Last year, Ubisoft, Take-Two, Xbox and Sony announced price hikes for games from $60 to $70, with other AAA publishers such as Activision Blizzard, EA, Square Enix and Warner Bros. following suit without announcement. Why did this happen and will prices rise in 2023? IGN’s Rebecca Valentine gives an elaborate positive answer.
Last year’s price jump was actually a response to inflation and not a pure price increase. Turning to the analysis of the prices of games since the 1970s, carried out by the resource TechRaptor, we can conclude that earlier games were more expensive in absolute terms. For example, Nintendo’s original console at launch cost $179.99, and the average cost of a game for it was $45. Adjusted for inflation as of 2020, the device cost $432.71, and games for it averaged $108.18. The same applies to the products of other manufacturers. If the average price of games increased in line with inflation, they would now cost $90.
Over time, the cost of games also increases. The former head of Sony PlayStation Sean Leyden claims that the cost of production of the game for PS 4 was at least $100 million, and for PS5 production may well cost $200 million or more. One of the components of the price is the salary of the staff. So, about 450 people worked on Assassin’s Creed 2, which came out, more than 1000 people in 17 different studios. In 2017, creating an AAA game cost an average of $10,000 per person per month. Taking into account the further increase in wages and based on the exemplary number of employees, it is possible to calculate an exemplary cumulative cost for developers of $10 million per month.
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Why didn’t the price of games increase dramatically before? The answer to this question is clear if you consider the transformation of the game sales model. In the classic version, the buyer immediately paid the full price of the game, now it is blurred between the price of the game, add-ons to it, spending on microtransactions, paying for Xbox Game Pass or PlayStation Plus subscriptions and other alternative monetization methods. In fact, the price of the game for the user consists of the sum of all costs for it. The real price of games is much higher, and users with a large financial limit offset the costs of those who do not want to pay more. However, inflation takes its toll and even this approach no longer makes it possible to maintain the minimum price.
Market pricing also takes its toll. Practice has shown that, on average, users are willing to pay $70 or more for a game. After the increase in prices, there was no outflow of people willing to buy games – and therefore, their manufacturers only won and have no reason to abandon the chosen pricing strategy.
On the other hand, games are often offered at a discount within the first year of release. In Steam, you can almost always find significant sales of current games, Epic Games Store to attract customers in general often gives away games for free, although not all of them are new (it should be noted that relatively old titles in any store are a good alternative for those who wants to save on buying games).
Consoles are traditionally not very generous, but you can find significant discounts on them, and subscriptions also work. Nintendo is the most conservative of discounts – but games still cost $60 on this console.
Users’ frustration with rising game prices is understandable: wages generally tend to lag behind inflation, even in the US. In a number of countries, it significantly outpaces the increase in wages, and we can actually talk about its decrease. This factor is particularly sensitive when it comes to entertainment rather than essential goods. The general political and economic situation in the world in recent years does not contribute to the growth of incomes at all.
Further development of the situation: who else will raise prices?
We can say that the wave of sharp price increases in the game market has mostly passed. However, Microsoft is raising the price of in-house games for the Xbox X|S and is likely to raise the price of consoles, the latter can also be said for the Nintendo Switch. Nintendo still keeps the price of the games themselves (as do other Japanese companies: Bandai Namco, Sega, Capcom). With pre-orders for The Legend of Zelda: Tears of the Kingdom at $59.99, one can hope to keep the prices up for a while, but Nintendo and others may run out of patience in the future. According to rumors, Japanese companies are already discussing increasing the cost of their games in the Western market.
The network is also discussing a possible increase in the price of Xbox subscriptions and the possible appearance of more expensive tariff plans. Sony is unlikely to take such a step – recently the company has already updated the tariff plans of PlayStation.
A significant potential for game price growth is hidden in the indie market. Around 2012, AAA games and indie games cost about the same on Steam. But AAA prices have increased since then, while Indie prices have remained flat. Market analysis indicates that a price increase of $5 to $10, or from $10 to $20, will not hurt overall sales much – why not?
Summarizing, we can say that although price growth is expected, most of it has already happened in 2022. Alternatives for the most frugal users can still be numerous discounts, sales and subscriptions. By carefully following the promotions, you can save significantly and constantly, even if you don’t get the newest product on the day of release. There is also significant potential in relatively old games – the difference between a new game and one that has been around for a few years is not as dramatic now as it was in decades past. And every day there are new users who have not yet played these games.
Valve has significantly increased the recommended regional prices in Steam – in particular, in Ukraine.
