The $70 Lie - ArticleTaneli Palola , posted on 11 November 2020 / 8,913 Views
With the advent of a new console generation upon us, the news that certain publishers have decided to raise the base price of their games from $60 to $70 also came out to give us a nice little surprise in anticipation. That brought back to mind a topic I've wanted to talk about for a while now; one that this recent talk of video game price points has made very relevant once again.
Among the most prevailing ideas in and around the video game industry over the last decade has been the notion that video games have to cost $60 or $70 to counter the rising costs of game development. The argument goes that, without this apparent necessity, video game developers and publishers won't be able to function and create those big budget games everyone seems to desperately want, and that many developers will have to be shut down without this additional chunk of revenue and resulting profit.
Sony and 2K Games have both already made the first steps towards $70 base price for games, with titles like Demon's Souls, Call of Duty: Black Ops Cold War, and NBA 2K21 all costing that much. While other game companies have mostly remained silent on the topic, you can bet they're watching very closely at how those games perform on the market at that price point. If they prove successful, expect other companies to follow suit, increasing pricing to supposedly offset the rising costs of game development. There are just three problems with that basic premise to begin with.
First, the whole idea that AAA video games need to cost 60 or 70 dollars/euros in order for publishers and developers to make a profit is a myth. Game companies like EA, 2K Games, and Activision Blizzard are making record profits almost on a yearly basis now, bringing in more money than ever before in the history of the industry. In 2017 alone the 25 biggest companies in the industry made over $94 billion, an increase of 29% over the previous year, and in 2020 the value of the video game industry in the US alone was estimated at over $60 billion.
Second, the $60 price point hasn't done anything to stop companies like EA from closing down developers that they own, nor has it stopped big independent developers from shutting down due to their own mistakes. The new higher price point isn't going to change anything in that regard. In 2018 Telltale Games was forced to close largely due to incompetent management, and in 2017 Visceral Games was shut down by EA despite being in the middle of developing a new game based on the Star Wars license.
A Star Wars game is practically guaranteed to make money just based on name value alone, as long as it's not a complete failure as a game, but because it wasn't a multiplayer "games as a service" title EA decided to "pivot the design" based on market trends and because it felt the game was too linear for modern consumer tastes. The success of games like Uncharted 4, God of War, Resident Evil VII, Nier:Automata, and any number of Nintendo titles is of course just a coincidence and doesn't mean anything.
Basically, Visceral was closed because the game it was making wasn't going to bring in a constant revenue stream from people playing online multiplayer and buying microtransactions. EA even stated that the closure was a cost-cutting measure. A cost-cutting measure that happened the same year that EA made over $5 billion in revenue, up several hundred million on the previous year. The rising price point has nothing to do with keeping development studios alive and everything to do with keeping publishers' profits as high as possible.
Third, and most important, the $60 price point itself was, just as the $70 price point is going to be, a complete fabrication that hasn't really been true for most AAA titles in years. In fact, at this point with things like season passes, microtransactions, multiple editions of the same game, in-game advertising, and exclusive DLC, the price you pay for a game at launch is increasingly becoming just an entry fee that only allows you access to the base game and gives you the option to pay additional money to play the rest of it.
Essentially, for any game these days that has an online component, the supposed price point of $70 doesn't really exist. Even primarily single player experiences like Middle Earth: Shadow of War or Assassin's Creed: Valhalla aren't free from this. You pay $60 to $70 for the base game, or upwards of $200 for any number of special editions with exclusive content that's not available anywhere else, then another $30-60 for a season pass if you actually want the full experience, which probably isn't even the full game even then because a lot of games also contain retailer-specific exclusive DLC that can't be bought anywhere else.
Add to this any number of possible microtransactions and the actual cost of a full AAA game can be anywhere between $90 to several hundred dollars. Simply put, there's no such thing as a $60 price point for AAA games these days, nor is there going to be a $70 price point when the next console generation starts, at least not if you actually want to play the full game.
The video game industry, at least on the AAA side, is making more money now than ever before in its entire history, and yet it's those companies at the top that try to argue in favour of raising the prices of games. The thing is, they've long since raised those prices, people just didn't notice because they don't pay it all at once, but rather over the course of several weeks and months as they gradually unlock the whole game they supposedly already bought. The $60 and $70 price points are a lie built on a false premise perpetuated by companies looking to profit from this "necessary" increase in price, despite it having quietly happened a long time ago already.