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Video games and elastic pricing

February 28, 2014

A brand new retail game would cost at a local Gamestop or any other retail store would cost someone around $60. While price elasticity is prevalent with many smaller independently developed and published video games, many of the larger AAA studios have set the price point at $60. This is a lot of money to spend on a single video game and that does not include additional downloadable content that can make the total up to $80 or $90.

So what’s the reason behind the $60 model? It’s not the budgets that some of these games command. A game like 2011’s “Star Wars: The Old Republic” reportedly had a budget of $200 million, while other titles like “L.A. Noire” cost $50 million. Both titles did indeed cost a lot of money but one spent a fraction compared to the other. Both ultimately cost $60 at launch. Is it used games that add to how expensive these games are? Game publishers like to blame used game sales for the high prices of games at launch. This may be a valid argument, but a counter-argument could be made that gamers would buy new if new weren’t so expensive in the first place. No matter how you look at it; these prices may seem to be too high for cash-strapped college students, so should they be lowered?

Personally, I see an elastic price model as a better alternate than what is currently being used. There are many video games that are enjoyable to play but with a lower starting launch price, it may entice people to make that purchase instead of buying the game at an even lower price or buying it used; the latter will result in the game publishers receiving no money at all from their game, since used sales don’t give any money back to the game companies. A typical game that’s dusted off in five hours should not be priced the same as one that offers hundreds of hours. I would go as far as saying that games like “Skyrim” should be about $70 to $80 where other games should be in a $20 to $30 price range. Games like “Beyond: Two Souls” or “Outlast” do not warrant the $60 price tag.

The majority of video games simply do not live up to the $60; even good games that are very entertaining and have some replay value should be launched at lower prices. Valves, a digital distribution company, has been experimenting with lower prices for games and have seen good results, I can only see that have a better “bang for your buck” strategy will only help game sales, not hurt them.

Jose Aranda
Contributing Writer

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