The $70 Price Tag Is Actually Indefensible (The Jimquisition)

[Jakisthe]

Disclaimer: I have no idea where to find a more reliable outlet for data on revenue and salaries, so take this info with a grain of salt.

From NewZoo:

The Global Games market in 2020 will generate 174.9 BILLION dollars in revenue.

Since, I can't find more reliable numbers, I'm using glassdoor here for salaries.

Developers seem to be making around, on average, $50k to 60k in salary, not counting any potential bonuses because I can't see that.

So in a market that will generate revenue that is 2.9 Million times the average salary of a developer, and noting that this article from 2017 stated that the national average salary was 70k (its now 12k less), that means that revenues for games have gone up by almost 70 billion dollars and average salaries have literally dropped.

I'm doing some basic ass research here, but if someone wants to come in and correct me, please do, happy to update this.

Click to shrink...

I know the games industry is very large, but I don't know if topline revenue is what I'd be looking at. I'm frankly not sure what would be a good indicator, to be entirely honest.

What I just pulled myself from filings is the average R&D expense as a % of revenue for the 6 largest public video-game only companies, and wound up with this:

Which seems to indicate a greater spend towards R&D (incrementally, in fits and starts, but it's there) over time. Now, I can imagine all sorts of reasons why R&D would be going up, and the early 00s aren't the world's most statistically relevant period for this because in, say, 2000 there was only EA and Take-Two, but it's certainly a trend.

This doesn't include anything about wages (S&P Market Intelligence, which is where I generated this from, doesn't have wage information), and I didn't check against headcount (although I could if you'd want, just have to give me a few hours to get back to this stuff). Plus, of course, this is only a handful of companies, although many of the other big gaming companies are either very diversified, or private. I can expand this to check other metrics/companies if anyone thinks it would be helpful. I am also just now seeing that Nintendo and Ubi give R&D of 0 even in years when they gave revenue; thanks a lot early 00s European and Japanese filing regulations for messing me up after I generated the

As it stands now though, just looking at this, R&D seems to becoming more burdensome. Whether that gets into the question of what can be defended or not, I don't know, but that's what I'm seeing.

Source: S&P Market Intelligence, filings
Edit: Removed instances of [revenue but zero reported R&D for some companies in early 00s] from the average margin of those years

 

[Asriel]

Being apathetic about price increases during a pandemic and going out of your way to make posts like "well don't buy games then", which happened on this very page of this thread, is corporate apologia.

Acting like buying used or waiting for sales has nothing to do with what these companies are charging for their games. The ratio of physical to digital games is moving more and more to digital so more people are going to be buying these games at these higher price points.

Click to shrink...

Um, yeah, I will be apathetic about the $10 price increase for freaking video games during a pandemic where people are struggling to even get food. If that makes me a corporate apologist than so be it.

There will be plenty of avenues and opportunities to purchase games at cheaper prices as is evidenced by this thread and many others which discuss sales. But yes, gamers LOVE to paint themselves as the poor victims here. Boo hoo.

 

[Iron Eddie]

Um, yeah, I will be apathetic about the $10 price increase for freaking video games during a pandemic where people are struggling to even get food. If that makes me a corporate apologist than so be it.

There will be plenty of avenues and opportunities to purchase games at cheaper prices as is evidenced by this thread and many others which discuss sales. But yes, gamers LOVE to paint themselves as the poor victims here. Boo hoo.

Click to shrink...

Are we comparing food to videogames as necessities?

 

[25th Baam]

I don't always agree with Jim but he's been criticizing these companies and capitalism indirectly for years. I don't think it's reasonable for him to have to add that context to every video discussing any aspect of it.

Click to shrink...

He criticizes capitalism pretty directly, like fuck capitalism could be the logo from his channel lol

 

[Deleted member 18944]

I know the games industry is very large, but I don't know if topline revenue is what I'd be looking at. I'm frankly not sure what would be a good indicator, to be entirely honest.

What I just pulled myself from filings is the average R&D expense as a % of revenue for the 6 largest public video-game only companies, and wound up with this:

Which seems to indicate a greater spend towards R&D (incrementally, in fits and starts, but it's there) over time. Now, I can imagine all sorts of reasons why R&D would be going up, and the early 00s aren't the world's most statistically relevant period for this because in, say, 2000 there was only EA and Take-Two, but it's certainly a trend.

