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[lithander]

I stumbled upon an interesting read: http://makeitbigingames.com/2009/02/game-pricing-look-out-below/

I'm not sure if I really agree with the author (do you?) but he mentioned an interesting point:

It used to be difficult and expensive to make games, so few people had the knowledge to create a game, and even if you could figure out how to make a game, there were only a few distribution outlets. There was no Internet, so only a few games could be brought to the few shelves open to selling them. [...]

Contrast that to today, with an uncountable number of inexpensive or free game engines and tools, game development schools and thousands of web sites that teach people how to make games resulting in tens of thousands of game developers and games competing in the market. [...] People want to be in bands even though there is no exact way to make money, let alone make enough money to make a living. [...] In the future, I am sure there will be millions of games developers, and all of them will be putting downward pressure on price points.

Opinions?

[Lynx]

I think you can only have downward pressure when it's a commodity and you can really say game X is the same as game Y.  The thing is, we are looking at creative products.  Some games will sell for more than other games, simply because people are more interested in works by certain authors/developers.

If you were really interested in game series X, would you cavil at their charging a slightly higher price for a new game in the series because you could buy game Y (which you are less interested in) for much less?

[ஒழுக்கின்மை (Paul Eres)]

Price has nothing to do with how much something took to make. Diamonds didn't take much money to make but are very expensive. Bridges cost a ton to make but going across them is often free (or at the most you get charged a tiny toll).

Pricing has a lot more to do with what type of marketing strategy you're going for, who your audience is, how niche the product is, and most of all which price would return the most profit.

Also, I don't agree that it only *used* to be difficult to make games. It's *still* difficult. Just look around this forum at how many people have actually completed a game, and how many people have tried to complete one. It's tough, even with tools like Game Maker.

Also the millions of bands analogy isn't that great, because even though there are a lot of indie bands, the bands that can actually create original music, sing in key, play their instruments well, market themselves well, etc., are tiny. Similarly, even though there are a lot of indie game developers, the ones that can make polished games that people would pay for are tiny.

That all said, I do think game prices are going down, but for different reasons: the ease of piracy makes paying $50 for a game unattractive considering how much else $50 can buy you, whereas $10 or $5 for many people is almost worth the price of a zero risk of viruses and quick access to the game, lowering the average price at which most games can be profitable.

If anyone remembers back into the 80s and early 90s, game prices of $60, $70, or even $80 were common. You don't see that as much anymore. And accounting for inflation, $80 in the 80s is around $100-$150 today. Imagine if new games today were priced at $150; it just wouldn't work. But back in the 80s it did work, possibly because piracy was harder to do.

[lithander]

Money isn't the only price I pay when playing a game. The other resource I'm investing is time. People that have money to spare will always be willing to pay money for entertainment if that increases the fun/time ratio. If you are able to create a game that is attractive enough to an audience that they'd pay for it then the only risk to your success is a comparable cheaper product. So in my opinion to earn money with creating games you either need to create a unique/niche game to avoid competition or a generic but high quality game to be more attractive then your competitors.

And I disagree that it has become any easier to create a game that sticks out and is good enough to earn a profit. Usually you need a team of specialists for that. That there's more sophisticated technology and information available nowadays just means that there's a LOT more skill and knowledge required to work at the top of the market.

As for game pricings... the internet has an impact on game prices as it allows new generally cheaper ways of publishing & marketing games. Thanks to the internet it's possible to make a profit _despite_ having only a small amount of unit-sales or selling a copy for just a couple of dollars. But the classical way to sell your game - placing a boxed physical copy in thousands of stores - involves a big monetary effort that has nothing to do with the development of the actual game. So typically only BIG titles that suit the mass-market are profitable to be published that way.

Bottomline: Thanks to the internet there are more diverse business models but this doesn't mean that the big AAA titles will die out or become any cheaper.

[Craig Stern]

Price has nothing to do with how much something took to make. Diamonds didn't take much money to make but are very expensive. Bridges cost a ton to make but going across them is often free (or at the most you get charged a tiny toll).

