26th June 2003, 1:15 PM
Quote:According to Michael Pachter, analyst at Wedbush Morgan Securities, you could be paying an extra 10 dollars for top titles by the end of this year. An MSNBC report tells why it may be possible, even though most analysts agree that most game makers want to keep software prices where they are. In a case against the increase in game prices, studies of the 'life cycle' model of previous consoles and the current next-generation consoles show that new games stick at a higher price, but old games and relatively unknown games get slashed prices. GameCube, PS2, and Xbox are entering the second half of their life cycle, the period where price points in hardware and software trend downward. But what isn't happening is development costs declining as developers reach the technical limits of the platform. “Research and development costs continue to go up,” said Richard Ow, a game analyst for the NPD Group. A typical Playstation game in 1996 cost less than $1 million to make and sold for $49. Today the console games run around $5-7 million per title and sell for $49.99.
Development costs have risen because the 128-bit generation requires at least 40 times as many lines of codes to exploit the system capabilities as the previous console generation. “To keep pushing the limits, that not only takes more people, but better people,” Perry said. “Great development staff are therefore becoming more and more valuable, and as our industry moves to Playstation 3, Xbox 2, etc., then they will be at a new premium,” he said. Game creators are also adding costly exclusives video footage for Enter The Matrix to grab peoples attentions, and licensed material. Then there's marketing to handle. "With so many costs built into production," said Halpin of the game retailing group, "a triple-A game price change in favor of higher prices and higher margin or lower prices and higher sales would not be easy. Right now it’s too much a part of philosophy in way of conducting business. Especially for public companies. They would need to re-scale their economics.”
The other problem is there isn't much complaining of the game prices. “There just doesn’t seem to be negative reaction to game prices,” said Ow. “Even if one publisher took the chance to lower the price of a triple-A game, it could bias the consumer that it’s a lesser game." "Game publishers don’t understand consumers, they understand video games,” he added. “Prices never go down. People don’t have a problem with prices going up, the publishers do.” Over the next year, about 750 new titles will hit the market. "If past sales figures offer any clues," said Pachter, "the top 50 to 60 games will rake in 50 percent of the total sales. Once you see those numbers, it’s easy to see that half could command a $60 price point. The thing that may counteract all of this is the fact that game sales have risen tremendously. $10 billion was spent by Americans on hardware and software. The conclusion they come to is if one publisher sells a very popular title for $60 and thus makes a killing on sales, publishers with similar titles may follow.
Quote:People don’t have a problem with prices going up
No, I think most people DO have a problem with prices going up.
N-Philes
Sometimes you get the scorpion.
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