This doesn't include anything about wages (S&P Market Intelligence, which is where I generated this from, doesn't have wage information), and I didn't check against headcount (although I could if you'd want, just have to give me a few hours). Plus, of course, this is only a handful of companies, although many of the other big gaming companies are either very diversified, or private. I can expand this to check other metrics/companies if anyone thinks it would be helpful.

As it stands now though, just looking at this, R&D seems to becoming more burdensome. Whether that gets into the question of what can be defended or not, I don't know, but that's what I'm seeing.

Source: S&P Market Intelligence, filings

Click to shrink...

Interesting, thanks for sharing.

My take on this data would be to just fall back and bolster the point about creating demand for bigger and better, and R&D typically explores using new technology to achieve that. See Frostbite, or Unreal Engine, etc. Not to mention that I believe that most game development budgets are funneled into marketing, which would use R&D results to fuel their campaigns and identify consumer trends.

 

[Zen]

It really makes no sense that the middleman, a publisher, gets more cut of the profit than the creatives who actually made the content customers are buying.

 

[Tfritz]

It really makes no sense that the middleman, a publisher, gets more cut of the profit than the creatives who actually made the content customers are buying.

Click to shrink...

that's capitalism baby
(this isn't me being flippant, it's literally what capitalism is)

 

[LunaSerena]

I know the games industry is very large, but I don't know if topline revenue is what I'd be looking at. I'm frankly not sure what would be a good indicator, to be entirely honest.

What I just pulled myself from filings is the average R&D expense as a % of revenue for the 6 largest public video-game only companies, and wound up with this:

Which seems to indicate a greater spend towards R&D (incrementally, in fits and starts, but it's there) over time. Now, I can imagine all sorts of reasons why R&D would be going up, and the early 00s aren't the world's most statistically relevant period for this because in, say, 2000 there was only EA and Take-Two, but it's certainly a trend.

This doesn't include anything about wages (S&P Market Intelligence, which is where I generated this from, doesn't have wage information), and I didn't check against headcount (although I could if you'd want, just have to give me a few hours to get back to this stuff). Plus, of course, this is only a handful of companies, although many of the other big gaming companies are either very diversified, or private. I can expand this to check other metrics/companies if anyone thinks it would be helpful.

As it stands now though, just looking at this, R&D seems to becoming more burdensome. Whether that gets into the question of what can be defended or not, I don't know, but that's what I'm seeing.

Source: S&P Market Intelligence, filings

Click to shrink...

As an financial analyst, what you want to look at as the first indicator to make yourself an idea of how profitable the industry is at the moment is the Ebitda and the Ebitda margin. That shows you the earnings the company has after paying all operating costs, but discounting depreciation and amortization, that don't have a direct impact on the cash flows.

I was just looking at a company today whose revenues aren't as high - but since their cost structure is highly efficient, their margin is really high.

On topic, I think the indefensible part is that we haven't heard that the publishers are actually crying for lowering profits in recent years. Thing is, they probably have higher profitability margins, but it rubs me wrong that the inmediate response from publishers (not developers) is to increase price and pass that extra cost to the customers insteda of doing an analysis of where their cost structure is inefficient and can be improved. IE - EA increased the price for Fifa (which I bet is mighty profitable), but didn't lift a finger to put a limit on some of their studios questionable practices (looking at you, Bioware) that could lead to higher costs.

 

[Asriel]

Are we comparing food to videogames as necessities?

Click to shrink...

Am I, you mean? Yes. I'm using as a point of perspective to exemplify my own apathy.

 

[Eeyore]

Um, yeah, I will be apathetic about the $10 price increase for freaking video games during a pandemic where people are struggling to even get food. If that makes me a corporate apologist than so be it.

There will be plenty of avenues and opportunities to purchase games at cheaper prices as is evidenced by this thread and many others which discuss sales. But yes, gamers LOVE to paint themselves as the poor victims here. Boo hoo.

Click to shrink...

This has to be bait.

It really makes no sense that the middleman, a publisher, gets more cut of the profit than the creatives who actually made the content customers are buying.

Click to shrink...

Weird how the talent in all these industries isn't making the amount of money as the labels or publishers.

 

[Asriel]

This has to be bait.

Click to shrink...

Yup. Just another corporate apologist railing against suffering gamers.

 

[ANDS]

It's not literally indefensible. Some games cost 70 now because the demand is there. The argument for game costs is only indefensible if you only use the argument that STERLING assumes you are going to use.

 

[Eeyore]

Yup. Just another corporate apologist railing against suffering gamers.

Click to shrink...

Glad to see you're at least self-aware.

