and the greed of business leaders.
Indeed, the initial price of a game is no longer the only way to make money in the industry, if at the time the arcade existed, microtransactions are now ubiquitous in games, subscription systems such as Playstation Plus, and Xbox Game Pass also bring revenue, as well as all merchandising.
Making a game does not guarantee its success and profitability but many titles are. And as in other industries, some studio bosses gorge themselves and pay their employees the minimum.
The introductory price
This is the price on the first day of release of the game. Until 10 years ago, this price remained stable for months or even years. And if he had the misfortune to lower the price, fans felt cheated, and rightly so.
From now on, it has become anything: just this year Sonic Frontiers, was sold off 3 weeks after its release at -50%. Same thing for Mario + Rabbids: Sparks Hope, Need For Speed Underground, Marvel Midnight Suns…
Fans don’t even bother to complain anymore.
Supply and demand
In fact, the price of the games depends on how much you want to pay to be able to play them. In itself, it costs nothing to copy computer files, but it is the whole creative process that must be paid behind.
If a game costs $90 when it comes out and you want to get it, there are several solutions:
- wait for its price to drop.
- wait for it to appear in a subscription offer. Many games I had bought, were then given away “for free” in a subscription
The games are not going to sell for more than $90, they sell at the price you want to pay. For the publisher, it is at an average price between the minimum and maximum price that he sells it.
Nintendo is the only publisher that manages to keep the price of its games artificially high.
The major downside of waiting for a drop price exists for competitive games. If you want to discover it at the same time as everyone else and have a similar level, it is more appropriate to get it when you go out.
In the majority of cases, this does not happen and waiting avoids all the computer bugs of the release of the games, and eventually get their best versions a few years later at a reduced price.