Some things in life are inevitable: death, taxes, and $60 video games. But why do new video games cost $60 — a price that has remained fixed for over a decade — when pretty much everything else has gotten increasingly more expensive? What was the first $60 video game, and what did it do to set the precedent that all new games now follow?
If one were to ask game developers these questions, they'd probably explain why video games cost so much to make. Today, a $60 price tag is rarely enough to allow game devs to recoup costs, which explains why even total flops feature additional DLC packs for sale. Not every game can be like Tetris, which was made for free, and the people who create your favorite titles need to be paid.
Even so, this sort of stagnant pricing doesn't appear anywhere else in the entertainment industry. Movie ticket costs vary by theater, time, and location. Books can have radically different prices, as can seasons of TV shows. The fixed $60 price point for new games is an anomaly, and it's bad for basically all parties.
Games are unique in that they're pretty much the only form of entertainment that becomes uniformly valueless over time. Whereas a classic film or record can continue to sell copies indefinitely, the public is far less inclined to play older, graphically unimpressive games, let alone pay full price for them. These days, pretty much any game released before 2001 has a hard price limit of $5, if you can't find a free version online. Even when one looks at 360/PS3/Wii games from the late 2000s, a $20 game from that era is shockingly pricey.
On top of that, the popularity of "big sale events" has pushed publishers and retailers to slash the prices on games almost immediately after their release. Wolfenstein II: The New Colossus was released on October 27, 2017 (and was generally well received), but less than a month later consumers could pick it up for $25-$30 on Black Friday. To make matters worse, both Microsoft and Sony offer subscription services that give away multiple games every month. Once a game has been given out as a freebie, its value is basically gone.
Publishers need games to start at a $60 price point so that they can make as much money as possible when their game is first released. They're well aware that most people will pick up the product of their hard work for half the price within a year of its release, so they want to squeeze all the money they can from day-one adopters.
One of the main reasons why publishers keep video game prices locked at $60 is that they're spending a tonof money making their games. While the price point has remained fixed for over a decade, the cost of making blockbuster games has increased every year, and today, it can cost publishers hundreds of millions of dollars to make a single AAA game.
Take Call of Duty, for example. Call of Duty: Modern Warfare 2 cost something like $200 million. That means a game would have to sell over sevenmillion copies just to break even. Fortunately for Activision, that particular game sold probably sold over 28 million copies, so they came out on top. However, most single-player focused games never make money, even though they require increasingly more assets such as voice actors and script writers.
Technically, This Type Of Price Fixing Isn't Illegal
Price fixing occurs when several companies in a specific market come together to artificially set a price for a product that has nothing to do with demand. If there's no other option, people will likely be forced to pay whatever price the fat cats decide on. This type of practice goes against the spirit of capitalism, as it only serves to hurt the consumer.
When it comes to video games, the $60 price point is a little more complicated. According to the Supreme Court, publishers are allowed to suggest minimum and maximum prices for their products, as long as retailers don't agree to all sell the product at the same rate. If retailers coincidentally all offer a game at the same price (based on what the publisher has demanded), then it's fine. If publishers say $60, all retailers can independently agree.
While this is basically the same thing as price fixing, it's not technically breaking the law.
Retailers Who Don't Charge $60 Won't Get Games On Time
While publishers can only ever suggest prices for new titles, that doesn't mean that they can't strong-arm retailers into heeding their advice. If a store routinely sells games for less than their suggested $60 value, publishers have been known to stall their shipments of new games.
In today's globalized world, it's hard to keep a good deal under wraps, and once a game begins selling at a lower price point, its value is forever tarnished. Retailers really don't have a choice in the matter, as publishers hold pretty much all the power.
Publishers Have The Most To Gain
Since publishers are setting the prices, it stands to reason that the value they decide upon will be in their favor. GameStop makes basically no money on new games, to the point that they encourage their employees to be evil in order to turn a profit.
On average, game publishers take home $45 for every new, full-priced game sold. After marketing, licensing fees, and eating the cost of unsold games, publishers still average $27 a game, which is pretty darn good. By comparison, movie studios only make about $6 per ticket. Even so, games rarely make money, as they're amazingly expensive to make.
Publishers Spend Too Much Money Keeping Up With Each Other
When asked about the high price of games, many publishers point to the increasing difficulty in keeping up with the technological demands of newer consoles, but in reality they often make ill-advised choices. One Wired article mentions that the primary reason gamers resell games to GameStop is because they don't think the games are very good.
The article specifically mentions Brutal Legend, which cost an insane $25 million to make, but was a critical and financial flop. Developers Double Fine shelled out a ton of cash to get Jack Black as the main voice actor, and the failure hit the studio so hard that they now focus solely on smaller, less ambitious games.
Call of Duty games have huge budgets, but they also move tons of units. Other, less popular games feel pressured to keep up with blockbuster titles, and wind up going way over budget by including allegedly necessary features. Many believe that a game isn't great unless it has cut-scenes with voice acting, online and single-player options, 30+ hours of content, and a long list of other features that all cost money.
If publishers were a little bit smarter about where they spent their money, they'd be able to make a profit more easily. Mobile games, for example, tend to be much cheaper to develop, and they usually cost less than $10 upon release, but tons of them still turn huge profits. Good graphics don't matter if the gameplay is boring.