 

[Asriel]

Glad to see you're at least self-aware.

Click to shrink...

👍

Hoping gamers will survive despite the struggle in these difficult times.

 

[Lobster Roll]

Yup. Just another corporate apologist railing against suffering gamers.

Click to shrink...

Can we at least get an extremely thin veil? Or is overt the play here?

 

[kitler53]

A $60 game that's 50% off is $30.
A $120 game that's 50% off is $60.

Everybody saying that it doesn't matter because they'll just wait for a sale are not taking into account that the sales will end up becoming more expensive by extension while publishers can point and say, "but it's 50% off, just like always!"

Click to shrink...

yeah, but Uncharted 4 shipped at $60 msrp but since then the msrp dropped to $20 and is on sale literally today for 50% off bringing it to $10. ...and you don't have to take a game that old to see huge sales. TLoU2 is only 5 months old and is on sale today for $30.

Things are worth only what someone is willing to pay for them. hell, they could raise the msrp of GoW2 to $500 for all i care. i wouldn't buy it day 1. frankly no one else (except a handful of suckers) would buy it either and the price would soon be dropped.

i really don't know if the raise to $70 is a good or bad financial decision. but i do know i'll pay for a game what i think it is worth. very, very few games are worth $60 to me let alone $70. but all games drop in price quite quickly. That won't change with the increase to $70. honestly, if it deters enough people who currently buy games day 1 to wait it probably means i'll get a good price even faster. ...nothing accelerates a game's price to plummet like poor day 1 sales.

 

[Sheepinator]

Being apathetic about price increases during a pandemic and going out of your way to make posts like "well don't buy games then", which happened on this very page of this thread, is corporate apologia.

Acting like buying used or waiting for sales has nothing to do with what these companies are charging for their games. The ratio of physical to digital games is moving more and more to digital so more people are going to be buying these games at these higher price points.

Click to shrink...

I noticed your Hades avatar. It's interesting to look at how indie game devs have raised prices so much over the years that so-called AAA games stayed static at $60.

Of that devs games:

Bastion 2011 $15
Transistor 2014 $20
Hades 2020 $25

You can see a similar trend with Housemarque and other devs. About a decade ago their games were $10, now they launch at $20.

 

[Deleted member 13077]

Agreed, and so far I've got plenty of my money's worth out of next gen without paying £70 for a single game (Miles, Astro, DMC5 and Bugsnax all cost about £80 for the lot).

Don't buy into the day 1 hype as much as you can. As great as I think Bluepoint are, they're not getting more than £40 out of now for DS, so I'll wait for a sale.

 

[Piggus]

Just like the $399 console expectation, the $60 game expectation is pretty unrealistic when you consider inflation. Games are relatively inexpensive even at $70 compared to anything before the PS2 era.

The problem though is you have full-priced AAA big-budget games (which make sense to release at $70) next to games that are charging the same amount but are much smaller in scope or are riddled with micro-transactions/gacha/add-ons that can inflate the price even more. There needs to be some kind of pricing standard here that goes beyond $70 being the maximum you can charge. But then again it's up to devs/pubs to weigh that risk. If the response to Destruction All Stars is anything to go by (was $70, but is now PS+ from all the backlash), hopefully consumers will ultimately keep publishers in check on this.

But people who think the next GTA or Naughty Dog game is too much at $70 are nuts. Some of these games are immensely expensive and even at $70 will need to sell millions of copies just to break even.

 

[JuniperAndSage]

It really makes no sense that the middleman, a publisher, gets more cut of the profit than the creatives who actually made the content customers are buying.

Click to shrink...

They don't "get" a bigger cut, they take it from the people who produced it.

 

[Sabin]

Amazing the extent people will go to in order to justify why they just don't feel like paying more for their video games despite the monumental leaps the industry has made in providing these experiences to players. As always, people will vote with their wallets. As always, I expect no impact to the companies (rightfully) raising their prices.

Click to shrink...

Yeah, these poor shareholder surely need the 10$ per game. Imagine if they could afford one ferrari less a year .. the horror.

Like for real i still can't believe how folks can still believe that any of the money publisher make extra from raising the prices will go to the pockets of devs or game development. Out of interest are you also believing in trickle down economics?

 

[Jakisthe]

As an financial analyst, what you want to look at as the first indicator to make yourself an idea of how profitable the industry is at the moment is the Ebitda and the Ebitda margin. That shows you the earnings the company has after paying all operating costs, but discounting depreciation and amortization, that don't have a direct impact on the cash flows.

