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Related: https://youtu.be/VhWGQCzAtl8 https://youtu.be/VhWGQCzAtl8 This 6 min video explains from game dev perspective why (AAA) games have been pegged at $60

Related: https://youtu.be/VhWGQCzAtl8 https://youtu.be/VhWGQCzAtl8 This 6 min video explains from game dev perspective why (AAA) games have been pegged at $60 on release, even though they should be priced higher to be sustainable ($85-$90 in 2018). So game developers tried various ideas to make up for this gap: DLC, perpetual experiences (map packs & expansions), loot boxes, microtransactions...

Hamuko 5y ago
>So game developers tried various ideas to make up for this gap: DLC, perpetual experiences (map packs & expansions), loot boxes, microtransactions... There's also "ultimate" editions, which bridge the gap at sales time. Sure, you could buy Forza Horizon 5 for $60, but you could also buy the Deluxe Edition for $80 to get some extra cars or the Premium Edition for $100 to get the same extra cars + the DLC when it comes out and some extra goodies.
- Leftium 5y ago
  Many players complain when DLC is released at the same as the main game because they feel it should just be part of the main game. Framing this DLC as an "ultimate" edition seems like a great idea!
  - foxfluff 5y ago
    To what extent does it backfire though? "Would you like the ripoff edition or the inferior edition?" Actually, I don't want to buy the game anymore.
    - Leftium 5y ago
      The difference a tiny change in framing can make is amazing: https://www.psychologyofgames.com/2010/03/framing-and-world-of-warcrafts-rest-system/ https://www.psychologyofgames.com/2010/03/framing-and-world-... > In World of Warcraft what they did when they first designed the game was they had an experience system that would, over time, lower the amount of experience you got because [Blizzard] wanted to encourage people to play for like two hours at a time instead of twelve hours at a time. So the longer you played you’d get this experience degradation and then it would bottom out and at that point it would be a fixed rate of experience. And people just hated it. > And so they went back and [Blizzard’s Rob Pardo] was like all right, basically what we did was we made everything in the game take twice as much experience to achieve as before and then we flipped it. So actually what happens is you start getting 200% experience and eventually it goes back down to 100%. So that effectively now how they spin it is that if you log out for a while you get this 200% boost when you log back in! And then over time it goes away and you just get regular 100% experience. It’s EXACTLY the same as it was before, except NOW everyone is like “Fuck yeah, Blizzard, this is exactly what I want!”
gopher_space 5y ago
A lot of your examples are also attractive because you'd already have the framework set up to deliver them.
chriswalz 5y ago
I found it weird how the video doesn’t account for the massive economies of scale that AAA companies have access to. The audiences & market size are way bigger now than they were back in the day.
- Leftium 5y ago
  There's a bit of handwaving and the the video admits $90 is just a gut estimate. However, I think they did try to account for things like that: they started with an estimate games should cost $225-$300 before accounting for larger audience size. Larger market size and efficiencies like reusable game engines are balanced by increased productions costs. The first versions of Final Fantasy just had text captions in 2D. Now they are in full 3D with fully acted voice actors. Starts here: https://youtu.be/VhWGQCzAtl8?t=96 https://youtu.be/VhWGQCzAtl8?t=96
- gambiting 5y ago
  Our own marketing department made a good summary of this( I work for a AAA games company) - according to them as little as 10 years ago there was maybe a dozen big, AAA, 50h+ long releases each year. Now there’s 100+ a year and increasing. Yes your markets are bigger, but there’s more competition and fundamentally it’s still winner takes all - big names sell 20/30/40 million units, while if the game isn’t either a big well known franchise or an absolute 10/10 hit it struggles to pay for its own development cost. And the length of games plays big part too - my wife took 100h to complete Assassin’s Creed Valhalla and there’s still tonnes to do, it just meant that she wasn’t ready to buy another big AAA game for like 3-4 months.
  - gruez 5y ago
    >according to them as little as 10 years ago there was maybe a dozen big, AAA, 50h+ long releases each year. Now there’s 100+ a year and increasing. What's the criteria for "AAA"? 100+ AAA releases per year seems a bit on the high side.
- ekianjo 5y ago
  > I found it weird how the video doesn’t account for the massive economies because it's a bad video made by someone who understands nothing about economics.
Leftium 5y ago
One additional major revenue stream not mentioned is merchandise. Pokemon's merch revenue completely dwarfs game revenue: https://youtube.com/clip/UgxvU_ygdejMiTGyChN4AaABCQ https://youtube.com/clip/UgxvU_ygdejMiTGyChN4AaABCQ Merch is great because it allows "whales" to spend as much as they want without the questionable gambling aspect of loot boxes/gacha.
- TheRealNGenius 5y ago
  That’s not exactly a fair comparison since Pokemon is more of a multimedia franchise in that it has trading cards, tv shows, movies etc. It’s more like a brand than just a video game. So barring these huge franchises (along with Minecraft/Fortnite), I would assume physical merch sales for most games is low by comparison.
  - Leftium 5y ago
