http://www.forbes.com/sites/insertc...point/?utm_campaign=yahootix&partner=yahootix
2/27/2015 @ 11:06AM 10,155 views
Evolve, The Order, And The 'Impossible' $40 Price Point
Two games came out this month that couldn’t be more different from one another. One is Evolve, the 4v1 multiplayer shooter than has players hunting down a giant alien monster while the game barely even hints at a narrative. The Order is a cover shooter/quick-time-fest that is almost nothing butnarrative, with no multiplayer mode in sight.
And yet, the two share something in common. Many consumers are loudly decrying that neither are worth their $60 cost.
Evolve follows in the footsteps of Titanfall, another $60 multiplayer-only game that was also deemed too substance-less for fans at launch. But in Evolve’s case, the game launched with a model that seemed perfect for free-to-play, as the game is selling new monsters, hunters and skins as paid DLC, and yet that initial $60 price point remains.
The Order is a different story, a production-rich, gameplay-light experience that’s more or less inching your way through a 5-7 hour movie, depending how often you stop to gaze at pretty scenery. While campaigns in other games can be around this short, titles like Halo and Call of Duty are bolstered by their multiplayer, of which The Order has none. As such, many fans are bemoaning the fact that they’re being asked to spend $60 for what very well may be a six hour game.
All of this has raised the question, is there another way? Is it possible to produce a “discount” AAA game when it seems fairly obvious to consumers that it contains dramatically less content than other titles? In this instance, I conducted an informal poll to ask a few friends what they thought Evolve and The Order would be “worth” new at launch, given that we now know exactly what each game contains. Other than a few fellow cheerleaders who agree with me that Evolve could have done well as a F2P game, the average response was about $30 to $40 for both. I’m going to go with the high end, $40, just so we’re a little bit closer to what might be a plausible reality.
Right now, there are really only a few price categories in mainstream gaming for brand new titles. There’s free-to-play, which includes giants like League of Legends, DOTA and Hearthstone. There’s about $10-25, which includes a very large chunk of indie games. And then there’s $60, which as we all know, is the standard issue price for nearly every major release.
$40 is a weird quasi-category that doesn’t really exist at present. When trying to think of a game being sold for $40 brand new, I can really only come up with something like Diablo 3′s Reaper of Souls expansion, which at the time, attracted its own controversy for adding around 20-25% more content to the game for 66% of the price of the original. In that case, Reaper of Souls was less of a new game, and really just “super DLC.” (Update: I’ve been rightly reminded that Nintendo prices some games at $40 like Captain Toad, and most 3DS games are at that price, so perhaps this is the most appropriate current comparison).
But what I’m talking about here is the possibility of getting the price of certain high-profile games down to $40 new as a marketing strategy. While prices are inflexible across say, different movies at the theater, they are flexible for…almost every other consumer product on the market. But gaming has been stuck at this $60 price point for so long, it almost seems impossible to break through it. Developers and publishers always talk about how they’d love for more pricing flexibility in the market, yet when it comes time to slap a tag on their game, you can bet it’s still going to read $59.99.
Is there any way around this? To start, I think it’s helpful to look at a breakdown of all the different pie pieces that go into a $60 game. The most commonly circulated illustration of this is from a few years ago in an LA Times piece. I’m a bit skeptical of the source, OnLive, which was at the time trying to dismantle the traditional console industry with game streaming, but I have not found a wildly different example of a breakdown, and no one seems to have taken much issue with this one.
From the chart, we can see that the biggest chunk does indeed go to the publisher, $27. A bit goes to the platform for royalty, and the rest is a cut to the store it’s sold from, some portion accounting for returns, and distribution.
So right away, the problem is clear. If a $60 game is suddenly cut to $40, either the publisher has to work out a much better deal with the platform and the retail stores, or suddenly their cut drops from $27 to $7, which would be a disaster. That’s not profit for the developer, that’s recouping the actual costs of making the game, plus whatever it takes to market it. Profit is squeezed out of the stone thereafter.
But is it possible to get around this? Perhaps, but many consumers may not like the answer.
For a purely digital copy of the game, you get to lose a few pieces of the pie. There’s no physical retailer, so that huge chunk is gone. There are far less returns, if any, on digital games, and some marketplaces don’t allow them at all. And physical distribution is nonexistent. Even if you account for some of these slivers still existing if Xbox Live charges an additional fee over the regular platform fee, or accounting for servers that have to make the downloads work, it still would likely cut a lot off the top, while publishers keep their existing cut, and add to it.
