Malik (4/20/04)

This editorial originally was presented on lazy.GEEKS (6/17/03)

The Cost of Fun

I know that my usual repertoire of posts cover either reviews or The Collector's Bitchings, but today I wanted to mix things up a bit. I was reading an article on and could not help but write a counter-point. The article (check out the link for more info) covers the trends in pricing for video games over the years and the fact that prices have been pretty static despite inflation. I mean, who out there remembers the original Romance of the Three Kingdoms games for the NES costing more than $60 new? I do. Isn't inflation supposed to raise prices so that we now would face $100 games? What about Phantasy Star 4 for the Genesis and its initial price of $100? Should we be facing $125 per game? Well, I think I have some perspective on this as someone who has seen the best and worst of game pricing, for I have been there since the days of Atari 2600, Intellivision, and Odyssey 2. I am The Collector and welcome to my first non-Bitching editorial. 

The History 

When I first entered video games, like most people, it was through my parents. Therefore I didn't have to deal with that ugly thing we all love (and a good deal of us also hate); money. However, by the time the 8-BIT NES had reached full swing, I was starting to buy games with my allowance. These games would usually have to be the latest and greatest, but sometimes they would be the ones I had missed when they first arrived (I missed out on the original Zelda until about 1989...that was a shame). I would be spending between $20 and $65 of my hard saved Christmas and Birthday money on games from old to new. Some games were even higher up there; The above mentioned Romance of the Three Kingdoms (number 3 to be precise) cost around $75-$80 at my local video game/toy stores. 

With time, prices started to drop a little and the average new game for the SNES or Genesis would be about $55-$60. This was a relief, but also this was a time when video games were starting to pick up again (the industry almost died in the mid to late 1980's due mainly to poor decisions from Atari with help from Nintendo). So, despite the raising inflation, prices were going down. However, every so-often a game would defy all logic; such as Phantasy Star 4. It came out with a $100 price tag. I wanted to game and so did many others, but Sega assumed our want for the final Phantasy Star would outweigh our common sense and wallets. Sega was wrong and the game sold pretty well after stores had to drop the price to about $45 to get them off the shelves (this is when I got it...only a few months after it came out...bad Sega...BAD!). 

Meanwhile, at this time, there was also the birth of the NeoGeo. A system that cost hundred upon hundreds of dollars, was sold in only a handful of stores (no one wanted to try to sell this economic behemoth) and had games priced around $250, each. Well, the NeoGeo was easily ignored and lost in the history of poorly conceived game ideas (good idea, bad idea of price). 

Soon, people were introduced into the first real CD-ROM based platforms. These being the failed Saturn and the (as of right now) all time king of video games, the Playstation. Many people in the media voiced complete surprise at the games coming out for prices of $50 for a third party game and $40 for first party games. Once again, inflation is still rising over the years but game prices dropped. 

It was this trend that carried on to the present day. With our Playstation 2, Gamecube, and even the much loathed (at least by me) X-Box. We see new games come out for $40 for first party and $50 for third party, with even some surprises of lower prices (I saw Wild ARMs 3 for only $35 when it first hit shelves). We also are seeing some new games for the Playstation coming out at $10-$20 (the Italian Job for PSX was only $10 at release, and while being a pretty lame game, it was worth this price). 

True, we get some trend breakers; We've all heard of Steel Battalion with it's several hundred dollar price tag, or SOCOM coming out at $60. But these have exaggerated prices for a simple reason; you get more than the game. With SOCOM you get you nifty headset, and with Steel Battalion you got a controller that could crush a small child, or several large squirrels. However, we must remember when you get something extra, you pay something extra; and so far gamers seem to realize that with no problem. 

So, how does this fit into being an editorial? How does it tie into that article? Sit down, hold on, and enjoy the ride. 

Why, Oh Why?!?! 

There are many elements that go into the pricing of a game. It is not simply a matter of inflation alone. Inflation is an important part of our modern capitalistic society, but it is not the only part of the economy. There are other economic factors such as supply and demand, size of market, and even cost of manufacturing. Then there are other economic factors that I prefer to think of more as audience factors (all of these in the end weigh in as economics, but as a non-business type of person, I like to think the more tangible and understandable realm called society). 

Who's Invited to the Party 

Back in the days of the 8-BIT systems and even a little prior to that era (usually that era is defined by the NES and Sega Master System), the amount of people who played video games was rather small. It used to be a social taboo to be a video game player unless you were a tiny little child. While this is still a little of the case today, more mature of content in games (and I don't just mean sexual situations or violence; think plot, like in Metal Gear Solid, to name one game of many) has changed this some. Not to mention the fact that the video game world in the 1980's was suffering from poor decisions a-plenty. There was Atari with it's flops like the 7200, that never saw the market until after it was done, or the lawsuit happy days of Nintendo. I mean what self-respecting company would want to get involved in that mess? Not many. That is why games suffered and as a result, with little demand, prices had to get jacked up. 

To put it simply, if a game costs X dollars to develop and produce, and each cartridge costs Y dollars to make, you have to sell Z games at a given price to make money. With little market, that price had to be rather high to turn a profit. Simple and to the point. 

With time, more companies joined the game world, and thus more quality games were released. This meant more people were drawn into video games and prices could be lowered per unit and a profit could still be had. If you look at the world of gamers now compared to back then, you'll see more people of more backgrounds are playing now, not just the true geeks. This meant more games sold and thus a price would not have to be as high. 

But Wait, There's More! 

With more people playing games, and more games available, you have to entice people to play your game and not the other guy's game. Enter the price wars.

