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TalkBack / The Return of the $60 Game?
« on: July 01, 2003, 07:47:24 AM »
This is a terrible idea for most companies. You could get away with this on Mario and Zelda games, but most of the others are going to just sit on the shelves until they get reduced. Come to think of it, that's what many of them do now.
The problem with raising the prices because your costs went up is that your marginal costs remain the same (trivial). What's the per unit cost for a GC game? I can't imagine it being more than a few dollars. 90% of the costs are in advance development costs... and once those are paid for, you make as much money as you can.
Since we have no real supply limitation once the game is already made (unless Sega Sports pulls it after the first day and it winds up $100 on eBay), what they face is a standard price/demand curve. A company will make as much (again, not counting the marginal costs) selling 100,000 copies at $25 as they will selling 50,000 at $50.
That's the problem with this article. Most of these companies are having a hard enough time stimulating demand at $50... it will only go down if they raise the price to $60. WWF Crush Hour is a perfect example. If they'd priced it at even $50, they would've been lucky to sell 10 copies. But down at $20, its worth the buy to a lot of people just to make fun of it.
Bringing the price of a good game up $60 might not be a big deal, but most of these game makers would see a lot more profit if they dropped it to $40.
The problem with raising the prices because your costs went up is that your marginal costs remain the same (trivial). What's the per unit cost for a GC game? I can't imagine it being more than a few dollars. 90% of the costs are in advance development costs... and once those are paid for, you make as much money as you can.
Since we have no real supply limitation once the game is already made (unless Sega Sports pulls it after the first day and it winds up $100 on eBay), what they face is a standard price/demand curve. A company will make as much (again, not counting the marginal costs) selling 100,000 copies at $25 as they will selling 50,000 at $50.
That's the problem with this article. Most of these companies are having a hard enough time stimulating demand at $50... it will only go down if they raise the price to $60. WWF Crush Hour is a perfect example. If they'd priced it at even $50, they would've been lucky to sell 10 copies. But down at $20, its worth the buy to a lot of people just to make fun of it.
Bringing the price of a good game up $60 might not be a big deal, but most of these game makers would see a lot more profit if they dropped it to $40.