I was just looking at a company today whose revenues aren't as high - but since their cost structure is highly efficient, their margin is really high.

On topic, I think the indefensible part is that we haven't heard that the publishers are actually crying for lowering profits in recent years. Thing is, they probably have higher profitability margins, but it rubs me wrong that the inmediate response from publishers (not developers) is to increase price and pass that extra cost to the customers insteda of doing an analysis of where their cost structure is inefficient and can be improved. IE - EA increased the price for Fifa (which I bet is mighty profitable), but didn't lift a finger to put a limit on some of their studios questionable practices (looking at you, Bioware) that could lead to higher costs.

Click to shrink...

EBITDA would be useful if I was taking a more comprehensive picture of the companies, but considering how I already needed to remove some strange results for European/Japanese companies(see edit) I'd want to stay closer to topline if possible, and moreover, for this particular case, I'm interested less in the overall strength of the company, but moreso the expansion of portions of their OpEx.

Further margins could include all sorts of stuff, like S&M or G&A which I don't know how relevant they'd be to this. I could pull the EBITDA, or EBIT (which I personally prefer) but like I said, I'm not sure what would be the most helpful.

 

[Mr.Deadshot]

yeah, but Uncharted 4 shipped at $60 msrp but since then the msrp dropped to $20 and is on sale literally today for 50% off bringing it to $10. ...and you don't have to take a game that old to see huge sales. TLoU2 is only 5 months old and is on sale today for $30.

Things are worth only what someone is willing to pay for them. hell, they could raise the msrp of GoW2 to $500 for all i care. i wouldn't buy it day 1. frankly no one else (except a handful of suckers) would buy it either and the price would soon be dropped.

i really don't know if the raise to $70 is a good or bad financial decision. but i do know i'll pay for a game what i think it is worth. very, very few games are worth $60 to me let alone $70. but all games drop in price quite quickly. That won't change with the increase to $70. honestly, if it deters enough people who currently buy games day 1 to wait it probably means i'll get a good price even faster. ...nothing accelerates a game's price to plummet like poor day 1 sales.

Click to shrink...

Honestly, I think most people who are paying 60 for a game now will buy it at 70 as well. They just want to have it ASAP and 10$ doesn't make a huger enough difference for them when they are already willing to spend 60$ on a game in times where games get 33-50% sales a few weeks after release.

 

[Sheepinator]

Like for real i still can't believe how folks can still believe that any of the money publisher make extra from raising the prices will go to the pockets of devs or game development. Out of interest are you also believing in trickle down economics?

Click to shrink...

I posted a pdf here earlier from a game developer survey of thousands of devs. Tons of them get bonuses, stock options, stock grants, etc. So yes, most definitely some of the money does go in their direction.

 

[Eeyore]

I noticed your Hades avatar. It's interesting to look at how indie game devs have raised prices so much over the years that so-called AAA games stayed static at $60.

Of that devs games:

Bastion 2011 $15
Transistor 2014 $20
Hades 2020 $25

You can see a similar trend with Housemarque and other devs. About a decade ago their games were $10, now they launch at $20.

Click to shrink...

Do you honestly expect to make in roads with this argument when we're talking about giant publishers making bank as it is and selling games for 70 dollars that also include MTX? Yes indie games have gotten more expensive but I guess I'm way more forgiving of that because they aren't giant corporations but smaller companies that could go under if a game fails.

You could look at all the different versions of Skyrim and how Bethesda thought well we could include VR with the other version of the game like a game like No Man's Sky, but nah instead let's again sell another version of the game.

Yeah I'm gonna be more forgiving of indie developers almost always, even in the case of No Man's Sky, which charged 60 at launch and had major issues dealing with a giant publisher like Sony.

I posted a pdf here earlier from a game developer survey of thousands of devs. Tons of them get bonuses, stock options, stock grants, etc. So yes, most definitely some of the money does go in their direction.

Click to shrink...

I would hazard a guess that it's an extremely low share of the profits.

 

[Hernan532]

It's expected that games get more expensive, like every other thing in the world. Iphone 6 was expensive at $400 now it's a lot more than that.
It's how we , as workers, increase our income.
I'm dev and like everyone else we need to progress. Imagine you as developer getting paid the same for 10 years.
Companies need to increase the final price to counter this.
Of course you are not bound to buy it if you think is expensive.
GOW for me was the best game i played in the last 5 years, $60 or 80 for that kind of game it's ok for me.

