$70 Prices On Next-Gen Games Won't Hurt Sales, Analyst Says

Players may grumble about the price, but they'll buy it anyway.

16 Comments

The price of top-end AAA games is going up for the first time in over a decade, increasing by $10 from the $60 standard that has been in place since the Xbox 360 and PS3 generation. NPD analyst Mat Piscatella says that gamers will pay $70, if not happily, due to the demand for next-gen games.

Piscatella broached the subject on the Virtual Economy podcast last weekend, as reported by Gamesindustry.biz. "Game prices have stayed the same since 2005, when Call of Duty 2 first went to $59.99 on Xbox 360 and we've basically stayed there ever since," he explained. "Now, a lot of people will say a rise in base prices for the higher tier, premium games is needed to offset development costs, inflation or whatever, and all those arguments seem to fall flat. But what doesn't fall flat is that for some of these premium games, if the $10 increase was implemented, people would happily pay it."

Various industry figures have spoken about the increased cost of next-gen production throughout the new consoles' release cycles. Back in June, Sony Interactive Entertainment president Jim Ryan warned that more technologically demanding games would "become slightly more human intensive and capital intensive to produce," but the new norm in game pricing wasn't revealed until 2K Sports announced its next-gen edition of NBA 2K21 for $70.

Piscatella doesn't assume gamers are going to welcome the price increase, of course. "They might grumble about it," he predicted. "But they would certainly pay it. The price sensitivity, particularly on day-one, suggests that."

He also suggested that prices would go back down if players balked at the new prices enough to impact sales figures, echoing an earlier statement from Xbox head Phil Spencer on game pricing. "As an industry, we can price things whatever we want to price them, and the customer will decide what the right price is for them," Spencer said in a July interview.

Pricing and dates for the next-gen consoles have now also been locked in. Check out everything you need to know about preorders for the Xbox Series X and Series S and the two versions of the PS5.

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Avatar image for donholio1toe
DonHolio1toe

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I will not buy 70 dollar games. Family video rent time. When it goes on sale then I will buy

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DonHolio1toe

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I will not buy 70 dollar games. Family video rent time.

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datriax

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In a nutshell..... Humanity is stupid as f**k, and these companies know it, and exploit it.

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Just1MoHr

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WT fluff????

They already make more money than ever on the following:

-Lower cost of digital sales, which means more profit for developers.

-Lower cost of development given similar PC architecture of PS & XB & PC.

-Launch games on standard, GOLD & Deluxe version.

-DLC, Season Passes, loot boxes & micros.

-Remasters & re-re-re-re-releases.

-Not as easy to refund digital games.

-Online & multiplayer games go out of service and they make more money on new releases.

-Games are intentionally released unfinished & blemished and incomplete!

-Re-used and copy & paste code & graphics resources.

If a game is truly AAAA, then I understand for games such as Cyberpunk 2077, but not for the repeat & rinse games and B quality games.

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SystemOverload

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Publishers already have taken measure to keep cost low and video games profitable besides video games are more popular than ever so publishers and developers have a great chance to have more sales per game developed and published.

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Soulcrusher777

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If the game is a great game, and has a long length to it, no problem for me! I'm sure most people will wait for price drops if they come out at $70 though!

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Gallowhand

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The price I pay for a game is dependent on the value I perceive in it.

If a game is laden with microtransactions and loot boxes, I won't pay full price, because the developers are already recouping development costs through alternative monetisation methods on top of the base price. I also tend to avoid games that are completely built around microtransactions, i.e., deliberate grind-fests to encourage extra spending to 'save time' or 'boost XP' or whatever.

If you show me a good quality game where I know I'll get 40+ hours of enjoyment out of it (either a lengthy campaign or replayability), and is not built around microtransactions...yeah, sure, I'll consider paying full price for that.

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durantftw

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Edited By durantftw

People must not get the situation. The production costs of games are getting hilariously big by the year. I'm not talking about yearly iteration games like FIFA or Call of Duty, I'm talking about quality AAA games that take years of work and resources to produce. So there are two options: either stop improving the games, keep the mechanics, graphics and everything at the same level, OR charge more for said games. No business will risk a ton of money for very little profit.

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DonHolio1toe

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@durantftw: problem is 99 percent of games today laugh broken!!!! Hence not even close to being worth 70. Games today after launch take 6 months to be on par for being worth that 70. They need to release games that work like they should before charging 70. Its crazy

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jenovaschilld

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@durantftw: I agree and disagree also. 20 years of no increases in prices, would be hard to bare in any industry, under any circumstance. BUT... there is always a but.

The gaming industry has continued to grow massively over the last 20 yrs also, which means more sales of software. So that hit game in 2001 that sold 1 million was awesome. Now today that hit game that sold 10million is even better. Licensing fees of 25% to 45% - avg 35% - start to really do well for platform holders, publishers, and developers-to studios- to even my little print company that works with a game studio.

GAming industry is a razor and blade model : so just looking at the math . (of course it is more complicated but still simple)

one game -sales 1 million @ 30million to make X $60 = 60 million 2X your investment

one game sales 10million @ 150 million to make X $60= 600 million. 4X your investment

Also, please take into account that there are many new revenue streams that the gaming industry takes in beyond your initial purchases. Like metadata sold to third parties (very profitable), DLC, Microtransactions, killing off non-licensed peripherals, ancillary sales into other media, digital sales cutting out brick and mortar, and on and on.

The more you sale the better, and 'tie in ratio' is constantly getting higher and higher.

