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Why you have a sad, sad wallet photo

In a recent report, Forbes sheds some interesting light on the topic of game pricing -- for those of you in possession of inquiring minds. According to them, the $60 price tag that Xbox 360 games are now proudly sporting is a 20% increase over game prices of the past. The risk involved with creating such a product for a brand new console is high, perhaps justifying why beyond a few key titles, console launch support always seem to suck balls. If you believe in the stats in the article, it'll take a million games sold before a publisher turns a profit at all -- and then when they do, they'll make a dollar per game sold. Makes turning a trick sound about a hundred times more appealing, doesn't it? Prostitution has a much better rep overseas these days, I hear.

Hit the jump for a little bit of game creatin' breakdown action. 

 

I found myself struggling while making this post to remember the prices of NES cartridges. I sure as hell wasn't keeping track of money I stole from my mother's purse to buy them, so I asked some fellow Dtoiders what they remembered paying for games from past systems. The general consensus seemed to be that Atari carts were about $20 - $30 and everything from NES on was $40 - $50. Looking at the comparison between today's games and those beloved relics of yesteryear, it may get you wondering: how can it be that games stay around the same price range, despite the leaps in technology? I paid $50 for Cho Eniki and now I'm paying the same for Gears of War? I know the latter is a homosexual freak carnival and the former is about real men at war, but still -- it kind of feels like finding out you were molested by your stepfather a long, long time ago.

Of course, there must always be forward progress. Ask any megolomanical world leader. Still, this news raises the same concern for me that the PS3 price announcement raised. Sure, your mega tech geek fiend types can afford these new consoles, but if things for kids are anything like they were when I was growing up, the Wii will be the console of choice strictly based on affordability. Sony and Microsoft choose to mostly alienate this demographic with their decision to price games and consoles as high as they have. It's neither good nor bad, but I know I would have been a much lonelier kid without games to play. I might have killed fewer small animals too, but that's beyond the point.

Here's some hard numbers: 

ON A $60 GAME OF GEARS:

    * 25% (aka $15) goes to pay the art and design guys.
    * 20% ($12) goes to pay the programmers and the engineers.
    * 20% (also $12) goes to your friendly neighborhood retailer.
EB / GameStop, whoever.
    * 11.5% ($7) goes to a "Console Owner Fee" - ie. whichever one
of the Big Boys made your hardware (Sony, MS, Nintendo.)
    * 7% ($4) goes to marketing, and puts Mad World and Marcus Fenix
on MTV.
    * 5% ($3) goes to "market development" -- paying for cardboard
Standees of the Gears Crew and elbowing other games out of the way
for shelf space at your local retailer.
    * 5% ($3) goes to actually manufacturing and packaging the disc.
    * 5% ($3) is spent paying the Man for IP licenses or maybe
hiring some big name voice actors. If your game isn't an original IP,
here's where you get dinged by Marvel, Disney, or Ray Liotta's agent.
    * 1.5% (just $1) goes into the publisher's pocket.
    * 1.5% (also $1) goes into the distributor's pocket.
    * 0.3% (about 20 cents) goes into corporate costs. Management,
overhead, lawyers, etc.
    * 0.05% (less than 3 cents) go into the cost of paying for the
Developer's Hardware. Who knew an SDKs can cost tens of thousands of
dollars?


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21 comments | showing # 1 to 21

ttaylor's Avatar - Comment posted on 12/20/2006 22:40
ttaylor
I seem to always remember NES and Sega games being 49.95. It makes sense that the games are now $60 a pop, so much technology is thrown into these things that they need to raise the price to make any sort of profit. Honestly I wouldn't doubt they try to raise the prices again.. Either that or keep making these "Collectors Editions" and charging more money for a few bonus items.. This is the price we pay for the games of this next gen era, nothing we can do about it.

