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MIG: Are Video Games Too Expensive?

MyInsideGamer writes:

"We look at video game budgets and profit margins to find out the answer to the age old question: "Are Video Games Too Expensive?

Many people wonder are games too expensive to buy. The average cost of a game is around $50 - a fairly high amount in these times. Many people wonder is this insanely overpriced for a disc with a days worth of enjoyment.

Let's look at the bigger picture, how much does a video game cost to develop? How many sales does a game make? How much of a profit does a game make? We'll look at multiple examples of video games to finally answer the question "Are Video Games Too Expensive?"

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vflhp2894d ago

Anyone agree that games are too expensive?

SupaPlaya2894d ago (Edited 2894d ago )

YES.

That's why I buy most games on sale, like SFIV for $20. This is also where blu-ray shine as a medium since it is more scratch resistant (still can be scratched though) than DVD, so there is less risk when buying used games or movies.

sorceror1712894d ago

...but the article pulls the estimates for additional sales at a lower price out of... well, nowhere I want to see.

The only way to convince the game industry is with *real* numbers. Like, for example, these:

http://www.techdirt.com/art...

Megaton2894d ago

I'd certainly buy a lot more at launch if they were $30 - $40 instead of $60, especially with all the money we dump into add-on content these days. About 1/2 of my PS3 games were bought months after launch, or during a sale, when the price dropped to $20 - $30.

BRG90002894d ago (Edited 2893d ago )

This article overlooks a lot. The $50 you pay for a game does not just go straight to the developer. Going off his GTAIV numbers from the article, in reality it is more like this (note that I am pulling numbers out of the air, the point is that I am including costs he left out):

Development: $100,000,000
Cost Of Game: $50
Number of Copies Sold: 13,000,000 copies

Retailer cut of each sale: $20
Royalty to console company (MS, Sony) per copy sold: $10
Shipping, advertising, and other costs: $5

ACTUAL Profit for Rockstar: ($15 x 13,000,000) - $100,000,000 = $95,000,000

Sure that is still a huge chunk of change, but realize that cutting the price per game by $10 would actually pretty much eliminate their profit (then increase it by extra sales).

Again, I have pulled these numbers out of the air but I think they are a lot closer to reality.

EDIT: Left out subtracting development costs in the final profit. Fixed.

IdleLeeSiuLung2893d ago (Edited 2893d ago )

Here is why:

a) The analysis is based on some of the most successful games. The reason it is expensive is because many games fail to make a profit. You should really take into consideration of other games like new IP since these don't have a franchise to ensure it's success.

b) The numbers given in the article assumes retail price goes directly to the publisher/developer. This is simply not true, as there are other obvious costs such as manufacturing, shipping and retailer profit.

c) Advertising costs that are done by the publisher (that often ranges in millions of dollars) aren't counted into this figure at all.

d) The article fails to recognize that the average selling price of a game is reduced over time. Almost every game is quickly reduced in price within 3 months if not sooner. So 5 million copies sold of Gears of War 2 isn't sold at $60/each and that reducing the price might not necessarily bring in a higher revenue (in this case profit) even though more games are sold. I'm sure the publisher knows how to price their products.

e) There is also ongoing costs of supporting the game, such as patches, extra free content and general support (i.e. detecting cheaters).

f) Licensing costs to the platform holders isn't included.

h) ... much more

However, the main reason is the chance of success relative to the risk of the large investment is lopsided. That is why it costs so much!!!

I'm all for cheaper games, but we have far too many kiddies making completely wrong analysis (or disregarding important facts) and posting them on blogs.

Viper72893d ago (Edited 2893d ago )

Well dunno, imo games in Uk and NA seem really cheap, even tough I am importing(delivery fees seem like a joke on some orders (dis including SE:s and CE:s)).

However that is only because of the ridiculous prices in my country and probably whole northern Europe. Scee and Microsoft seem to not bring their games here so they go trough some other importing firms that charge extra and then there are these taxes...

New games here 70€
New games in Uk/Us 20-40£? (25-50€)

So I dunno about games being expensive everywhere, but the prices differ far too much between some countries even when considering the higher taxes.

But then again I am not some crazy patriot so I don't really care as long as I can buy stuff internationaly with prices like these. (region free gaming ftw!)

AnttiApina2893d ago

Are you guys saying that 50 dollars is much? Heck we here in North Europe must pay for 70 euros for the games. THAT IS OVER 100 DOLLARS!
So STFU. I would gladly come to shopping in North America.

ReservoirDog3162893d ago

Yeah they are kinda expensive but, by and large, they're worth it.

IdleLeeSiuLung2893d ago

Yes, for you a resident of Europe it is cheap to shop in US. Likewise, for US residents it is fairly cheap to shop in Mexico. That still doesn't make it cheaper for US residents to buy stuff in the US relative to the average income and purchasing power.

Far too frequently do people forget that US wages are lower than European and hence the price is lower to accommodate for that.

+ Show (6) more repliesLast reply 2893d ago
Pandamobile2894d ago

Console games in Canada are too expensive. $70, compared to $45-50 for the PC version.

vflhp2894d ago

Ouch, that is very expensive! The profit margins these games make are outrageous!

death_spasm2894d ago

here in the UK new console games have hit £50

that's 100 dollars

resistance1002894d ago (Edited 2894d ago )

Yer but no where sells them for that much, most games are 39.99 top's and online you can pick them up for 33quid

I should also add that 15% of this money is then lost to tax and more to the retailer. So really the developers/publishers are probably only getting about 22quid from each sale

table2893d ago

£50 is probably more like 80 dollars these days and they usually retail at £39.99 which is like 65 dollars so there really isn't much difference. I personally think the pricing is fine as it is, I usually wait until games come down to around £20 anyway. I certainly don't think it should be anymore like a certain arrogant publisher is pushing for.

vflhp2894d ago

That is insanely overpriced IMO - get with the times Devs and publishers!