    I think Pokemon is a brand because they started with the video game and capitalized on its merchandisable nature. I don't think there was was a Pokemon card game (or anything else) until after the video game was released. I agree some games are less amenable to the merch model, but that is within the control of the game designers. In fact, some games were designed explicitly to support the sale of merchandise. I think Rovio's Angry Birds and/or Seriously's Best Fiends used this strategy, but I can't find the source, now... Apparently Garfield is a cartoon that was created solely to sell merchandise. It's quite blatant: https://youtu.be/1ei_eNTmCsU?t=33 https://youtu.be/1ei_eNTmCsU?t=33 I don't see why the merch strategy can't be applied to games, too.
    - detaro 5y ago
      Yes, the original Gameboy game was first. The other branches followed quite quickly though, so they probably fed into each others popularity and I'm not sure it would have made a huge difference if e.g. the anime had come first and a bit later then the games. EDIT: that all these channels were there was probably quite important though. Japanese releases: Game: early 1996, second late 1996 TCG: late 1996 TV series: 1997 movies: 1998
mister_tee 5y ago
in response to the video's message - I get that $60 in 2006 inflated to $80 today. And that development costs have gone up rapidly (so have sales IIRC but I know that's not evenly-distributed). Might the move to digital distribution, even if not complete yet, already be giving publishers substantially increased profits per unit sold? A decade ago, an article suggested publishers made $27 on a $60 physical game, and the platform holder a $7 royalty[1]. With digital, retailers lose out and no longer get a cut, cost of goods is reduced, and returns go away. With a $60 digital game, don't Sony/Microsoft/Nintendo/Steam all charge a 30% platform fee for infrastructure/store costs and their profit? They'd take $18 (+157%) and leave $42 for the publisher (+55%) (edit:math). Is that the extent of the pie or is it divided more? Multiplayer still requires a $60/year fee on console systems too, correct? And all the extra and ongoing costs mentioned in the parent post are unlikely to go away with increased base price, right? I don't mean to be skeptical but feel we're going to see some price increases (beyond gaming too) just because businesses can. [1] https://latimesblogs.latimes.com/entertainmentnewsbuzz/2010/02/anatomy-of-a-60-dollar-video-game.html https://latimesblogs.latimes.com/entertainmentnewsbuzz/2010/...
- muststopmyths 5y ago
  Most of what used to go to the retailer apparently goes to the console maker now ($7/60 vs $18/60), so the studio hasn't really gotten much of a benefit from digital. Multiplayer fee does not go to the game maker either. And costs are astronomically higher. A mid-market AA game with a studio of 80-100 people will cost in the order of 15-20 million USD a year to produce. Art is enormously expensive in 3D, even outsourced. My numbers are a few years old, so it's probably worse now. It's ludicrous to assume that in the cut-throat gaming market (unless it's the 1000th iteration of a franchise) game developers are looking to increase the price "just because they can". They actually can't because gamers have shown themselves to be incredibly hostile to price increases. The main reason there are no more mid-market games (i.e. between AAA franchises and indie small-scales) is that it is absolutely not profitable or sustainable. You can put all your money and energy into a game, but unless it's a huge hit, you will never recover the cost. It is just not worth it to most of us these days to even try.
  - 5y ago
dkersten 5y ago
> sustainable The popular AAA games have been making record breaking amounts of profit in recent years before you even include the microtransactions they've been adding. The market is bigger than ever. This is from the earning reports. This is just an excuse to try milk more money out of consumers.
- Wowfunhappy 5y ago
  Which ones? The big yearly franchises rake in tons of cash, just as superheroes do at the movie theatre. But if you go a bit deeper, the situation is more mixed. Bioshock Infinite just about bankrupted Irrational Games, for instance, despite being very well-received.
  - lostmsu 5y ago
    Sounds like they should have put $80 price tag on the game. It was worth it.
  - dkersten 5y ago
    The big publishers (EA, Activision, Ubisoft, Zenimax) have had numerous record years. Irrational Games has been a subsidiary of Take Two since before Bioshock Infinite.
    - Wowfunhappy 5y ago
      That doesn't mean the individual games or studios were profitable. https://www.polygon.com/2014/2/21/5431332/what-irrational-games-closure-means-for-the-industry https://www.polygon.com/2014/2/21/5431332/what-irrational-ga... > Earlier this month, Irrational co-founder Ken Levine announced that less than a year after the release of BioShock Infinite, the studio would be "winding down," which meant that everyone but Levine and 15 others were being laid off.
      - dkersten 5y ago
        I mean that whether or not the studio closes is at the parent companies whims. According to Wikipedia, Bioshock Infinite sold 11 million copies. If your development is so costly that 11 million sales, vastly higher than most games sell, isn’t a success then maybe you should go out of business. That’s not a price point problem but a budgeting problem with unrealistic expectations. If you look at the top selling games, the top 50 ever bottom out at 20 million sales so they were half way to being on the top 50. If your game has to be in or close to the top fifty selling games of all time in order to be profitable then you’ve planned something very wrong.
ekianjo 5y ago
AAA games sell a more than they ever did, with digital distribution.
pankajdoharey 5y ago
A good solution would be to make these games in places like India or China where they have advantage of exchange rates. And relocate the Devs and Artists to these places or maybe they can work remotely and save on expensive office costs?