Probably a stupid question, but as a non-wii owner, how much are their games sold for?
toast!'s Avatar - Comment posted on 12/20/2006 22:41
toast!
Good article... really interesting shit in there. Companies (Microsoft and Sony) are making their consoles more expensive these days because they arent targeting use when we are 5 years old anymore, they're targeting our same generation, but now we're older and we have more money! Nintendo has said they're targeting different generations with their system, so maybe that's why it's cheaper?

Who knows... interesting topic tho!
toast!'s Avatar - Comment posted on 12/20/2006 22:42
toast!
double comment! man games back then went for 50 bucks? It's hard to imagine that... but I guess advances in technology also make games easier (cheaper) to make... i just don't remember paying so much for games that, these days at least, seem so simple.
Cruds's Avatar - Comment posted on 12/20/2006 22:53
Cruds
They cost about 60 Eurie around here, I find that too much, so I often find my self buying them second hand or in the UK from Ebay. I believe there cheaper now tho than when we had guldens as currency.

And I'm talking ps2 and cube titles here don't even know what gears of wars cost. Since the xbox360 lineup mostly consist of shooters and sports games I can't be bothered with it but I feel that can change any time soon now.
TheBrain's Avatar - Comment posted on 12/20/2006 23:17
TheBrain
If NES games were 50 bucks, and we've got exponentionally rising development costs in ADDITION to inflation, 60 bucks is starting to sound like a deal. Of course it doesn't matter to me because I play games 9 to 12 months behind everyone else and pay about a third as much and don't mind one bit :).
PKN's Avatar - Comment posted on 12/20/2006 23:29
PKN
Did this account for inflation at all? Games are pretty cheap today if they were $50 20 years ago. Also notice that the dollar per game that goes to the developer is pure profit... That is after they pay every bill they had while making and advertising the game. I think it works out pretty well overall. The only issue is for smaller companies who may or may not be able to take the risks of spending money upfront to create a game which may not sell well because they have no money left for advertising. But I think that any team that looks at the problem creatively will see the benefits of online advertising/word-of-mouth as well as other creative means to get their games to the public. I'm sure it's a tough road but I don't see the consumer or the companies making games getting raped here.
Petrie's Avatar - Comment posted on 12/20/2006 23:29
Petrie
@The Brain

It's great when you can wait all that time and still enjoy a game, but with the rise of online gaming, if you don't get the title in the launch window, your usually left in the dust, unable to even find people at your skill level to play with when you finally get the game.

Though the flip side is that you get WAY more milage out of games thanks to the same online components.
TheBrain's Avatar - Comment posted on 12/20/2006 23:36
TheBrain
@Petrie

This is true. Fortunately, I don't care for online play. I'm one of the weird reclusive types (although I do enjoy getting together and playing games with friends in the same room). However, I do occasionally whip out Tetris DS and AC:WW for the Wifi. I did get completely owned when I finally tried out Metroid Prime Hunters on Wifi though, so I know what you mean, but online play is something I rarely take advantage of anyway (for the record I picked up Hunters for 6 dollars, methinks that was worth the wait.)
Dexter345's Avatar - Comment posted on 12/21/2006 00:06
Dexter345
Maybe I'm way off, but I thought NES games were like $30. I guess back then it was my dad buying them so I don't really remember the prices...

But remind me to thank Forbes for letting me know $60 is a 20% increase from $50. Like, seriously. Thanks.
Petrie's Avatar - Comment posted on 12/21/2006 00:17
Petrie
Yeah I sypathize Brain, I have been enjoying the hell out of Dead Rising, mainly because its a single player experience, no one to annoy or interupt me. I hope you frequent CheapAssGamer though, I never EVER pay full retail for games, even when I get them at release.
Samit Sarkar's Avatar - Comment posted on 12/21/2006 01:13
Samit Sarkar
ttaylor: FYI, Wii games are selling at the standard last-gen price, aka $49.99.