 

[Antrax]

How does being against a price increase mean he wants everything to be free? Quite the leap

Click to shrink...

I don't think he actually wants that (and I am not that poster), but I do think it's basically all that's left after watching his content.

MTX? Bad
Subscription? Bad
Loot box? Bad
Etc....

I have this issue with a lot of talking head content. It's easy to say what you don't like. I don't like paying taxes. But I also want funded govt. In Jim's case, he needs to explicitly state the monetization he wants implemented. Then he can defend it from criticism.

Also he needs to drop a lot of the outrage that's misplaced. These are toys. There is no consumer exploitation occurring when a company charges too much money for a toy. It is not an immoral decision to ask for $70 instead of $60. It's just a company overvaluing their goods. Happens all the time. I've posted this before but I personally haven't bought a game at MSRP since Borderla ds 2 came out. I think $60 is simply too much for most games, and my wallet appreciates the restraint. Video games are not essential goods. If the new CoD or Horizon or Spiderman or Halo cost too much money, then don't buy them for that price. I won't be.

 

[Asriel]

I don't think he actually wants that (and I am not that poster), but I do think it's basically all that's left after watching his content.

MTX? Bad
Subscription? Bad
Loot box? Bad
Etc....

I have this issue with a lot of talking head content. It's easy to say what you don't like. I don't like paying taxes. But I also want funded govt. In Jim's case, he needs to explicitly state the monetization he wants implemented. Then he can defend it from criticism.

Also he needs to drop a lot of the outrage that's misplaced. These are toys. There is no consumer exploitation occurring when a company charges too much money for a toy. It is not an immoral decision to ask for $70 instead of $60. It's just a company overvaluing their goods. Happens all the time. I've posted this before but I personally haven't bought a game at MSRP since Borderla ds 2 came out. I think $60 is simply too much for most games, and my wallet appreciates the restraint. Video games are not essential goods. If the new CoD or Horizon or Spiderman or Halo cost too much money, then don't buy them for that price. I won't be.

Click to shrink...

For real.

 

[Eeyore]

It's expected that games get more expensive, like every other thing in the world. Iphone 6 was expensive at $400 now it's a lot more than that.
It's how we , as workers, increase our income.
I'm dev and like everyone else we need to progress. Imagine you as developer getting paid the same for 10 years. Companies need to increase the final price to release a 5 years under development triple A game.
Of course you are not bound to buy it if you think is expensive.
GOW for me was the best game i played in the last 5 years, $60 or 80 for that kind of game it's ok for me.

Click to shrink...

But wages have stagnated in major nations like the United States. So this is indeed what is happening. They are flat over the last 20 years while industry revenue has grown considerably.

 

[Sheepinator]

 

[Tfritz]

I don't think he actually wants that (and I am not that poster), but I do think it's basically all that's left after watching his content.

MTX? Bad
Subscription? Bad
Loot box? Bad
Etc....

I have this issue with a lot of talking head content. It's easy to say what you don't like. I don't like paying taxes. But I also want funded govt. In Jim's case, he needs to explicitly state the monetization he wants implemented. Then he can defend it from criticism.

Also he needs to drop a lot of the outrage that's misplaced. These are toys. There is no consumer exploitation occurring when a company charges too much money for a toy. It is not an immoral decision to ask for $70 instead of $60. It's just a company overvaluing their goods. Happens all the time. I've posted this before but I personally haven't bought a game at MSRP since Borderla ds 2 came out. I think $60 is simply too much for most games, and my wallet appreciates the restraint. Video games are not essential goods. If the new CoD or Horizon or Spiderman or Halo cost too much money, then don't buy them for that price. I won't be.

Click to shrink...

i'm not expert but it seems like he wants more money to go to the actual workers working on games and for them to have better working conditions instead of money being funneled into the pockets of upper management while the workers are pulling 80 hour weeks to finish animating realistic horse testicle physics or w/e

 

[Nepenthe]

In Jim's case, he needs to explicitly state the monetization he wants implemented.

Click to shrink...

Pretty sure he just wants games to be <= $60, and for MTX to really only be applicable to significant gameplay expansions. Carved up content, collector's editions, cosmetic shit, and gambling mechanics need to be done away with permanently.

I may be over or undershooting, but this seems to be his gist. And it's an amazing one.

 

[Aaronrules380]

Click to shrink...

