After yesterday’s PlayStation announcements we learned that many of the launch titles will be making the $10 jump from $59.99 to $69.99. The confirmed games with the new price are Call of Duty Black Ops: Cold War, Destruction Allstars, and the Demon Souls Remake. Spider-Man: Miles Morales will come in a $49.99 for the base game and $69.99 with a remastered Spider-Man included. We’ve discussed this before on the podcast and will fully break down our thoughts this week but let’s first get some key points out.
The $59.99 price point has been around for 15 years with it becoming the norm on the Xbox 360 and PS3. With inflation alone, $60 in 2005 would be $81 today according to smartasset.com. Inflation doesn’t mean everything due to many variables but it is important to remember going forward.
Now let’s look at the cost of making the game, we’ll use Halo as our benchmark. Halo 3 was released on September 25, 2007, and cost $30 million to make. At the time that was seen as a massive price tag. In today’s money, that’s about $38 million. Now, let’s compare game development costs to today. WE have Halo 5, released October 27, 2015, that cost over $100 million to make. And most impressive is the rumored budget for Halo Infinite of $500 million according to the German news site Xbox Dynasty. Sales have not matched the cost increase either. Halo 3 is the most successful Halo with 14.5 million copies sold. Halo 2 had 8 million in 2004 and Halo 4 had 9.75 million in 2012. Halo 5 had weak sales with only 5 million copies sold. This all means that games are more expensive to make, but don’t necessarily sell more copies to make up the difference.
Companies have been creative with making up the difference. The term “microtransactions” is gaming profanity and could turn consumers away from an upcoming game. While I am not a big fan of extra costs, I do see their necessity. Games cost more to make and the companies can make up the difference with customizations after the release. The positive version of this is something like Sea of Thieves. Their cosmetics are well made and affordable. Along with the random $5 pet comes more free cosmetics and content to play at no additional cost. I gladly buy a pet hear and there to help support the company and show off my new pup. Unfortunately, there are many companies that are taking advantage of this business model and create negative opinions. EA is the prime example of these abuses and their FIFA franchise is the worst of the worst. Players can buy packs that grant them new FIFA players to add to their team. The packs have random players from all over the league. What this means is with extra money put into the game you are actually becoming better than your competition. This is commonly referred to as Pay-to-Win and takes all the fun out of a game that a player has already spent $60 to play. Imagine playing some multiplayer and the person you are matched with has an all-star team that they bought for an additional cost but with no additional efforts. The other problem with the “loot box system” used by EA’s FIFA and many more is it’s similarity to gambling. You could open a pack and receive an outstanding new player or end up with useless items. Worst is you don’t know what the odds are before purchase. Some nations have already gone after these games like Belgium and the Netherlands. An increase in the price of games can lead to a more stable income for the companies. They would be less dependant on DLC’s and microtransactions.
The last thing to keep in mind is the business model for the console creators. These machines are very powerful with some of the latest in computing tech. I know PC gamers argue that they have these capabilities with their computer for years before the release of the consoles but the price of the consoles brings cutting edge gaming to the masses with decent prices. $500 for PS5 or Xbox Series X is more likely in the average players’ budget than building a PC gaming rig for a few thousand. The tech is still there and still cost a lot, but its the console makers that are paying the difference. To build the Xbox Series X it cost Microsoft from $460 to $520 according to Forbes. That’s before the logistics of distribution, advertising, development, and the following support. That means the Xbox is selling at a loss. The profits come in on the games, but as we have shown those are also struggling to make a profit. If we don’t make games profitable on their own then the console makers will be forced to make their money back on the consoles themselves. An example of this was Sony’s PlayStation 3 release. The PS1 and PS2 sold for $299. The PS3 was a massive jump in technology and promised a 10-year lifespan, making the price a lofty $499-$599. The Xbox 360 countered with a $399 price tag. The systems launched a year apart but the PS3 lagged behind with an 8 million unit deficit. PS3 eventually caught up as the prices were adjusted. The PS4 launched at $399. When a company tries to make profits on the consoles they face a lackluster performance in the very competitive launch window.
No one wants to pay more for video games but if we want the industry we love to thrive, we need a sustainable business model. The $10 increase is the correct move but we need to keep the pressure on companies. With this increase, we should see a softening in after purchase costs. This will be difficult for some companies but we have seen hope from games like Star Wars Jedi: Fallen Order and Gotham Knights who celebrate the fact that they do not have microtransactions. As consumers, we need to voice our opinions with our purchases.