Videogames Can’t Afford to Cost This Much

Photo: 401K/Flickr

Electronic Arts was recently named the winner of Consumerist’s annual Worst Company in America reader poll, beating out rival Activision and perhaps more notably Bank of America, which it crushed in the final round 64 to 36 percent. We could probably name several companies that deserved the dishonor more than Electronic Arts, or dismiss the win as internet forum trolls having a misplaced set of priorities. But Consumerist’s explanation of EA’s transgressions is revealing.

“For years, while movies and music became more affordable and publishers piled on bonus content — or multiple modes of delivery — as added value to entice customers to buy, video games have continued to be priced like premium goods,” the publication wrote in its announcement of the award.

So it comes down as it often does to the almighty dollar: Consumerist readers, enough of them to massively swing the vote towards EA, think that videogames cost too much money.

“There have even been numerous accusations that EA and its ilk deliberately hold back game content with the sole intent of charging a fee for it at a later date,” Consumerist continued in its awards announcement.

Of late, it’s publisher Capcom that has come under fire over this: Owners of the new fighting game Street Fighter vs. Tekken have found that there are 12 characters already included on the disc that Capcom says it will sell access to at a later date.

To make ends meet, Capcom needs players to pay more than $60 for its games. That much is clear. But a $90 price tag at GameStop would be unthinkable. So it sells the game for $60, then asks gamers to pay more to unlock more content.

If Street Fighter vs. Tekken were free and each character cost $1, no one would be having this discussion. But gamers believe $60 is plenty enough to pay for a game already, and balk at being asked to pay more on top of the considerable sum they have already invested.

Game publishers rightly point out that the increasing technological demands of game consoles have caused game budgets to balloon, and something must be done about that if the company is to continue to turn a profit. True enough. But publishers may find that raising the price of the games is no solution.

Scapegoating Used Games, Again

Following rumors that the next Xbox or PlayStation hardware might restrict users’ ability to play pre-owned games, industry analysts lined up at the Gamesindustry website for their turn to call it a bad idea. Wedbush’s Michael Pachter, for example, said that while cutting off used game sales would “slightly benefit” Electronic Arts and Activision, it wouldn’t benefit the hardware makers.

In a response piece, former THQ executive Richard Browne fired back. (He telegraphs his feelings about Pachter and his colleagues early on in the editorial when he puts the word “analysts” into scare quotes.) Remarks from game creators that cast used game sales as a threat to the industry are nothing new (see “GameStop the ScapeGoat”), but Browne’s piece goes further than any I’ve ever read, blaming practically all of the videogame business’ current troubles squarely on used games.

The real cost of used games is the death of single player gaming. How do I stop churn? I implement multiplayer and attempt to keep my disc with my consumer playing online against their friends. … The problem is, at what cost? Countless millions of dollars would be the answer.

In other words, because publishers are taking action to stop used game sales, and because that action may hurt the quality of the final product, used game sales must be a bad thing. This is a self-fulfilling prophecy. Used game sales may well hurt publishers, but this is only proof that they believe it to be so.

Let’s take someone like Tim Schafer. … Tim’s game will sell a few hundred thousand copies and then get endlessly churned. … Do I think it’s fantastic that I’ll no longer be able to buy another Brutal Legend style Tim Schafer game? No I don’t.

Not to pick on Brutal Legend, but there are probably more compelling reasons why a game in an extremely niche genre (real-time strategy on a console) with mixed reviews didn’t sell up to Electronic Arts’ expectations.

The variety of games out there is shrinking. … You simply cannot afford risk, since the console business has become a complete hit or miss scenario where hits are well rewarded but misses are potentially crippling.

The real cost of used games has been the destruction of the mid-tier publisher and the elimination of many an independent development studio….

These are undoubtedly two problems that the game industry faces. But how are they the result of used games? GameStop and EB Games existed during the previous three console generations, buying and selling used games. I traded in black-and-white Game Boy games towards the purchase of a new copy of Earthbound for Super Nintendo. What’s so different about this generation?

Photo: Elisabeth Caren/AIAS

Oh right, game budgets rocketed into the stratosphere. Somehow I feel as if that might have a little something to do with the increased risk of producing games during this console cycle.