I agree with your post, Paul, except for these two examples. Obviously people don't make diamonds, but there are definitely costs involved in mining them, cutting them, and bringing them to market. If there were no costs involved in producing diamonds ready for market, it would have to be because perfectly cut diamonds were as common as ordinary pebbles, and could be gathered and immediately sold at no cost (except for the minimal time and effort involved in picking them up off the ground).

Bridges, on the other hand, are a public good. They are generally paid for by the government and belong to the public as part of the commons.

I think the most salient point made here so far is that no matter how many games there are, the only way one game (or twenty games) can be considered interchangeable commodities is if they are all but identical. Consider DVDs. There is a constant stream of new DVD releases, and yet this does not affect the price of films like Seven Samurai and Citizen Kane--no matter how many new Vin Diesel action flicks or Seth Rogen comedies come out, these are not interchangeable with Citizen Kane, despite being the same general type of good. Similarly, no matter how many Killzone 2s or Final Fantasys come out, unique games like Planescape Torment or Vampire: Bloodlines will remain costly because they cannot be substituted for.

Having said that, I don't think that there is actually no downward pricing pressure on unique games simply because they are unique. For that to be true, we would have to make certain assumptions about the gaming public that I doubt are actually the case:

1) that most purchasers are discriminating, and have adequate knowledge to tell when a clone (or even an unrelated game) cannot substitute for a truly unique game;
2) that purchasers have unlimited time and resources to purchase all the games they want (even if Killzone 2 cannot substitute for Torment, a gamer who wants to play both games has less time and money to acquire Torment if he first buys and begins to play Killzone 2);
3) that purchasers will not have their expectations of the cost of unique games revised downwards when they see most games selling for less money than the unique games do; and
4) that purchasers, seeing that the unique games sell for more money, are willing to spend that extra money when (à la Point 2) they might be just as happy playing a generic FPS like Killzone 2 as they would a unique game like Torment.

While I believe a unique game will be able to resist downward price pressures much more effectively than a generic piece of shovelware, I would be surprised if downward pressures had no effect on the unique game's profitability at a high price point whatsoever over the long term. (Even Citizen Kane is on sale for $9.99 right now on Amazon, barely a third of its ordinary price of $27.)

[ஒழுக்கின்மை (Paul Eres)]

Notably, niche indie games are very highly priced -- spiderweb software for instance prices its games at 25-30$ each and sells thousands, just because nobody else is making the type of games that they make anymore (huge world Ultima-style RPGs).

[nihilocrat]

Yeah, the quote in the OP sounds really unresearched because it's acting like games are a commodity, and it's overstating the value of game tutorials and makers. You still need to sit someone with lots of time and talent in front of a computer to learn the tutorials and design cool gameplay / art / code for the gamemaker to use.

Also, the volume of sales needed to stay afloat for an indie is much less than that of a chipotle title (Alec mentioned 'Triple-A' sounds like 'chipotle' ) so a game doesn't need to be that popular for it to be successful. Geneforge, due to its publicized figures and blog posts, is of course a popular example.

[undertech]

The potential market nowadays is also much larger than the days when games used to cost $80. Back when Ultima VII came out (which was $80...I remember staring at the HUGE box at my local Freddy's) I'm sure there were less than a million machines out there that could do it justice. Considering also the astronomical cost involved in developing a game like that, I'm not surprised at the price (now).

[h0bbE]

In my experience price has nothing to do with how much a game sells. We sell games for 4.95 to 19.95 including a 3 game pack for 34.95. There is no correlation between price and sales.

However, pricing is a way to diversify yourself on a crowded market and as the market gets more crowded we'll probably experience a wider price range at least in crowded niches. I don't know if this can be called a "downwards pressure" or not, you can as easily diversify by raising your price and offer a more "exclusive" game.

Imho a bigger issue is with big time publishers like steam that are mostly interested in volume sales to gain market share. It's quite hard to motivate a customer to buy directly from the dev for 19.95 when he can get the game from steam for 4.95. This creates a big downwards pressure on devs.

Interestingly 2D boy reported (as I remember it) that steam sales where only a small source of income the big being their own homepage and wiiware. So publishers on pc might not be worth it at all, at least if your brand is strong enough.

