There is something to be said for human greed. It is a wonderful driving force that has brought much good into the world, just as it has brought much ill into it as well. Controversially many in the video game industry have opted to raise the price of brand-new games from the standard $60 to $70. Naturally, consumers have bucked at the notion, but the industry conceitedly says such descent doesn’t matter; you’ll buy the games anyway.
NPD’s Mat Piscatella argued as much during his appearance on Virtual Economy Podcast. Where he proclaimed, “But what doesn’t fall flat is that for some of these premium games, if the $10 increase was implemented, people would happily pay it. They might grumble about it, but they would certainly pay it. The price sensitivity, particularly on day-one, suggests that.”
According to Bloomberg news, this price hike is not the product of chance, but industry collusion that has been in the works for years. Yet if you want to believe the industry would collude on other matters, you’re a madman of the finest caliber.
Most companies were content merely raising the price to the aforementioned $70 with the noted exception of Sony, who wanted to increase it even further. A position they held in private while assuring consumers they were taking a “wait and see” approach to the issue.
Bloomberg News rightfully highlights a critical flaw in the industry’s reasoning on the matter. People can’t “happily spend” what they don’t have. With the pandemic sending many into unemployment and financially crippling many more who will barely survive, the idea of spending $70 on a game is untenable.
Why does the industry need this price hike? Why to offset inflation, increasing development costs, and or offsetting one claimed figure or another, of course. The problem with this argument is the simple reality that it is categorically false. Any look at various company finances reveals the readily apparent truth that the industry spends more on management or marketing than on development. Startling so if you isolate a single game’s development budget and contrast it towards the enormous cost per year of management and CEOS bonuses.
In EA, the CEO made in one year a total of $21,365,751, only $1.2 million of which was in actual salary. With that money, two triple A games could have been developed over three years, and that is just off what he alone was given in a single year.
Executives are not interested in offsetting anything other than the cost of their bonuses. Bonuses that investors are beginning to hold skeptically. That’s the reality of the industry. Games don’t have to be profitable on their own. Instead, they must earn back their cost, plus interest, and then support the rest of the company that often functions in a highly parasitic manner.