It's almost like this has been addressed repeatedly in both this thread and the video and there are a ton of other factors that this completely ignores including the fact that as a metric this is pretty worthless in determining whether a price increase is justified in the first place (Hint: a better metric for talking about how increasing development costs are effecting developer's ability to make money would be return on investment which has been going up)

 

[kitler53]

Honestly, I think most people who are paying 60 for a game now will buy it at 70 as well. They just want to have it ASAP and 10$ doesn't make a huger enough difference for them when they are already willing to spend 60$ on a game in times where games get 33-50% sales a few weeks after release.

Click to shrink...

too true. honestly i see this as basically being the same as movies. i live in an expensive market for sure but to see a movie in the theaters is $18 per person. so taking my family of 4 to the theater is $72 plus tax. ...or i could buy ...or i could just wait 6 months and buy it on blu ray for $20 (or better yet, rent it from the library for free). ...or more likely just buy (almost) a year's worth of disney plus.

i do not get the motivation to be first. it's an awfully big waste of money imo. but whatever, those day 1 viewers/buyers keep the industry fueled to make more movies and games.

..but all in all i still find video games to be quite a good value. my son and i can get a month or more of entertainment out of a $20 purchase. that's way better value than any movie or toy or dinner out or vacation. hell,.. i put $2 into rocket league 1 time and have played it for over 300 hours. that's less than 1cent per hour of play. i'm sure i put more money into electricity then i actually paid to psyonix...

point being is it quite easy to keep gaming very affordable so long as you aren't foolish with your money.

 

[AgeEighty]

Can somebody tell me when a videogame suddenly became a necessity of life of which the price isn't allowed to exceed a certain amount? Don't buy it if you think it's too expensive.

Click to shrink...

It's about whether the money is actually necessary for publishers to make a profit (it isn't) and where it's going (mostly just to publisher executives). That's a perfectly valid avenue along which to criticize pricing.

 

[gravitationsfeld]

I don't always agree with Jim but he's been criticizing these companies and capitalism indirectly for years. I don't think it's reasonable for him to have to add that context to every video discussing any aspect of it.

Click to shrink...

I understand the context, and I still think it's dishonest to make this issue about games alone.

 

[Str0ngStyle]

, there is a world of gaming out there at prices ranging from £FREE to 'less than £70' and that wasn't the case 25 years ago. I'll take the odd £70 game if I can also have cheaper AA games, Game Pass day one releases, quality F2P titles, etc.

Also, think the laser focused criticism of Ubisioft is a bit weird in this case seeing as all of their big games are still $60/£60. They're not one of the £70 pubs yet.

Click to shrink...

I think honestly that is the fear. That there will NOT be the range of prices if games go to $70. There is absolutely gonna continue to be a floor for gaming because of your point about the cheaper AA games, Game Pass etc. But that doesn't do anything about what people are bitching about. I think that gamers "want" the AAA games but do not want that they are worth the money. And while you're right that the other AAA publishers have not raised their prices yet, the fear is that its coming. Game prices as a whole are not rising, but the price ceiling most definitely is.

Rockstar is probably chomping at the bit to charge $70+ for the next GTA. I don't know how I feel about that but considering that GTA V was supported for a generation and a half basically, I'd feel a bit more comfortable paying that.

The Ubisoft thing he is holding a grudge against them for the bullshit they have been up to over the years that we just found out about this summer.

 

[Biggzy]

And you believe higher game prices would have saved these companies?
These companies folded because their games flopped not because game prices weren't high enough.
Higher game prices only accelerate market consolidation, because consumers don't magically have more money just because the industry decided to up prices. Meaning higher prices will lead to less games being sold (at full price).
And the games affected by this won't be the CoD's, FIFA's or GTA's.
The "problem" of the market isn't the amount of money that's in the market it's how this money is distributed.

Click to shrink...

I didn't necessarily say that, but just pointed out that game development costs have only been increasing and, well, publishers have to make back their investment somehow to not only break even but to make a return on investment otherwise they go the way of the dodo. You don't need me to tell you that that means either: Microtransctions, expanding your audience, or charging more upfront for the game, and one of them is a lot harder than the other two.

 

[Deleted member 43552]

I genuinely don't understand the point of these types of discussions. Prices are driven by more than the product cost. Prices are also determined by its utility, demand, etc. If customers don't buy enough of a product, its price would go down. If customers continue to buy the product at the same or higher amounts, the price will go up (assuming competition can be addressed).

Arguing whether the price of a game is defensible or not is pointless.