This has been one of the common complains about digital games for the start. Where’s the advantage for the consumer, other than simply saving a trip to the store? If distribution costs are getting that much cheaper, why is none of that savings passed onto the player with digital copies priced exactly the same as their retail counterparts? With these metrics, digital could be the way forward for $40 games in special cases. This isn’t saying the entire industry needs some dramatic, sudden shift to cut $20 off all games, but there does seem like some way to make this happen at least on occasion.
Still, there are other factors working against the eternal hope of new, cheaper, big budget games. The big budgets. AAA games cost so much to make these days, developers and publishers are constantly looking for ways to squeeze even more money out of players in the form of subscriptions, microtransactions and DLC season passes, and their deployment is now reaching a fever pitch in the industry.
While it’s true that pretty much all major games have agreed to this universal $60 price point for new games, $60 has been the mark for a good long while now. Even just jogging back to 2005 when the Xbox 360 launched and sold games for $60, that’s now a decade ago. Games are still $60, which means inflation is coming into play. Other industries adjust to this, while video games do not. Our good friend the movie ticket may be inflexible across all movies at a given time as we mentioned, but it changes with the times. In 2005, the average price of a movie ticket in the US was $6.41. Today, it’s climbed to $8.17. Not a massive spike, but an increase nonetheless, and it accounts for inflation, at least to some extent. In contrast, that $60 Xbox 360 game sold in 2005 would cost the equivalent of $71.80 today if inflation was taken into account.
So at least part of the reason we have all this song and dance about DLC and microtransactions is because if anything, the industry is trying to avoid doing something as riotous as raising the price of games to $70. That’s why talking seriously about a $40 price point for a new game is going to be a tough sell around the offices of these publishers.
And without knowing exact budgets and costs for these games, there’s really no way to know if it would even be remotely possible. We see Evolve and The Order as having “less” content than other games sold for the same price, and I’m willing to bet both were still extremely expensive to make, and they don’t have margins that are much more cushy than their competitors.
Of course, none of this is the consumer’s problem, if developers can’t keep costs down and publishers refuse to scale back over-saturated marketing. But given this recent trend of gamers getting less game for the same price, it’s something that should at least be discussed, even if there are very clear obstacles standing in the way of execution.
2/27/2015 @ 11:06AM 10,155 views
Evolve, The Order, And The 'Impossible' $40 Price Point
Two games came out this month that couldn’t be more different from one another. One is Evolve, the 4v1 multiplayer shooter than has players hunting down a giant alien monster while the game barely even hints at a narrative. The Order is a cover shooter/quick-time-fest that is almost nothing butnarrative, with no multiplayer mode in sight.
And yet, the two share something in common. Many consumers are loudly decrying that neither are worth their $60 cost.
Evolve follows in the footsteps of Titanfall, another $60 multiplayer-only game that was also deemed too substance-less for fans at launch. But in Evolve’s case, the game launched with a model that seemed perfect for free-to-play, as the game is selling new monsters, hunters and skins as paid DLC, and yet that initial $60 price point remains.
The Order is a different story, a production-rich, gameplay-light experience that’s more or less inching your way through a 5-7 hour movie, depending how often you stop to gaze at pretty scenery. While campaigns in other games can be around this short, titles like Halo and Call of Duty are bolstered by their multiplayer, of which The Order has none. As such, many fans are bemoaning the fact that they’re being asked to spend $60 for what very well may be a six hour game.
All of this has raised the question, is there another way? Is it possible to produce a “discount” AAA game when it seems fairly obvious to consumers that it contains dramatically less content than other titles? In this instance, I conducted an informal poll to ask a few friends what they thought Evolve and The Order would be “worth” new at launch, given that we now know exactly what each game contains. Other than a few fellow cheerleaders who agree with me that Evolve could have done well as a F2P game, the average response was about $30 to $40 for both. I’m going to go with the high end, $40, just so we’re a little bit closer to what might be a plausible reality.
Right now, there are really only a few price categories in mainstream gaming for brand new titles. There’s free-to-play, which includes giants like League of Legends, DOTA and Hearthstone. There’s about $10-25, which includes a very large chunk of indie games. And then there’s $60, which as we all know, is the standard issue price for nearly every major release.
