Is Gaming REALLY Cheaper Than Ever?

Is Gaming REALLY Cheaper Than Ever?
Image courtesy of ArsTechnica

Many times I have mentioned that games today are relatively cheap – especially in light of my memory of paying $60 for a Sega Genesis game for my brother-in-law nearly 25 years ago! And that is exactly the point of a new article at ArsTechnica, which calls it an ‘inconvenient truth’ that game prices have actually fallen over time.

From the article:

During one of our discussions on the issue of game pricing, we tracked down a press release putting the suggested retail price of both Mario 64 and Pilotwings 64 at $69.99. Halpin says that the N64 launch game pricing only tells you part of the story.

“Yes, some N64 games retailed for as high as $80, but it was also the high end of a 60 to 80 dollar range,” he told Ars. “Retailers had more flexibility with pricing back then—though they’ve consistently maintained that the Suggested Retail Price was/is just a guide. Adjusted for inflation, we’re generally paying less now than we have historically. But to be fair, DLC isn’t factored in.” He also points out all the different ways that we can now access games: you can buy a game used, rent a game, or play certain online games for free. There are multiple ways to sell your old console games, and the competition in the market causes prices to fall quickly.

It goes back further than N64 generation, however. You can find scans of Sears catalogs that put the price of NES games around $30 to $50 each. At current prices that’s $50 to $80. This was in 1990, well into the system’s life.

More recently, with the PS2/XBOX/GameCube generation, prices seem to have finally stabilized. For that generation, $50 was the working price for console and PC games alike. But for the latest ‘generation’ of games, increasing budgets meant increasing prices. The normal price for a XBOX360 or PS3 game is now $60, with PC and Wii games generally costing $50.

The image at top shows how much inflation would impact the price of classic games, making it look like a bargain to be paying $50 – 60 for games. I mean, budgets have gone from hundreds of thousands to tens of millions of dollars to make a game, overhead for fuel and transport and all sorts of things have all greatly increased, and so it only makes sense that games should cost more. Even just taking inflation into account, that $50 game from 1995 would be $72 today, and Baldur’s Gate 2 from 2000 would cost $64.

But at the same time the article points out that part of the reason for the variation in pricing was that memory cartridges were expensive, so you could assume a higher priced game used more memory. Games now come either on much cheaper optical storage, or as digital downloads which only cost the more abstract amount required for storage and distribution. Also, immature industries tend to run much less efficiently, and as time progresses prices drop and efficiencies maintain a reasonable profitability.

So it is certainly debatable exactly what games SHOULD cost now. But I agree that paying $50 for now is less in terms of ‘real money’ than paying $50 ten or fifteen years ago.

But is the game we are getting the same? I would argue that it is not. Just as the $0.99 iPhone game has fundamentally shifted the casual market, so has the $5 post-release DLC.

My point: figuring out if games are cheaper now requires more than consulting an old ad page and an inflation calculator.

I used Bioware’s Baldur’s Gate 2 as a specific example. A decade ago, you would get a game, and perhaps a year or so later you would get an ‘expansion pack’. The expansion uses the same engine but adds a load of content, and even enhances the experience of the original game with new shared regions to explore. Both games offer massive and detailed manuals that you would always take the time to read – because it was worth it and enjoyable! The original game offered ~120 – 200 hours of gaming, with the add-on providing another 40 – 60. It makes me tired just thinking about it!

Fast forward a decade, and we have Bioware’s Dragon Age: Origins. The main game offered ~60 – 80 hours of gameplay, and about four months later we got the Awakenings expansion, which picked up after the end of the original and allowed you to import your character and continue on for another 10-15 hour expansion. The manuals? Nobody knows because they really weren’t worth reading, since everything there was covered in-game, and more. There was an item added from the expansion that you could obtain in the original game.

In terms of pricing, the original Baldur’s Gate 2 cost $50, Throne of Bhaal cost $20, meaning you could get everything that classic game had to offer for $70.

The simplest comparison would be to say that Dragon Age for the PC cost $50 and the Awakenings expansion cost $40. Meaning for $90 you get the ~75-90 hours of play offered by the two official campaigns. Considering both games are excellent and the rate of inflation, that sounds pretty reasonable – in fact, inflation alone would cause the price to increase to ~$89!

But it really isn’t so simple – your $50 gets you the ‘core’ experience for Dragon Age, but pretty quickly you meet someone who breaks the fourth wall and tries to get you to buy a large quest to get a stronghold! You also discover that there is another party member available … if you have bought him as day-of-release DLC! In other words, while we can quibble about the whole notion of ‘held back content’, it is clear that even someone buying on launch day is NOT getting the WHOLE Dragon Age experience for $50. To get that? $65.

In addition, over the year since launch we have seen several DLC add-ons: Return to Ostagar, Darkspawn Chronicles, Leliana’s Song, The Golems of Amgarrak, and Witch Hunt. Each of these offered roughly an hour of game time, and cost either $5 or $7.

DLC has added a whole new dimension – on the one hand it allows gamers to keep dipping back into a game they love for a nominal fee. On the other hand they offer an obscenely low return on investment for gamers – pretty much all technical content is recycled, the team is already in place and expert with the toolset, and the relative price to playtime ratio is very high compared to the original game.

Specific to Dragon Age, some new voice acting was required for all modules, as well as some new music for Leliana’s Song, but otherwise everything was recycled. One person on a forum calculated that based on the $7 for the <1 hour of Witch Hunt, the relative price per game time for Dragon Age at 80 hours would have bee ~$450 or so!

Taking DLC and the ‘collector’s edition’ of Dragon Age into account, the ‘full experience’ lasting 80 – 100 hours would cost ~$130.