 

[Antrax]

i'm not expert but it seems like he wants more money to go to the actual workers working on games and for them to have better working conditions instead of money being funneled into the pockets of upper management while the workers are pulling 80 hour weeks to finish animating realistic horse testicle physics or w/e

Click to shrink...

As has been argued by Jim himself though, the companies don't need the extra $10 to appropriately pay their employees. "The price hike is not explainable by rising development costs because companies are posting record profits" is true, but also means that the companies not using those profits to pay their workers is divorced from the price they charge.

Also, this is worker exploitation, which is also not consumer exploitation. What I think Jim needs to tone down on is the moral outrage he has at these price hikes from the consumer perspective. Consumers are not being exploited by a luxury goods company asking for too much money.

Pretty sure he just wants games to be <= $60, and for MTX to really only be applicable to significant gameplay expansions. Carved up content, collector's editions, cosmetic shit, and gambling mechanics need to be done away with permanently.

I may be over or undershooting, but this seems to be his gist. And it's an amazing one.

Click to shrink...

He needs to state this then. "Games should cost up to $60, once, done." People can then respond to that. What he's actually doing is making his own position a ghost to avoid the conversation.

 

[Sheepinator]

It's about whether the money is actually necessary for publishers to make a profit (it isn't) and where it's going (mostly just to publisher executives). That's a perfectly valid avenue along which to criticize pricing.

Click to shrink...

What is an "acceptable" profit margin? For example Ubi last year had non-IFRS operating income of €34.2 on €1,594M sales, which is an extremely low profit margin. Is that still too much? EA's profit margins are similar to what they were in the PS2 days. If it's too much now, it must have been too much then, but I don't remember people complaining this much back then. Just wondering where the line is. Should game publishers be allowed to have the 24% profit margins that Apple has, or the 34% that Microsoft has?

 

[Str0ngStyle]

In Jim's case, he needs to explicitly state the monetization he wants implemented. Then he can defend it from criticism.

Click to shrink...

In Jim's defense, he has been pretty much on the "make a game and sell it" train for a while now. If you can't do that then you shouldn't be in the video games business (his words, not mine.) And a hard ceiling on prices (I do NOT agree with this at all, let the market decide what the floor and ceiling are)

 

[Antrax]

In Jim's defense, he has been pretty much on the "make a game and sell it" train for a while now. If you can't do that then you shouldn't be in the video games business (his words, not mine)

Click to shrink...

Then he should have no issue with someone making a game and selling it for $70!

 

[werezompire]

• They blame gamers but it is the companies who are pushing graphics over everything else.
• Goes on how the biggest games in the world aren't most graphically intensive: Fortnite, hearthstone, etc.
• Most of the massive budget goes to marketing, not graphics or employees.

Click to shrink...

I'm going to have to call foul on this.

Companies spend a lot of money on graphics because it helps them stand out in an increasingly crowded field and it helps them stand out because gamers like better graphics. Yes, the PS2 era had a much healthier bang for your buck ratio when it came to development costs, but can you imagine the outcry if the next Final Fantasy/Uncharted/GTA/etc. looked like a PS2 game? It's not even good enough to look as good as the last game, because gamers and reviewers will dock your game if each game doesn't look noticeably better than the last. People are desperately trying to buy the new systems because they want better graphics (and load times) with the only big exclusive at the moment being a remake of a PS3 game (admittedly, a rather good PS3 game).

Likewise, spending a ton of money on marketing is a necessary evil for big budget games in the modern era because there's so much competition. I'm not even sure what the logic is supposed to be here - that if you spend less money on marketing, you can charge less? No, if you spend less money on marketing, you generally make less money. The trick is to figure out the optimal amount to spend and these companies have a better idea of what that optimal amount is than random pundits.

Marketing + graphics are how you get people to notice your game in the first place. The best game in the world does you no good if nobody knows about it.

There are some games that aren't the most graphically intense that manage to succeed, but they generally have other factors behind their success (Fortnite & Hearthstone, for example, are made by some of the most powerful videogame companies in the world who have the marketing muscle to outspend competitors, same thing with anything that Nintendo puts out). Trying to make the next Minecraft or Among Us is not a viable business strategy since games like that are one in a million.

I say all this as an indie developer who would love to do a NES-style JRPG, but thinks that anything less than "Advanced SNES or PS1 2D" graphics at this stage will render an RPG unlikely to recoup development costs because people will ignore it. You can't do "Basic SNES" graphics in an RPG, because RPGMaker has made that market very saturated and going NES or Game Boy doesn't have the same level of nostalgia for most people. You can do more retro graphics if you're incredibly stylish (see World of Horror) but that's a tough trick to pull off. And for every Shovel Knight, there are hundreds of retro-style games that go unnoticed.