$40 is a weird quasi-category that doesn’t really exist at present. When trying to think of a game being sold for $40 brand new, I can really only come up with something like Diablo 3′s Reaper of Souls expansion, which at the time, attracted its own controversy for adding around 20-25% more content to the game for 66% of the price of the original. In that case, Reaper of Souls was less of a new game, and really just “super DLC.” (Update: I’ve been rightly reminded that Nintendo prices some games at $40 like Captain Toad, and most 3DS games are at that price, so perhaps this is the most appropriate current comparison).
But what I’m talking about here is the possibility of getting the price of certain high-profile games down to $40 new as a marketing strategy. While prices are inflexible across say, different movies at the theater, they are flexible for…almost every other consumer product on the market. But gaming has been stuck at this $60 price point for so long, it almost seems impossible to break through it. Developers and publishers always talk about how they’d love for more pricing flexibility in the market, yet when it comes time to slap a tag on their game, you can bet it’s still going to read $59.99.
Is there any way around this? To start, I think it’s helpful to look at a breakdown of all the different pie pieces that go into a $60 game. The most commonly circulated illustration of this is from a few years ago in an LA Times piece. I’m a bit skeptical of the source, OnLive, which was at the time trying to dismantle the traditional console industry with game streaming, but I have not found a wildly different example of a breakdown, and no one seems to have taken much issue with this one.
From the chart, we can see that the biggest chunk does indeed go to the publisher, $27. A bit goes to the platform for royalty, and the rest is a cut to the store it’s sold from, some portion accounting for returns, and distribution.
So right away, the problem is clear. If a $60 game is suddenly cut to $40, either the publisher has to work out a much better deal with the platform and the retail stores, or suddenly their cut drops from $27 to $7, which would be a disaster. That’s not profit for the developer, that’s recouping the actual costs of making the game, plus whatever it takes to market it. Profit is squeezed out of the stone thereafter.
But is it possible to get around this? Perhaps, but many consumers may not like the answer.
For a purely digital copy of the game, you get to lose a few pieces of the pie. There’s no physical retailer, so that huge chunk is gone. There are far less returns, if any, on digital games, and some marketplaces don’t allow them at all. And physical distribution is nonexistent. Even if you account for some of these slivers still existing if Xbox Live charges an additional fee over the regular platform fee, or accounting for servers that have to make the downloads work, it still would likely cut a lot off the top, while publishers keep their existing cut, and add to it.
This has been one of the common complains about digital games for the start. Where’s the advantage for the consumer, other than simply saving a trip to the store? If distribution costs are getting that much cheaper, why is none of that savings passed onto the player with digital copies priced exactly the same as their retail counterparts? With these metrics, digital could be the way forward for $40 games in special cases. This isn’t saying the entire industry needs some dramatic, sudden shift to cut $20 off all games, but there does seem like some way to make this happen at least on occasion.
Still, there are other factors working against the eternal hope of new, cheaper, big budget games. The big budgets. AAA games cost so much to make these days, developers and publishers are constantly looking for ways to squeeze even more money out of players in the form of subscriptions, microtransactions and DLC season passes, and their deployment is now reaching a fever pitch in the industry.
While it’s true that pretty much all major games have agreed to this universal $60 price point for new games, $60 has been the mark for a good long while now. Even just jogging back to 2005 when the Xbox 360 launched and sold games for $60, that’s now a decade ago. Games are still $60, which means inflation is coming into play. Other industries adjust to this, while video games do not. Our good friend the movie ticket may be inflexible across all movies at a given time as we mentioned, but it changes with the times. In 2005, the average price of a movie ticket in the US was $6.41. Today, it’s climbed to $8.17. Not a massive spike, but an increase nonetheless, and it accounts for inflation, at least to some extent. In contrast, that $60 Xbox 360 game sold in 2005 would cost the equivalent of $71.80 today if inflation was taken into account.
So at least part of the reason we have all this song and dance about DLC and microtransactions is because if anything, the industry is trying to avoid doing something as riotous as raising the price of games to $70. That’s why talking seriously about a $40 price point for a new game is going to be a tough sell around the offices of these publishers.
And without knowing exact budgets and costs for these games, there’s really no way to know if it would even be remotely possible. We see Evolve and The Order as having “less” content than other games sold for the same price, and I’m willing to bet both were still extremely expensive to make, and they don’t have margins that are much more cushy than their competitors.
Of course, none of this is the consumer’s problem, if developers can’t keep costs down and publishers refuse to scale back over-saturated marketing. But given this recent trend of gamers getting less game for the same price, it’s something that should at least be discussed, even if there are very clear obstacles standing in the way of execution.
