Video games could rise in price for the first time in 15 years

Video games which cost 60 dollars can date back at least to the 1990s. In the later three decades, although the value of the dollar devalued for half price due to inflation, few games have been sold for more than “Super Nintendo”.

In this week video game publishers will push the industry standard price up to 70 dollars. This move comes at the right time when Microsoft and SONY Games are switching consoles -- they usually launch a new generation Games every seven years. But the current situation is complicated: an economic crisis has doubled unemployment rates in the United States since COVID-19 outbreak.

Inside the publishers, senior managers have been planning and analysing price increases for years. There are mainly two reasons why they increased the price: the first is inflation, and the second is the cost of developing a 3A game has soared. Before SONY finalized the price up to 70 dollars, they had been discussing about raising the price up to a higher level. Many game senior managers accepted the report interviews anonymously, apparently because they realized the move was not popular. In the most cases, these companies would not admit the raising prices, only saying that the price varies from game to game.

---

But when people are browsing digital stores, they would find out the case that the price rising is inevitable: the new “Call of Duty”, “Devil’s Spirit,” “Meteorite” and “NBA 2021” are all 70 dollars.

In the 1990s, Nintendo took advantage of the popularity of its game consoles by pricing certain cassettes at 60 dollars. It was not until SONY launched the PlayStation in 1994 and put the games to lower-cost CDS then the prices fell. The world entered the age of 50 dollars’ game, and the Microsoft Xbox, which was launched in 2001, continued the same price. But the price of next generation of consoles went back to 60 dollars, during a three-year economic boom in the mid-2000s and has continued until now.

Inflation

Dan Armstrong, 34 this year, has been playing video games since he was 12. “When left my parents and make my own money, the standard price was 50 dollars, then it went to 60 dollars, and now I hear it would be going up to 70 dollars”, he said. “it is ridiculous.”

Armstrong served in the US Navy for eight years before he got honoured discharge one year ago, expecting for a work in the IT industry. He attended college in Norfolk of Virginia, where he took a job as a career consultant, working 15 to 20 hours a week. After the epidemic outbreak, his working hours were cut in half. He said the economic situation formed a threat to Americans’ livelihoods, and he had to choose groceries and car loans or his hobby.

“We don’t know how long it will last. I’d rather keep my money in a safe place than giving it to Activision,” he said, “I know they need to hire more programmers and graphic designers, but it still seems greedy.”

Because the gamers are reluctant to pay more, this has forced game companies to experiment with new business models to cater to their most obsessive players. They have released premium versions of various games for $70, $80 or more. They also offer limited edition game props or costumes. Many publishers also sell additional weapons, equipment, or levels for paying players to download. ‘Loot Box’ is a more developed product that requires players to pay for virtual goods, such as baseball cards.

None of these models will go away with the new console. But Microsoft is heavily promoting an alternative model that pays a flat fee per game. Xbox Game Pass utilized a Netflix-like subscription model: you can run more than 100 games for 10 dollars a month. SONY’s subscription service offers a slightly smaller range of games than Microsoft’s.

With NBA2021, Take-two Interactive Software became one of the first publishers to charge 70 dollars for games this summer, but quickly encountered opposition. In an interview, Take-Two’S CEO, Strauss Zelnick, defended the move, citing the high cost of development. “We have no pricing strategy,” he says. We charge far less than the value we provide. If there is, that's our pricing strategy.”

EA is offering users of its two biggest sports games a free upgrade to make them compatible with the new console. For next year's game, the company will set the price in six to nine months. “We are developing important sports games,” says Blake Jorgensen, the company’s chief financial and operating officer. The cost of making games really keeps going up.”

According to people who know the facts, SONY senior managers have been considering raising prices for some time. The company spokesman said, SONY releases games priced as low as 50 dollars, and ‘the biggest titles’ cost is as little as 70 dollars. She said, “the increasing price reflects the increasing resources needed to develop these titles.”

Yoshio Osaki, head of IDG Consulting, said game companies believe prices have not risen as much as other media such as movie tickets, Netflix or cable TV. He said, since 2005, the cost of game development has increased three or four times.

---

He wrote in the email, ”not all publishers are going to come out with the next generation of games for 70 dollars.” But we do expect that more and more games will come out at 70 dollars, but not all at once, and not every publisher or game will raise prices uniformly.”

Japan’s Capcom, publisher of Resident Evil and Street Fighter, will not release software for the new system until next year. But Like other companies, Capcom says it is setting prices on a game-by-game basis. “We believe that the price of the game software should be determined by how much consumers are willing to pay for the quality of the game, not how much we spend to make the game.” Said CFO Kenkichi Nomura.

David Cole, an analyst at DFC Intelligence, said games released by Microsoft or SONY were more likely to use a low-price strategy to drive hardware sales. They have already taken this approach with “Halo: Infinity” and “Spider-Man: Miles Morales”. It is the most anticipated game of the two systems and costs 60 dollars per set. Coke said, with the time moving forward, as more games compete for players’ wallets, prices may come down. But 70 dollars games are still there, and “consumers are definitely going to pay the bill in the short term.”