Over time, the price of video games has risen to $60 due to rising development costs and inflation. But, some people have argued that these games have to be priced accordingly because they are more costly than going out to dinner or watching a movie. Games must not be more expensive.
Games do not cost $60, including everything
The $60 price is just one of the revenue streams today. Other streams include season passes, loot box purchases, micro transactions, and downloadable content. Video games like Over watch, Battlefield, The Division, Destiny, and Call of Duty relied on different revenue streams. Game publishers increased the price to $80; they will still rely on loot boxes or downloadable content for the extra money.
For instance, Call of Duty’s WW2 had a season pass for an additional $50. Activation and Sledgehammer Games offered credits for players to purchase loot boxes in exchange for real money. Most players buy the base game only, but many of them still buy the other extras. Some players are willing to pay $100 for a Deluxe Edition or a season pass. Thus, Call of Duty: WW2 was able to generate more money than its original price. In fact, its players pay for loot boxes up to now.
Publishers take advantage of digital distribution to lower costs
Going digital killed the used game market. After the release of PlayStation 4 and Xbox One, the price of video games had increased. In February 2013, the share price of Activision cost $14.37, months before the release of the video game consoles. The publisher of video games was already a big name in its field. As of this writing, ATVI shares cost $70.19. EA, the publisher of Battlefield, has its shares at $16.97. Today, it is at $126.02. The massive gains are attributable to digital distribution.
The cost of selling the video games at retail is high. Publishers need to consider physical media and packaging. Also, they need to add in shipping and distribution costs. Retailers get a cut from the selling price. Reselling and trading used games also compete with new copies. Physical video games cost money to publishers.
But, digital media change the course of the game. Video game publishers no longer worry about physical media, shipping costs, packaging and the threat of the used games market. Although Valve, Microsoft, and Sony still have a cut on the sales, the amount of money is incomparable to the cost of physical media.
Net bookings for Activision was at $7.16 billion in 2017. A large part of it, $5.43 billion, came from digital sales, and revenues from microtransactions. This means that the margin of Activision has increased significantly. Companies like Rockstar continue to make money from selling copies of GTA V, and GTA Online.
Higher price can scare players away
Publishers get additional money from other revenue streams. Thus, increasing the price is not in the game publishers’ best interests because it can scare away players. If the price goes higher, publishers sell fewer copies. Thus, they also miss sales from other revenue streams like micro-transactions and downloadable content.