[Lynx]

Slightly offtopic, but this occurred to me as I was checking out Emerald City Confidential since a blog site had mentioned a 50% off sale.  Yes, it's 50% off - to PlayPass owners, and you have to pay $9.95 per month for that.  Instant turn-off for me.

Then it hit me.  To make such a pass worth it, people have to buy more than $20 of games a month.  But do casual players spend that much on games?

I think what they've got there is a hardcore gaming market model in search of a casual market.  They aren't even offering an on-line community or component to their games that I can discern, which is the only reason I can think a monthly service fee would be justified.  If they were Steam, it might be a viable model - 50% off of all Steam games could go quite a way toward covering the investment - but their portfolio is largely casual.

Go figure?

[ஒழுக்கின்மை (Paul Eres)]

Actually casual players buy tons of games -- Big Fish Games has a similar system where you pay x a month and get games at y% off and most people who shop there use it. Casual doesn't mean they don't buy games as often or don't play them as often.

[Lynx]

Hmm.  That's interesting to know.  I figured people who enjoyed casual games tended to get into one or two and play those only.  Thanks for the information!

[TeeGee]

How would the websites like BigFish earn that much money then?
They release a new game every day. Most of them are similar to other casual games released earlier. And people still buy them in thousands to hundreds of thousands range.

Casual players aren't really that casual, they just like 'casual' games, if you know what I mean. They are older people mostly, they have tons of time on their hands and they have little other needs. They are perfectly okay with buying many cheap games to kill their time and brighten up their retirement days. You should read some Gamezebo forums - it's really enlightening in that matter.
Also, to debunk another myth, casual gamers don't play in short bursts - they can easily spend a whole day playing a match-3 puzzler.

[gradgames]

How would the websites like BigFish earn that much money then?
They release a new game every day. Most of them are similar to other casual games released earlier. And people still buy them in thousands to hundreds of thousands range.

Big Fish Games makes a ton of money.  They have tons of visitors to their site (not to mention affiliate sites) and don't make all of the clones and games on their site.  They sell other peoples games and give them a cut of the sales.

[TeeGee]

Yes, that's what I said.

[ஒழுக்கின்மை (Paul Eres)]

He is new to the internet. He doesn't know the way of the wink smiley.

[Lynx]

Well, what stands out for me here is the realization that you can have 'hardcore casual game players'.  If you can get people who are willing to pay $20/month for games, they are hardcore in some sense of the word - the question is, what do they want out of games, and how do we reach these people?  It doesn't feel like the same market as Kongregate and similiar web portals, though there's almost certainly overlap.

Not that this is necessarily the kind of market I want to reach, but if they're doing well, they must be doing something right, and there might be lessons that can be applied to other markets.

[TeeGee]

the question is, what do they want out of games, and how do we reach these people?

Just go to the BigFish Games website and you have your answers .

And sure - there's a plenty to learn from casual games.  Simple but effective design, rewarding player's actions and accessibility are something that works for most games.

[Rudolf Kremers]

Interestingly 2D boy reported (as I remember it) that steam sales where only a small source of income the big being their own homepage and wiiware. So publishers on pc might not be worth it at all, at least if your brand is strong enough.

ACtually Steam is a big source of income for 2dboy, they said as much in their session at the IGF. At times dwarfing the other ones in massive sales spikes. Also, you need to be careful with extrapolating too much becasuse 2dboy made such a well loved game and had so many awards and great reviews. I suspect this inflates the value of Steam somewhat to them in relative terms as they have been able to garner enormous marketing appeal themselves. For smaller (in terms of word of mouth/marketing etc.) games Steam can be invaluable when Valve decides to push it a bit. Their impact in that way can be ginormous.

[DaveGilbert]

The casual gamers I've met are anything but casual!  For these folks, the PlayPass is a great deal.  Big Fish and iWin have similar models.

Back to the subject at hand, I think the downward trend in pricing is extremely harmful.  I ignore it, myself.  I released my first game for $5 and it instantly go the reputation of being a "cheap" game.  My second game was priced for $15 and I instantly got complaints about the price hike, despite the game having better production values.  Turns out that the $15 game sold infinitely better.  Perceived value?  Maybe.  Either way, it's a vocal minority who complains about prices.