Xbox Boss Phil Spencer Responds To Increased Price For Next-Gen Games
Phil Spencer says, "We can price things whatever we want to price them," and allow the customer to decide if it's right.
Recently, 2K Sports announced that NBA 2K21 for PS5/Xbox Series X will cost $70 USD, which is a $10 price increase from the $60 USD that has been commonplace since the Xbox 360/PS3 era. Other publishers are expected to follow suit and raise prices for next-gen games, but the full picture has not yet become clear. Xbox boss Phil Spencer has now commented on the matter, telling The Washington Post that he sees no problem with the price increase. Gamers will ultimately vote with their wallets, after all.
"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. "I'm not negative on people setting a new price point for games because I know everybody's going to drive their own decisions based on their own business needs. But gamers have more choice today than they ever have. In the end, I know the customer is in control of the price that they pay, and I trust that system."
Spencer declined to say if Microsoft's own new games will cost $70 USD, but the situation at Xbox is somewhat different. With Xbox Game Pass, Microsoft offers a subscription service that gets you all first-party Xbox games for around $10 USD per month.
Before the $10 price increase for NBA 2K21 was announced, PlayStation boss Shawn Layden spoke about how the current AAA games business is unsustainable.
"It's been $59.99 since I started in this business, but the cost of games have gone up ten times," Layden told GI.biz. "If you don't have elasticity on the price-point, but you have huge volatility on the cost line, the model becomes more difficult. I think this generation is going to see those two imperatives collide."
IDG Consulting's Yoshio Osaki said that, despite increasing development costs, the price of games has not increased in the same way that something like a Netflix subscription has. "Even with the increase to $69.99 for next-gen, that price increase from 2005 to 2020 next-gen is only up 17%, far lower than the other comparisons," he said. "While the cost of development and publishing have gone up, and pricing in other entertainment verticals has also gone up substantially, next-gen software pricing has not reflected these increases. $59.99 to $69.99 does not even cover these other cost increases completely, but does move it more in the proper direction."
Osaki added that he believes other publishers are "exploring moving their next-gen pricing up on certain franchises."