What better way to bring about customers than through competitive prices. But you must keep in mind that price wars are a two way street. Not only does it make the customer want a game (if there were two games you really wanted, and could only get one at a time, would you go for the more expensive? Really?) but it also causes the further competition in platform manufacturers. If all of the PS2 games were cut in price, Microsoft and Nintendo would have to follow or face fewer customers. Either way, this is the true motivating factor in prices. If someone jacks up a price, you will be pissed and the competition could take advantage of it. You think if Gamecube games went up in price that Sony and Microsoft would not exploit it? Please say you didn't say yes. 

So What's Inside 

Another factor that I was quite pissed to see the article completely and totally ignored is what makes a game. Not plot and graphics, but physically what makes a game. In the old days of more expensive games, we were all using cartridges. A cartridge would consist of a plastic custom made case (all SNES games may look the same on the outside, but who else could use this case...Sega? I think not) with a board inside that consisted of many chips and possibly a battery. Each of these chips were custom made chips designed for that game or for a small group of games. That's how breakthroughs were made in the past. You made a better chip and if cost more money; remember games bragging about how they were an amazing 4 megs in the days of 2 meg games; these advances were made by making better chips. 

So, now we have CDs and DVDs. These are not custom made. If Sony needs a DVD for a video game, it is no different than a DVD they would use for production of movies. Plus a CD/DVD costs only a handful of change to make. That's why a 2, 3, or more CD/DVD game can cost the same as a 1 CD/DVD game. Low production cost. Ever see a multiple cartridge game? I doubt you have, but if you did, I'm sure the price was pretty damned ugly. 

To put some actual facts to this, while a game no on tends to cost more to develop (Enter the Matrix cost $20 million to produce...damn...), the actual DVD costs only a few cents. In the past, a game on a cartridge could cost up to $35 just to make per unit. That means the retailer would end up having to sell them for about $50 to make any money at all after store advertisements and the such. Also, on this same sort of note, Nintendo used to charge outrageous fees to get a game licensed by them (remember the official Nintendo seal on all your non-Tengen NES games?). Now the fees have been cut in half or more by most console developers. Less price goes into the media and less goes into the licensed logo on the box. 'Nuff said. 

You Mean I Bought THIS!?!? 

Another key factor in pricing is while there are some truly great games out there, there are also some crap-tacular failures. If prices were higher, people would never take the risk of buying a game that they would throw away or beat in a matter of hours after opening it for the first time. Also, more of these games would be returned if we were all paying twice as much per game. With current prices, most people don't bother returning games for a refund, since the price is not that big of a deal. If anything, most people will hold onto the game for a few months and then sell it to a used game store to get the next flop. 

But Wait, There's No More! 

Also, ask yourself this question; would you want to pay more for the same thing? I mean some games can raise prices in this current generation of consoles, but why? Simply put, they offer you something more than just a game. That Pokemon Stadium game had a link thing to connect your GB to the N64, Steel Battalion has the coolest and most expensive controller to ever grace a console, and even SOCOM has a nifty headset. They charge more because they offer more. If you look at games in the past that charged more and offered nothing new, one of two things occurred. Either the game would not sell until the price dropped a lot (like with Phantasy Star 4...good game, but not $100 good), or the game would sell as expected...huh? It was not expected to sell well to begin with, so the price was higher to make money from the people who would buy it at any price (like early Romance of the Three Kingdoms games...who bought them? Only the die hard fans, and the price didn't matter to them). Will the makers of Doom 3 do this for the X-Box release...NO! They have a blockbuster on their hands and know that with a normal price, more people will buy it and thus more total revenue. Do the math. 

Money Can't Buy Happiness 

Alright, here's the heart of the price issue in today's society. Money. It's always the heart of the issue, but now more than ever. The entertainment industry sagging, with the exception of video games. A price increase would possibly ruin this for everyone involved. If people no longer feel compelled to buy games, let's say because of price increases, the industry would slump and this is something the industry will not want to cause. 

More importantly, the unemployment rate is the worst in 8 years right now. This means people don't have the money for games as it is. If the prices increase, many people will stop buying all together so they can afford food and shelter. I, for one, am working a job that pays me less than I should be getting simply because companies cannot afford to pay good wages right now. Once again, the economy is not good enough to risk raising prices and losing customers. 

So, Here We Are... 

So, while that article on tries hard to make a point, I can tell you two things; one, any real points made by it are self-defeated in the following paragraph; two, this reporter is not a game player. I personally like to think that reporting should be done by fans with the restraint to be at least a little impartial. Would you want someone who never heard the word "baseball" to report on the World Series? It would be funny for a few minutes, but then we'd all be pissed off beyond words. If this reporter knew anything about video games, he'd know the information I stated above, and if he knew about economics to any degree he'd realize a price jump would lead to the competition exploiting it and laughing all the way to the bank. 

Games are cheap now, and will remain so. The product is cheaper to make now than in the past (DVDs are cheap and always available), price wars involve lowering prices and not raising them (or the competition will have the best advertising scheme ever..."we are cheap, and they are expensive"), more people play games now so there is more total money out there to be had, and we are still getting the same product we always got (it might have better graphics, but it is still just a game by itself). Prices may one day increase, but it wont be an issue of a ten dollar jump. That is too noticeable. It will start out small and barely match the inflation rate, at best (or worst). Anything else would ruin all attempts to win over a potential audience.

Some of you may not have agreed with what I said, and that's why it's an editorial. As for the solid facts, there's no arguing, and there's also no arguing with history either. If you disagree, you're free to your own opinions, but you are wrong. If you agree...good. The $50 game is here to stay.