Someday, people will ask: What was it about the game industry in late-2004 that put so much downward pressure on the retail price of games? Was it the sub-20-buck price affixed to ESPN-branded sports games that made a $19 dollar price something to boast about? Was it the way any product other than those on analyst Gary Cooper's notorious Murderer's Row got pummeled at retail in the '04 holiday sales season? Or was it the basic realization that the low price of consoles (when you could find them, that is) meant gamers who were willing to pay $50 or more for a title were a vanishing breed?
Ultimately, the answer may be a combination of the above.
With those realities in mind, Midway Games tomorrow will announce a new price point of $19.95 for its upcoming M-rated, adult-themed console game NARC. Currently, the game is being preordered at a price of $49.95 at most retailers, but tomorrow, the Chicago-based publisher cuts a fat $30 off the price.
According to Midway's chief marketing officer Steve Allison, it was only after much debate within the organization that the price was reduced. "Pricing is not necessarily an indication of the quality of the game," Allison told GameSpot today. "It's an indication of where you're sitting in the [retail] queue, relative to the rest of the market."
GameSpot spoke with Allison at length regarding the pricing.
GameSpot: How do retailers react to a price reduction like this?
Steve Allison: It depends on if they expect it will help them move units. In the case of NARC, all our retailers so far love it.
GS: What's the typical retailer reaction been?
SA: The first question is: Why is the software going to be a disaster? And if your answer doesn't resonate with them, they call you to the carpet on it for sure.
GS: Did they proffer a thumbs-up or -down?
SA: After we talked EB and GameStop through it, they were pretty stoked. They think it's going to really amp up their sell-through.
GS: Your goal is to
SA: Were going to blow this out. We're doing a soundtrack CD with some of our retailers, and these guys are going to help us blow it out.
GS: Is the pricing decision based only on the specialty retailer environment?
SA: It's not just an EB sort of game. It's also a game that can move at Wal-Mart, and in the case of a game like this, they really like it, especially when they understand we're trying to get the attention of people who like crime games.
GS: What's putting pressure on prices these days? Saturated genres, crowded shelf space, or is it something else?
SA: Despite what many other game executives will probably tell you, there is absolutely downward pressure on pricing right now. This Christmas, the battle between EA and Sega Sports shows that [to be the case] in the sports segment, but you can look at pricing history of all recent games: When they start at $49, they take a hit faster than they used to in the last couple of years. NARC was originally planned to be a $49 game, but the world has changed a lot.
GS: How does the consumer factor into the equation?
SA: We're definitely part of the cycle where price is starting to matter, because we're getting another wave of customers to the table, and those customers are the ones who are price-sensitive, or more mass-market. In some cases, you can get a big win when you come out with the right price, but if you come out with the wrong price, one that's too high, you could kill yourself.
GS: Does retail pricing affect your R&D allocation? Are you going to look at this move with NARC and say, OK, we're going out at a low price. Let's pull back on R&D in the next quarter or two?
SA: We cant. We really can't. This price was a big debate in the company, and after talking to our retailers and looking at this Christmas, the information from our retailers on pricing and where things are headed--and how it would affect our orders and our partnerships and presell programs, and retail programs when the title ships--we made a decision based on all that.
GS: What did Christmas tell you?
SA: This Christmas was a Christmas where the big titles could hold that price, but the titles that werent big, that shipped in that quarter of blockbusters, got absolutely destroyed. I mean, titles got wiped off.
GS: Wall Street doesn't always react favorably to lower retail prices, so how do you expect analysts to react to this particular pricing announcement?
SA: I have no idea how they're going to react. I think they'll react depending on who they are and what their position in Midway is.
GS: Overall, your goals are what with this title?
SA: I want to move a good amount of units and see it succeed...and then have a chance to talk about NARC II.
GS: Thanks, Steve.
For the most recent coverage of the game, read the preview of NARC published earlier today.
In addition to today's pricing news, Midway confirmed the game's release date: March 26.