I hope to get my hands on a PS3 eventually, but it’s true — I wonder about kids these days and what video games they play. Putting myself in their shoes...there’s no way my mom would’ve spent $400 on a video game console when I was 8, let alone $600. In fact, when I was 11 and campaigned to my parents for a PS for Christmas 1997, I chose it over the N64 because (even though the two consoles were the same price at the time, $149.99) its games were cheaper — PS games went for $39.99, while many N64 games went for $49.99+, and in some cases as much as $74.99! (WWF No Mercy, anyone?) And when my parents bought a PS2 for my brother and me for Christmas 2000, the $300 gift was specifically for both of us — neither of us got any other gifts that year (except for the obligatory clothes, etc.) I can’t see your average pre-teen kid justifying a $300+ console purchase to his parents, especially if that child has siblings (unless, of course, the parents give one gift to multiple siblings, as was the case in my family with the PS2).

Microsoft and Sony certainly haven’t said that they’re shunning kids with their next-gen (now current-gen?) consoles, but they’ve also marketed them vigorously to the prime videogame demographic out there, the 18-to-34 male crowd (people who were born around or before the year that NES came out). I’m not saying that it’s a bad thing that many kids nowadays will only grow up with the Wii, but you have to wonder...what will the situation be 10, 20, 30 years from now?
Jelster's Avatar - Comment posted on 12/21/2006 01:37
Jelster
Ermm wasn't a big factor the actual hardware cost of making cartidges, I'm also sure they tried to recoup those hardware costs through a larger margin.

Now instead of hardware costs at the distribution end you're being hit with them at the developer end. While I wouldn't be skipping with glee thinking I'm getting a great deal just because the price is similar after so long(!?!), I am surprised we've not seen a bigger increase justified on the back of HD and in the case of the PS3 filling the BluRay Disc.

Perhaps a better analysis would be comparing PC game prices over time as the distribution method has remained fairly price consistant for a long time.
Mxyzptlk's Avatar - Comment posted on 12/21/2006 01:44
Mxyzptlk
@ Dexter345: I kinda remember that price for NES games too, but all my googling on the topic has proved fruitless. I'll ask my folks if they remember over Xmas.

I don't think $60 is absolutely terrible for a game, but I'd like it to stay there for a long time. As game prices go up, the fewer games I'll end up buying in the long run though. Online rental sites like Gamefly are looking more and more tempting to me, considering how I've been burned by games that end up being unfinished or far too short in the past.
Burnt Meatloaf's Avatar - Comment posted on 12/21/2006 04:59
Burnt Meatloaf
Games always cost the most at system launch. In my area, I clearly remember N64 and PS1 games costing around $75 when they came out -- MSRP be damned.

Even many PC games are retailing for $60, now.
paranoid android's Avatar - Comment posted on 12/21/2006 04:59
paranoid android
I remember buying final fantasy III for $115 (canadian) back whenever that came out (1994?), which took a few weeks saving money from my paper route. that felt like a lot.
macr's Avatar - Comment posted on 12/21/2006 06:59
macr
With the amount of "product placement" in games today, you would think that games should be moving towards the price of expensive DVD's not the opposite way around. The last memory of actually buying expensive games myself was for £50 on the nintendo 64. Prior to that my parents had always bought me games! The dreamcast was quite expensive too at £39.99.
snotrocket's Avatar - Comment posted on 12/21/2006 09:46
snotrocket
Really cool to see just how much money each department of the game gets. Nice article :)
Cruds's Avatar - Comment posted on 12/21/2006 11:24
Cruds
Yeah but its odd to see that the retailer gets just as much as the programmers, also I realize that art and design is very important but they get paid more than the programmers? I always thought that the programming part is the most time consuming part of building games.
TheBrain's Avatar - Comment posted on 12/21/2006 17:45
TheBrain
@Petrie

CheapAssGamer is my lifeblood.
tiffsauce's Avatar - Comment posted on 12/22/2006 02:56
tiffsauce
Fantastic article Nagiko! I've yet to see the monitary break down of game price and you pretty much nailed it. Where did you research that information?
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