Taking a trip to a videogame shop can bring a whirl of emotions ranging from ecstasy to depression. There is happiness because of the purchase of a precious piece of entertainment and depression from the empty wallet that follows. The price tags of gaming, however, are disturbingly creeping upwards because of newer technology and larger development costs.
Video game price tags tend to stay the same for every new game, so the expensive prices are going to be set for a while. Currently, new game prices are set at $59.99 up from $49.99 in the last generation of consoles. Also, depending on how reviews from magazines rate the game, the prices can be lower. There is always the option of the pre-owned section, where you can get the same game for less money.
“The main reason video games are more expensive now is because of the cost it takes to make them,” Adam Ross, engineering major, 19, said. “Today, a games studio is more like a film studio, with huge companies spending years on a single project.”
According to a survey by Screen Digest, video game development budgets range from $10 million to $20 million. With increasing costs, game companies tend to on fewer and higher quality games to prevent the possibility of losing money. And in some cases, companies, mostly smaller ones, will not break even and may even fold.
“Even many of the bigger names still coast from project to project, struggling to keep up. Most recently, the game company Flagship developed the game Hellgate: London but stopped making copies after just one game due to slumping sales,” Ross said.
Game companies have to understand the distribution of wealth after the profits are collected from a game. From paying distribution chain stores like GameStop or Best Buy to licensing, there is a lot to pay off.
“Video game companies and developers have to share a lot of the money they make due to multi-licensing and also with the sharing of products,” Ross, GameStop employee, said. “If the developer has used someone else’s game engine, which many do because it works out much cheaper than building their own, then they’ll have to pay a part of it to the owner, and if the game uses characters or content that belongs to someone else such as comic book superheroes, characters from films or music from big-name artists, then that’s another type of payment. Engine and character licenses can each account for around 5 percent of the total price,” Ross said.
Small games such as Xbox Live Arcade releases do not have the giant budgets of other major companies, but they can still be difficult to break even as well. Once again, the price you pay doesn’t go straight to the creator. The publisher, in this case, Microsoft, takes a cut of each sale.
“The amount depends on how much involvement Microsoft has, but the figures are reportedly between 35 percent and 70 percent, so if the game sells for 800 Microsoft Points which is just short of $10, then the creator gets between $2 or $5 per sale. You need to sell a lot of copies to make any money,” Jose Torres, biochemistry major, 21, said.
With pre-owned games, shops make a profit because the game has already been sold. However, this is also a good option for buyers because the prices are lower.
“You don’t have to pay full price, though,” Ross said. “Waiting until a game is no longer a hot release is always smart since you won’t get discounts when demand outstrips supply. Online (downloads) is cheaper than the retail box, digital is cheaper than boxed, and even the most sought-after games eventually end up in the bargain bins or on eBay.”
With the new prices being so high, there still exists the option to rent games with services like Blockbuster or the online site, GameFly.
“I’ll just rent,” Tyler King, business major, 18, said. “I can live with paying $8 for a video game instead of $64.”
Games can provide more entertainment for the dollars than music or movies and that makes the companies in gaming exist.
“You see why games are expensive (with how the money is shared and made),” Torres, GameStop supervisor, said. “But with the amount of different modes that games offer including online play, multiplayer, and other options, people will continue to spend the money regardless of how much it is.”