All of a sudden the comparison isn’t so simple – an increase from $70 to $130 is no longer inflationary. Of course, whether or not the ~$30 of DLC should be included is debatable, but even the $70 to $105 increase is non-trivial.

So are games really cheaper now? That is what the game industry would have you think – and sites like Ars Technica are right there with them. I myself have made the point many times that a base game now costs the same or less than it did twenty years ago, not even counting in inflation. So it seems like games really ARE cheaper for us as consumers.

Yet … doesn’t it seem strange that budgets have increased 1000x, inflation has risen a total of ~27% over 10 years, cost of living for workers has increased substantially, medical care and so on have greatly increased – and yet game companies are making more money than ever selling games for so much less? How does THAT work?

One thing is certain – game companies are run like businesses, with project plans, time-lines, budgets and accountability. As the industry has matured it HAS become much more efficient. Material costs have greatly decreased moving from cartridges to cheap disks and digital storage. And many companies have either failed or been swallowed up – we now have Bioware as part of some massive EA conglomerate rather than an independent company … and they were one of the most successful companies!

Yet throughout it all folks like EA and Activision and Ubisoft have cried poor, blamed piracy and used games and everything else for their woes, and resorted to more and more ways to monetize everything gamers do.

I mentioned campaign DLC, but most games also have ‘trinket DLC’. Dragon Age has armor and ‘feastday gifts’, Mass Effect 2 has weapons and armor, Oblivion infamously had ‘horse armor’. I wrote about how Lord of the Rings Online doubled revenue by going free – and that is exactly what is happening here. Using their own sort of ‘razor & blade’ model, game companies are keeping game prices more or less flat while increasing revenues by a variety of other means.

Dan has been tracking the intriguing SeV-Delta story, and one thing that is very clear to anyone who has ever worked in a company dependent on selling stuff – companies don’t like anything that disrupts a revenue stream, and similarly love to exploit and maximize any revenue stream they find.

For gaming companies, a major expense is maintaining support for online gameplay of existing games. They have enjoyed the profits based on this generation of consoles offering excellent online gaming and community involvement through XBOX Live and Playstation Network, but have discovered two things: it costs money, and while one gamer might tire of a game in three months, used game sales perpetuates the online support need indefinitely.

So online gaming is at once a boon and a sinkhole for revenues. Taking immediate action, they noticed that they had a clause for years in their EULA saying they reserved the right to terminate online support after a year or with certain notice. So they started making online support die after a year for sports games. That was an immediate savings, but they still noticed that the player drop-off didn’t meet their models – and they determined that used game sales were the issue. Someone could buy the game for $60, play for three months and then sell or trade away for ~25 – 50% value, and the new person suddenly has full online access!

That is how Project $10 was born, and as I wrote about, they are estimating a 60% buy-in for stuff they are tracking. This means that 60% of (mostly sports) gamers who got the game used have paid $10 to go online, even knowing that $10 is buying them less than a full year of online support.

DLC is the new revenue stream to exploit – because in spite of the outcry and outrage over Horse Armor and the Tiger Woods tutorials being sold for a few dollars, and protests and petitions saying folks would NEVER pay for content that used to be free … millions of gamers did just that. Now, rather than being an exception, we can assume that any ‘high level’ game will have a special version that costs more and includes non-trivial in-game content, gets extra DLC right at release, and quickly gets content of questionable value pumped out on a regular basis to keep the game in the spotlight.

So while you CAN buy that cool new game for $50 – 60, EA and others are expecting the AVERAGE gamer to dump more than $30 into that same game in terms of DLC items and post-release content. Suddenly we have more than accounted for inflation, and combined with inflation …

The real cost of games for gamers has actually increased.

Assuming you accept my hypothesis, you are probably asking: So what can I do?

Regardless of platform, the key to being a smart consumer is to make a list of what you NEED and what you WANT. Most gamers have stuff they absolutely want to have right at release, and other stuff they think will be cool. Don’t pay full price for ‘nice to have’ games.

If you are a console gamer, even for your top games, look into trading sites such as Goozex. These sites allow you to trade your existing games in order to accumulate ‘points’ to get new games you want. Of course, the most popular games have wait times, but it can lead to significant savings.

If you are a PC gamer, take advantage of digital download sales and discounts. Unless you really are tied to physical games, the best deals are through places like Steam, Direct2Drive, Impulse and GamersGate. Most places are offering pre-order bonus items AND discounts … heck, for ArcaniA I got the game, as well as two other games from a few years ago and STILL paid less than the $50 retail price!

Also on PC, use sites like Good Old Games to expand your Horizons, and Steam and Direct2Drive’s frequent deep-discounts on older games to expand your catalog. As I have said countless times in my Netbook Gamer articles, many of these older games STILL rock!

Again regardless of platform, gamer attention spans haev never been shorter – use this to your advantage. A game released in spring 2010 will be an ‘oldie’ come January 2011 and likely have had a significant price drop. A little patience can save you big!

There you have it – I agree with ArsTechnica that games CAN be cheaper, but looking deeper into how these guys are making so much money shows that in reality they seldom ARE cheaper. The industry has matured in terms of efficiency and finding ways to get our money, and it is up to us as consumers to be smarter about how we part with our money.

Source: ArsTechnica

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About the Author

Michael Anderson
I have loved technology for as long as I can remember - and have been a computer gamer since the PDP-10! Mobile Technology has played a major role in my life - I have used an electronic companion since the HP95LX more than 20 years ago, and have been a 'Laptop First' person since my Compaq LTE Lite 3/20 and Powerbook 170 back in 1991! As an avid gamer and gadget-junkie I was constantly asked for my opinions on new technology, which led to writing small blurbs ... and eventually becoming a reviewer many years ago. My family is my biggest priority in life, and they alternate between loving and tolerating my gaming and gadget hobbies ... but ultimately benefits from the addition of technology to our lives!