Author Topic: Games too cheap says Wall Street!  (Read 383 times)

**andius

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Games too cheap says Wall Street!
« on: November 20, 2017, 03:05:38 PM »
 Reading https://www.cnbc.com/2017/11/20/gamers-overreacting-on-ea-star-wars-game-firms-should-raise-prices.html makes me think wall street does not understand gaming at all  :o

Comparing a movie to a game in terms of cost per hour just does not stand up >:(
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Piralyn

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Re: Games too cheap says Wall Street!
« Reply #1 on: November 20, 2017, 03:25:42 PM »
The movie vs video game cost per hour comparison is indeed flawed, but there is a pretty significant argument to be made that $60 games are not sustainable, at least at the AAA level. We've been paying $60 for basically a decade now, but development costs have exploded due to a variety of reasons (graphical fidelity, etc.) that's probably part of the charge towards "game as a service" and recurring revenue out of players. I think the Tomb Raider reboot sold like four million copies and was still a net loss for SquareEnix.

I think (most) gamers wouldn't have too huge a problem with paying $90 or whatever if there wasn't any microtransactional bullshit, which we're arguably getting to an extent with the "deluxe edition game + season pass" combos that are growing increasingly common, for a meaty game, but $60 per big-time AAA game is becoming more and more problematic. Randomized and repeatedly necessary microtransactions aren't the right answer, but there is a need for something to pad the revenue of these bigger titles.

This article is an interesting perspective one how quickly a budge balloons on big titles and why.

Kharvek

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Re: Games too cheap says Wall Street!
« Reply #2 on: November 20, 2017, 07:03:28 PM »
Yeah speaking on the other side of the fence here, games have been at the $60 since 2005 at the dawn of the X360 era.  That's about 13 years at that price point and there's definitely been a bit of inflation.  (I think if you account for that, NES games that cost 40 bucks in the 80's now would sell for over $80 today)

Development costs since 2005 have absolutely gone way up and unless you're GTA5 where you sell 86 freaking million units, you're struggling to make a profit.  I'd say most AAA games sell between 4-6 million if you're moderately successful.  Like Pira said a good number of games in that bracket actually lose money.  A common model is you make a new IP and spend a bunch of development cost getting the damn thing to work, then you make a sequel that's basically "Make evolutionary improvements and add content/assets" that in theory costs way less than the first game and that sales of both combined pay for the investment.  ...but that takes a hefty investment and if the 1st game bombs out of the gate?  Then you're really fucked.  I feel like development costs at the outset of the 360 era were around $25 million and towards the end that crawled up to $50 million.  With gen8 that spiked up to an average of about $90 million. This also doesn't include marketing spend which can range between $20 million and $200 million.  This means to break even games need to sell more and more copies....or generate revenue from alternate sources.

Now some of the sources are shitty like things that make the game itself not appealing and fun.  (Whenver you can pay money to get an advantage?  It instantly saps the fun out of it since the game on some level is designed to nudge people there so you don't feel like you're getting powerful by playing and good at the game, only when you pay some cash)  The other predatory thing is the loot box craze which rely on research done by casinos to make them all spectacles to trigger those pleasure centers.  Some loot boxes are only cosmetic stuff, which is fine.  The pomp and flare that goes into opening them to make them exciting?  Predatory.  I'm totally okay with charging 5 bucks for an asset pack of customization or cosmetic items that's straight up you know what you're going to get.  Grinding out pure assets like that is generally less expensive to do and you can recoup some costs there if the game lends itself to that kinda thing. 

...regardless AAA is a scary and risky place to be these days and we're all trying to solve the problem of the static cost of the game while trying to bring in money from other places while not alienating players or sabotaging the game to drive people to these revenue sources.  Also with those insane costs it's harder and harder to really experiment.  Smaller scale games do that and plenty of big publishers are suddenly funding "indie" games.  Things like Child of Light and Grow Home?  Published by Ubisoft.  Ori and the Blind Forest?  Microsoft.  ...games like these let you experiment with new stuff and if things fly?  Find a way to incorporate those ideas into the big AAA experiences.  Since if you fail on one of those?  You're out way less money. 

Anyway...I don't think that money article is out of touch as you think.  As a game developer I struggle pretty hard to think of ways we can keep this thing afloat.  However I do agree raising prices and inching towards $100 games is a psychologically scary number for many people to justify on something like this.  ..but the reality is with the cost it takes to make that stuff?  ...those prices are pretty close to what we'd need for an averagely successful game to make money without additional revenue streams.


Winston

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Re: Games too cheap says Wall Street!
« Reply #3 on: November 20, 2017, 08:05:53 PM »
This does not contradict Kharvek's points, but in the interests of math: According to a few inflation calculators I found on the web (e.g., here), $60 in 2005 would be inflated to roughly $77 today.
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Fernia

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Re: Games too cheap says Wall Street!
« Reply #4 on: November 21, 2017, 07:03:27 AM »
One thing that the budgets fail to take into account is how many studios abuse the loyalty of their developers.  I have known quite a few game devs that have horror stories about working without pay for months trying to get a game out.  That's on top of the significant number of unpaid hours that salaried devs regularly put in...

Marco

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Re: Games too cheap says Wall Street!
« Reply #5 on: November 21, 2017, 07:32:36 AM »
Comparing a movie to a game in terms of cost per hour just does not stand up >:(
I think it's a fair comparison, and a well-played game really is cheap compared to most other forms of entertainment (including dinner at a restaurant, for instance).  WoW is relatively expensive at $15 per month plus $60 every couple of years, but that's still fifty cents a day--a tiny cost for someone who plays for hours each day.

