Topic: EDITORIALS: Price Break: The Future of Game Prices

[KDR_11k]

Quote
Originally posted by: Kairon

Quote
Originally posted by: KDR_11k
I don't think license fees and production costs are so high that you absolutely have to sell at 50-60$, this is not the cart era anymore. The price is solely determined by what the company thinks the market will bear.

Really? With Ubisoft's CEO saying PS2/X360 games need to sell 1.3 million copies (and at the raised $60 price) in order to make a profit?!?!? With Lost Planet reportedly costing Capcom $20 million to make, then ANOTHER $20 million to market? Seriously, a $40 million budget for a videogame?!?!?

The games industry wouldn't need these higher prices if they were making choices that didn't lead to bloated development budgets, if they didn't concentrate that are conceptualized in order to brag about tech specs, ... and they definitely wouldn't need such high prices if they developed on the Wii. &P

Kairon, development costs are paid once and subtracted from the total revenue. They are not per-copy. Whether your game cost 1$ or 100000000$ to make, the optimum price remains unaffected. The optimum price is the price at which (price per unit - cost per unit) * sales is maximal. Higher price does not necessarily mean more profit as sales decrease and at some point the loss from reduced sales is worse than the profit from the higher price. All of that is more or less independent of the cost you paid to develop the blueprint for the units (of course the resulting quality can result in more sales at higher prices but not necessarily). The only cost that affects the optimum price is the per-unit cost since you pay more of that as sales increase.

In other words, the next-gen games are more expensive because companies think the next-gennyness will make people willing to pay that much. If few people paid more than 30$ for a game then all games would cost 30$ and if people were willing to pay 100$ games would cost 100$.

[Kairon]

Ah, I see what you're saying now. *nods*