ALSO things are much different then early generations compared to now, Publishers pool together investments much much better and across the board, so it not like 6th gen when developers were closing left and right . The game industry is still one that averages 40-60k a year and one that requires not formal education, no states licensing, no regulations, little to no unemployment (may need to travel). And still an industry where a teenager can make millions on a cool idea. The gaming industry on whole is very profitable, and those that lose out , is usually from self inflicted wounds.

You can just see the proof, developers are just as likely to close from talent pool leaving to create their own, then financial loss. If this was a risky, unprofitable industry then you would not see more games now then ever. There are several times more AAA games per year then their was 20 yrs ago. Happy memories may make it seem like there was a lot of game in the past but when you count the games .... Consoles are launching with dozens of games, not a few. aFter a year you have 100s, not dozens. I once remember being able to play every single RPG that came out, and sadly reading EGM for more. Now there are so much choice, so many games, so many new ways to consume them.

I also want to point out the development costs. The budgets have risen per game a lot, but entry costs have dropped. Processing power, computer hardware costs, storage, memory, on and on --- before the entry into the gaming market was enormous. Now about anyone who has worked on a successful title is out their making their own on steam with parts they can buy off Newegg. Profits are much higher in every way.

BUT, BUT... Publishers are under pressure to increase prices and ... that probably should happen. But not for the reasons you mentioned above. PRESSURE, competition is high, not just from console makers but everything that pulls eyeballs away from games. Stockholders want results and want expansion at an even faster rate. I mean everyone wants more profit when ever they can get it, but you have strong investors on your back at all times. They do not want good profits they want amazing profits. CHANGES: 7th gen was thought to be the last, with mobile, social games killing off consoles altogether. 8th gen, new markets, the hold on publishers IPs could be threatened. VR, digital, streaming services, new players. Publishers want and need higher investments for what they don't know will happen. It is not like 20 yrs ago when a group of 30 people were just hoping for just good sales. Now it has become so complicated and console industry needs to hedge its bets.

Your view of higher development costs, therefore higher prices - i am not dismissing out right. But it is way more complicated then that. WE could also see the curve more sharper. $70 first month, 60$ next, and so on, (estimation) with early adoptors eating the most costs. I do think all it will take, is one console maker/ one publisher to balk and drop their prices. And that could see digital or MSRP fall back to 60$ as this is not the first time 70 has not been pushed.

ME, I steal my games off torrents. lol joking, I am a consumer and buy the games I feel is worth it to me, so should we all.

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durantftw

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Edited By durantftw

@jenovaschilld: I'm not saying that the gaming companies don't currently thrive and that they don't have various streams of income. All I'm saying is that if that profit is mitigated, they will invest less, as any business would, and the production costs are mitigating it. There are other factors to it, true, it's a little more complicated, but in general that's the issue. Trust me, I worked as a tester for 2 gaming companies and have my fair share of info on the matter.

Indeed, I forgot to mention this in my previous comment, another alternative to raising the price is bombarding the games with microtransactions and such. But presuming the company chooses to not go that route and wants to keep improving the quality of its games, trust me, it NEEDS to raise the price. Needs to.

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Avatar image for jenovaschilld
jenovaschilld

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@durantftw: Good discussion and I agree with much of it.

I kinda do agree that prices need to raise, but maybe not along the lines of the ones your thinking. One thing I would like to point out is that raising prices NEVER guarantees improvement in quality, that is always .. competition. More profits never means, 'alright ! finally we can improve quality', that has not been a 'trend' in any business in history. The fear of losing business, losing consumers, and or losing out- really causes producers to take risks, cut costs, innovate, and work harder.

Has there been a car company, that was not selling a vehicle go, 'well time to raise the price, so we can sale more of a vehicle we were not selling before'.

As the gaming industry grows, the cost of its product will have to fall in line with inflation, why we haven't had a cost increase is for many reasons, number one is they simply sell more units, per cost to produce. But along the lines of what your thinking is somewhat like the IPHONE, demand is very high (people are willing to pay anything), we can raise prices, stave off our competition, and add future improvements and features that consumers want, thus staying in the game and thus stay profitable.

I think the industry may have found the ceiling of what they can get through microtransactions, -believe me even if people hated, protested, voted on dancing with the stars- as long as microtransactions kept growing in profitability - they would keep doing it. So time to raise prices. Because I doubt anyone in the gaming industry is thinking- 'we can improve quality by raising prices"Uh how? "we can do more awesome things",things we are not doing now?, Maybe....So, will higher profits make our products better?,Not sure, but it will make me happy.

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KumaTenshi

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They can kiss my ass, they already milk us for DLC and costumes and microtransactions and shit, and the ONLY reason gamers have put up with THAT crap is because the base game price hasn't changed. Now they want their god damn cake and to eat too, well screw them. I ain't buying jack shit brand new unless it is a FULL, COMPLETE game with ZERO season passes, microtransactions, planned DLC, etc.

Especially since I'm in Canada and the base price is going to 90 ffs.

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waltdawg443

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Maybe not in a big picture sense, considering the price will inevitably drop over time, but it sure as hell means no more day 1 purchases for this gamer.

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spectre_xr1

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I'll be using gamepass for the day and date games then buy them on sale like I do now . The way games are still broken and need patches and microtransactions. No way I'm paying $70

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gatsbythepig

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It won't change anything or me. I'll still wait 6 months to a year, after most patches and balancing have occurred. Then I'll buy the game on sale

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