Browne concludes his piece with a blithe dismissal of the idea that the relationship between used and new game sales might be anything other than parasitic.

The rebuttal of course is usually the same. Used games fuel new game sales; this is GameStop’s response and some buy into it. Of course, in reality it’s pure conjecture without any evidence.

No evidence at all, except for things like this 2008 study that shows that of the 26 million or so regular sellers of used games, 16 million of them used that credit to buy exclusively brand-new games.

Or like GameStop’s own statements. “We provide our customers with an opportunity to trade in their used video game products in our stores in exchange for store credits which can be applied towards the purchase of other products, primarily new merchandise,” GameStop said in a 2011 filing with the Securities and Exchange Commission. If it’s lying, it’s lying to the SEC.

If used game trading fueled new game sales then when used game trade-ins became the new standard a few years ago new games sales should have spiked. Of course they didn’t; in fact game sales have stayed mostly flat or actually declined.

That’s funny, because the numbers I have (provided to Wired by the NPD Group) say that videogame sales have more than doubled since the year 2000, when the Babbage’s and Funcoland chains of game stores merged and rebranded as GameStop.

Yes, sales of new packaged software did drop after 2008, which is probably what Browne is referring to when he conveniently marks that very moment in time as being “when used game trade-ins became the new standard a few years ago,” not providing any evidence to back up that spurious claim.

What happened in 2008? Well, the Wii started to drop off in popularity precipitously, after inflating the numbers for a few years by selling more than any other game platform had ever managed.

More to the point, the App Store launched, giving gamers a widely popular platform to purchase low-cost games that don’t count toward the sales charts of packaged ones. Simultaneously, other digital platforms like Steam started to gain wider acceptance. Earlier this week, the NPD Group said that digital games and add-on content have accounted for an additional $2.5 billion in sales in the U.S., U.K., France and Germany so far this year.

I also seem to remember something about a global financial crisis and a deep recession that caused consumers of everything from homes to toothbrushes to stop spending so much money at retail. Experts still disagree on what caused the meltdown: Too much government meddling in markets? Fat-cat Wall Street bankers? I can’t be sure, but at this point I feel like Richard Browne would blame it on used videogames.

[Game] churning isn’t a one-off second hand thing but a multiple of a multiple. New game gets returned for used game which gets returned for used game which gets returned for used game. It’s not like GameStop is pushing new game sales when I bring the first game back.

Oh no, it’s not like GameStop is doing that at all.

Oh wait, except that’s exactly what GameStop does. It routinely offers extra trade credit when a trade is applied to the pre-order and subsequent purchase of a brand-new, day-one, full-price game.

We sell a lot of product to adults with decent disposable income — people who will find a way to buy Skyrim, Saints Row: The Third, Assassin’s Creed, Battlefield 3, Batman and Call of Duty in November.

Hey, American males ages 18-35, guess what? Were you feeling a bit of a cash crunch this past holiday season? Still trying to pay the credit card bills? Don’t worry, says Richard Browne, you all actually have a spare $360 plus sales tax that you could have spent purely on yourself over Christmas after buying presents for the kids. If you’re wondering where that money is, it exists because he says so.

Conclusion: Games Cost Too Much Money

Why do people buy used games? Because they cost less money. Why do people sell their used games? Because they’d rather have money than the game. The number one reason, in that 2008 survey, why gamers traded in games was “The game is not very good.”

Games cost too much: Players don’t feel that it is a good value to pay $60 for a game and then immediately be hit with an additional $10-$20 charge for the rest of the content.

Games cost too much: The popularity of used videogames simply indicates that players are seeking to mitigate those costs from both ends, by buying low-cost used games and/or selling games back for store credit.

Games cost too much: Gamers are dumping more of their money and time into smartphones and tablets, where games cost a dollar or are free and are getting more and more entertaining by the day.

Games cost too much: Gamers are happy to pay $60 and up for the best-in-class experiences like Call of Duty or Skyrim, but they don’t have to pay $60 for B-games anymore. Let alone $90.

Games cost too much, and there are plenty of game publishers that are doing something about it. The ones who aren’t will just keep losing their customers.



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