Collecting Coins: Is the Video Game Industry Too Expensive?

Are video games too expensive? As an enthusiastic consumer of the video game industry, I’m inclined to say, “Of course they are!” Let’s be honest, in a perfect world, video games would be much cheaper. While we’re dreaming, wouldn’t it be great if they were free? That’s the world I’d like to live in. But of course that’s not realistic. The question then becomes, how much are games worth?

The movie industry has been a powerful money making machine for decades, and it’s only been gathering more and more steam lately. For the price of a movie ticket, you’ve got about 2 hours in which you can experience another planet, a dramatic love story, or animated talking animals singing about friendship. Seems like a pretty solid deal, right? Well, the world seems to think so. Blockbuster films are making millions worldwide and it doesn’t seem to be in danger of slowing down anytime soon.

But what about video games? Depending on the game, video games can cost much much more than the average price of admission. The national average for a movie ticket is about $9. The full price of a game for any of the 3 most popular consoles (Playstation 4, Xbox One, or Nintendo Switch) is about $60. But buying just a game won’t get you anywhere, you need a console to play it on which can range anywhere from $250-$500 and up. So let’s take the cost of a console system, which one can generally find for $300 plus one game going for $60 to give us $360.

A $360 entry barrier is pretty steep. Definitely steeper than $9. But people still pour money into video games year after year. After all, the video game industry is a multi-billion dollar engine of entertainment in its own right. Why? Per hour of entertainment, movies give us about $4.5 worth of value. One movie, 2 hours, $9. In contrast to that, video games are oftentimes capable of giving dozens of hours of gameplay, sometimes over a hundred. In addition to campaigns that last 10-15 hours, lots of games have multiplayer aspects to their games that will provide entertainment for as long as you’d like to keep playing it.

Take the game Batman: Arkham Knight. To complete the barebones single player game it takes about 15 hours. The main game plus extra side quests and features doubles that time to around 30 hours. If one were so inclined to get every item, quest and trophy in that game, one could easily clock in over 45 hours of gameplay! If we apply the pricing schema for movies to video games at 4.5 dollars per hour of entertainment value, we come out with a video game that should be priced at $135 dollars, if we expect to get 30 hours of gameplay out of it.

Now let’s take one of the most popular game series on the planet and look at the breakdown there. Legend of Zelda: Breath of the Wild gives us about 44 hours of main story gameplay. That’s not including collecting items or going on any sidequests, because that would double our game time to around 86 hours. But if we really wanted to get our money’s worth and squeeze every last second out of our game, you could go on a massive collect-a-thon and expect to clock in a whopping 168 hours. Playing BotW for 86 hours gives us a hefty $387 price tag, if we were to use movie conventions. I could go on and on, but the point is, video games give us a spectacularly higher dollar per entertainment value ratio. So really, the question isn’t “are games too expensive”, but rather “are they expensive enough”.

Over the last few years games are essentially cheaper than they’ve ever been. An NES game in 1990 cost, on average, about $50. That’s $89 in 2017 money. Your $70 N64 cartridges in 1998 would require the equivalent of $100 today. Heck, the $50 PlayStation 2 game you bought in 2005 is worth $60, the exact price of a typical retail game in 2017. This isn't to say that salaries (or hourly pay) have kept up with inflation and the cost-of-living (which it hasn’t) but it is to say that, dollar-to-dollar over the past 35 years, gaming hardware and software is generally cheaper than ever.

The problem is that how much it costs to make a game has exploded. Nowadays, AAA titles cost millions to make. The cost per person for a development team like that averages out to about 10,000 per person. Say you’re a massive publisher that’s trying to compete with the Red Dead Redemptions and Destinys of the world and want to make a military shooter. In order to hit the graphical fidelity that your fans expect, you need a staff of at least 400, and you need to give them three years (36 months). 400 * 36 * 10,000 = $144,000,000. And that’s before the delays that inevitably pop up, not to mention the marketing costs. Without the amount of money garnered by the movie industry’s $4.5/hr revenue structure, keeping this as a sustainable system becomes a problem.

Companies are trying desperately to make back as much of the development costs as possible. And without raising the prices of games, you start seeing companies using tactics like including paywalls in games, pay-to-win games, and dirty DLC tactics such as skewing loot distribution so as to encourage players to purchase in-game items using real money.

What’s the solution? Charge more per game? Will gamers really be willing to fork over $70 or $80 for a game, even if they’re still miles ahead in terms of a dollar to entertainment hour value? Or is DLC really the way of the future? All I can do at this point is speculate, but I’d bet that the current profitability model for the game industry is due for a massive overhaul. Either that, or a massive crash. I guess we’ll all find out sooner or later!

#gaming #consoles