 

[Nepenthe]

He needs to state this then. "Games should cost up to $60, once, done." People can then respond to that. What he's actually doing is making his own position a ghost to avoid the conversation.

Click to shrink...

Meh, this seems like nothing to get worked up over. His whole shtick is debunking game industry arguments. You are free to do that without stating in every engagement "here is everything I believe."

Then he should have no issue with someone making a game and selling it for $70!

Click to shrink...

He probably wouldn't if they got rid of the extra monetization options. That's the caveat.

 

[HylianSeven]

I don't think he actually wants that (and I am not that poster), but I do think it's basically all that's left after watching his content.

MTX? Bad
Subscription? Bad
Loot box? Bad
Etc....

I have this issue with a lot of talking head content. It's easy to say what you don't like. I don't like paying taxes. But I also want funded govt. In Jim's case, he needs to explicitly state the monetization he wants implemented. Then he can defend it from criticism.

Also he needs to drop a lot of the outrage that's misplaced. These are toys. There is no consumer exploitation occurring when a company charges too much money for a toy. It is not an immoral decision to ask for $70 instead of $60. It's just a company overvaluing their goods. Happens all the time. I've posted this before but I personally haven't bought a game at MSRP since Borderla ds 2 came out. I think $60 is simply too much for most games, and my wallet appreciates the restraint. Video games are not essential goods. If the new CoD or Horizon or Spiderman or Halo cost too much money, then don't buy them for that price. I won't be.

Click to shrink...

He's pretty clearly stated that making a game and selling it for money is perfectly fine.

Selling post-launch DLC is also been fine according to him. He's also not been against MTX in Free to Play games, just against Loot Boxes in them. In fact he talked for a while about how much he loved Warframe and it's business model.

I don't think the outrage is misplaced on a lot of things he talks about either, for a number of reasons. I highly recommend this video of his:



It's got actual accounts from people that suffered gambling addictions. He's done other videos about this topic, but another example is things like kids in schools bullying other kids for being "default" in Fortnite. This isn't just a "Gamers rise up!" thing, he's got a legitimate point.

It always annoys me when people reduce any argument about video games to "They're toys". Yes, this argument holds water in some situations, but this is not one of them. We are talking about billionaires lining their pockets with more money while they continue to dodge taxes and ruin people's lives by laying them off after wildly successful fiscal years.

I mean you can reduce any argument about video games to "They're toys" by that logic. "Oh I think the Mass Effect 3 ending should have had this this and this instead" "Oh well they're toys so it doesn't matter!"

 

[Munstre]

Why didn't anybody think of that before? Welp, that's a wrap on this topic.

Click to shrink...

Mock all you like, but it is the truth. This isn't water or food or medicine. These are luxury toys at luxury prices. The creators are happy with these prices and the market seems willing to pay. There is no controversy here.

 

[stefanomusilli96]

Then he should have no issue with someone making a game and selling it for $70!

Click to shrink...

How so? You're saying that as long as there are no MTX or Season Passes then you can charge whatever you want? Besides, what you're describing doesn't exist. Games already have the same types of MTX despite charging 70$. Nothing is going to change.

 

[Deleted member 18944]

Companies spend a lot of money on graphics because it helps them stand out in an increasingly crowded field and it helps them stand out because gamers like better graphics. Yes, the PS2 era had a much healthier bang for your buck ratio when it came to development costs, but can you imagine the outcry if the next Final Fantasy/Uncharted/GTA/etc. looked like a PS2 game? It's not even good enough to look as good as the last game, because gamers and reviewers will dock your game if each game doesn't look noticeably better than the last. People are desperately trying to buy the new systems because they want better graphics (and load times) with the only big exclusive at the moment being a remake of a PS3 game (admittedly, a rather good PS3 game).

Click to shrink...

It started with the company, not the consumer. The only reason people demand more is because they've been taught to demand more by the people selling products.

Click to shrink...

 

[Lobster Roll]

Mock all you like, but it is the truth. This isn't water or food or medicine. These are luxury toys at luxury prices. The creators are happy with these prices and the market seems willing to pay. There is no controversy here.

Click to shrink...

There's clearly a controversy when you consider that this is an ongoing discussion in every pocket of the industry, has spawned countless videos & articles, and has a robust discussion within this very topic.