On the other hand, I think a lot of purchased games don't get played much, and if those games are bought at $60 or more, that can be very expensive compared to a movie.  I also think it's socially important to have cheap entertainment options, although they don't have to be in the form of AAA games bought shortly after release.
« Last Edit: November 21, 2017, 08:19:18 AM by Marco »

Honorata

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Re: Games too cheap says Wall Street!
« Reply #6 on: November 21, 2017, 07:58:12 AM »
I suppose the question is:
* Should AAA games stay in their current incarnations, but cost more upfront to lower the need for predatory microtransactions?, or
* Could many AAA developers make smaller games with a narrower scope that fits the current price point?

(Or, arguably, should they do both of those things for different games and titles?)

A few people have pointed out in the games-discussion-sphere that the concept of the budget/mid-market major game has largely disappeared in recent years, and that that's a scope-level that needs to come back to fill in a niche between Blockbuster AAA titles and truly tiny indies.
« Last Edit: November 21, 2017, 10:32:53 AM by Honorata »
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ghoselle

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Re: Games too cheap says Wall Street!
« Reply #7 on: November 21, 2017, 08:27:42 AM »
This may sound weird, but I'm not willing to pay as much for games with DRM and that require online services to play in single player.  They are actively a worst value proposition than older games, and if they want to raise the price they need to provide something to cover that lost value.  (I may be weird but I still sometimes play a game I bought in 1994 for $50; which is $82 in 2017 dollars.)

Kharvek

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Re: Games too cheap says Wall Street!
« Reply #8 on: November 21, 2017, 11:14:59 AM »
Reducing scope has been done without much success.  People are generally unwilling to pay 60 bucks for what they perceive isn't that much time when there are other 60 dollar games that offer hours and hours of things to do.  Tom mentioned Tomb Raider, but you can add Dishonored 2, Deus Ex: Mankind Divided, and Wolfenstein to that list of medium scope games that were good games but aren't pulling a profit.  DOOM I think is right on the edge of losing/earning money.  Whereas you've got a game like Mafia III, which wasn't a very well received game that is making money since it's a big open world game with a lot to do.  The only way to make money on those old school tight, linear games is if you're a part of some mega franchise or from a heavy hitter like Naughty Dog.  Uncharted makes money.  (Also I'd hesitate to call them games with reduced scope since even if they're a quick play, they put a ton of cost into those cinematics, VO and mocap.  That shit ain't cheap)

I think a major component to these games no longer selling at that price point when they used to sell at that price point in 2005-2008 is that the era of the Steam Sale is upon us.  In the late 2000's those sales got huge and popular and other places started following suit.  MSFT and Sony offer similar discounts on their storefronts, and Amazon frequently runs discounts on hard copies.  Back in the day you had to wait for an official price drop, which for some games would take over a year to hit.  Now if you wait between 2-3 months?  You can probably get something with 20 bucks off the price.  This is making people far less likely to pay full price for a game they'll complete in 10'ish hours.  If they know they have 30-50 hours?  They're far more likely to pay full price for a game.  ...so you've got big RPGs, sprawling sandbox games, or games with a heavy focus on competitive MP that sell right outta the gate. 

So a price hike might help since the first drop would be to 60, and maybe the increased take from sales would counteract the likely reduced sales from the price hike.

..I think the best solution is kind of where minds are at right now and it's thinking up alternative revenue streams from games that are palatable for players.  Yeah, there's a lot of predatory stuff, but not all alternative revenue streams are predatory.  Destiny's expansion pack model I think is fine.  You don't pay a subscription fee, but what would be a free content patch in WoW, is a paid expansion for Destiny.  ....when you take the spacing of these into account with subscription fees for WoW?  It evens out.  You spend about 30-40 bucks for every content drop either by buying the drop itself, or in subscription fees.  Additionally if there's a huge gap between drops?  You're not continuing to pay.  Those content drops are far cheaper to make than an entire game since you're likely tweaking less gut systems and just making missions and assets.  Larger expansions is where you start messing with and adding systems....and those usually cost more.  If you can keep people engaged in a game, more of the players are going to buy additional content.  This is how games like Forza make money.  They aren't cheap to make, but you can release packs of new tracks and cars that don't cost nearly as much to create, and a good amount of the players will buy it.  However, certain games don't lend themselves to additional content as much.  Some games? You beat them, and players are just done.  They don't care about additional models, or customization.  They're just done.  That's where I think the Hitman model could have some merit.

Hitman I also think had an interesting model.  It wasn't successful, but I don't think it's the fault of the model so much as the game had almost zero marketing so only people reading gaming press knew about it.  They had a full game, but released it episodically so you'd buy a level/episode every so often.  When all the episodes were done?  You could buy the whole thing for sixty bucks.  If you bought each one individually?  You'd pay about 80.  I think by splitting up the content like this you could make 80 dollar games more palatable by letting people pick and choose what they want.

Imagine if Battlefront offered the SP game for 40 bucks, the MP for 40 bucks and the whole thing for 70.  That might inspire more people to pick up a part of that game....and you might get a few people who'd pick up one, really love it and buy the other piece so you'd get some people paying a full 80 for the entire experience.

Anyway it's a tough problem that's got a ton of layers and we're always trying to figure it out.  At the end of the day the best way to sell is just to make something exceptionally awesome....but that ain't easy.  Awesome games sell.  Good games?  That's more iffy. 

AAA is going through some major growing pains right now with budgets hitting extreme levels and needing to generate new ways to earn money on products without ruining the reason people play games to begin with.