How To Price A Video Game
price video games industry AAA
What can be done with a video game by developers is astonishing. I never imagined that video games would offer the experiences that they currently offer. It's simply amazing. Along with more sophisticated games come higher budgets leading to more expensive games. The current pricing model is that all games are created equal but this is simply not true. A game that reviews at a 5 out of 10 is priced the same initially as a game that is 9 out of 10.
Games with smaller budgets or less time for development, but are still trying to be AAA, are sold at the same price as a game with enormous budgets or tons of time for development. What has happened is that with the increasing budgets and accountants running companies, games are selling initially at 60 dollars at release and depending on the sales volume, are discounted over time. Sometimes, games are discounted only weeks after launch while other games are sent to die at that initial 60 dollar price point with no marketing assistance. If a game doesn't sell then people lose their jobs and studios are shut down, even studios with a history of creating great games.
There are a few options that I think companies have to combat the effects of games that become highly discounted only a few weeks after launch. Number one, companies need to be honest with the products they are releasing. If a game isn't worth 60 dollars and/or companies are sending their game to die without marketing, then these companies should charge a lower price initially. Why not charge 45 dollars instead of 60. Marketing 101 says that game sold at a discount will theoretically sell at a higher volume.
If a game simply cannot compete with others in the marketplace, then it makes sense to charge a lower price. This can also be done for new IPs that want to grasp a good install base so the sequel can be sold at a higher price when it has earned that price in the market. If the company thinks this game can garner a price of 60 dollars, then by all means charge that price. Since there are so many games being released these days, games have such a short time to gain attention. If a game is released against a well known IP at the same price, then how can a company expect someone to take the chance to buy the lower reviewed game or unproven IP at the same price. It isn't good business.
Another thing that has happened in the gaming industry is the destruction of the lower budget, B level game as well as the almost complete elimination of creative risk in the AAA industry. A game like Singularity, from a good developer, was given a lower development budget and wasn't marketed by Activision while being releasing at 60 dollars. The game was reviewed well but wasn't marketed by the company. No one other than the enthusiast knew this game actually existed and had an idea of what it offered to the player. What companies can do is make more budget games and sell them at a lower price while decreasing the amount of higher budget games to offset the development cost.
These games can be XBOX Live Arcade, PSN, 3DS, Vita, steam games and whatever else platform they can be sold on. This does two things. It first allows companies to take more risks with games because the budget is lower and also allows the success of these games to contribute to the development of the higher budget games. If the game is successful, maybe the company can turn it into a AAA franchise. It also brings back the B level games for AAA publishers. Companies are now able to try other business models and pricing structures to see what could work better in the marketplace. We have seen Double Fine go to the smaller game model with huge success.
Companies like EA and 2K can easily do this as well while still making the blockbusters.
The point is, don't expect people to buy a game at 60 dollars if it isn't warranted to do so. Why not release the game at a discount and actually have people potentially purchase the game when it's still fresh. Companies aren't fooling anybody. They would be far better off by just releasing the game initially at a lower price which potentially can lead to higher sales. It would also be good for the industry because 60 dollars is a lot to ask for from the consumer. Thank goodness we have indie developers to that make games that we can afford to buy. Not all games are created equal so they shouldn't be priced as though they are.