Hamuko 5y ago

>So game developers tried various ideas to make up for this gap: DLC, perpetual experiences (map packs & expansions), loot boxes, microtransactions... There's also "ultimate" editions, which bridge the gap at sales time. Sure, you could buy Forza Horizon 5 for $60, but you could also buy the Deluxe Edition for $80 to get some extra cars or the Premium Edition for $100 to get the same extra cars + the DLC when it comes out and some extra goodies.

Leftium 5y ago
Many players complain when DLC is released at the same as the main game because they feel it should just be part of the main game. Framing this DLC as an "ultimate" edition seems like a great idea!
- foxfluff 5y ago
  To what extent does it backfire though? "Would you like the ripoff edition or the inferior edition?" Actually, I don't want to buy the game anymore.
  - Leftium 5y ago
    The difference a tiny change in framing can make is amazing: https://www.psychologyofgames.com/2010/03/framing-and-world-of-warcrafts-rest-system/ https://www.psychologyofgames.com/2010/03/framing-and-world-... > In World of Warcraft what they did when they first designed the game was they had an experience system that would, over time, lower the amount of experience you got because [Blizzard] wanted to encourage people to play for like two hours at a time instead of twelve hours at a time. So the longer you played you’d get this experience degradation and then it would bottom out and at that point it would be a fixed rate of experience. And people just hated it. > And so they went back and [Blizzard’s Rob Pardo] was like all right, basically what we did was we made everything in the game take twice as much experience to achieve as before and then we flipped it. So actually what happens is you start getting 200% experience and eventually it goes back down to 100%. So that effectively now how they spin it is that if you log out for a while you get this 200% boost when you log back in! And then over time it goes away and you just get regular 100% experience. It’s EXACTLY the same as it was before, except NOW everyone is like “Fuck yeah, Blizzard, this is exactly what I want!”

gopher_space 5y ago

A lot of your examples are also attractive because you'd already have the framework set up to deliver them.

chriswalz 5y ago

I found it weird how the video doesn’t account for the massive economies of scale that AAA companies have access to. The audiences & market size are way bigger now than they were back in the day.

Leftium 5y ago
There's a bit of handwaving and the the video admits $90 is just a gut estimate. However, I think they did try to account for things like that: they started with an estimate games should cost $225-$300 before accounting for larger audience size. Larger market size and efficiencies like reusable game engines are balanced by increased productions costs. The first versions of Final Fantasy just had text captions in 2D. Now they are in full 3D with fully acted voice actors. Starts here: https://youtu.be/VhWGQCzAtl8?t=96 https://youtu.be/VhWGQCzAtl8?t=96
gambiting 5y ago
Our own marketing department made a good summary of this( I work for a AAA games company) - according to them as little as 10 years ago there was maybe a dozen big, AAA, 50h+ long releases each year. Now there’s 100+ a year and increasing. Yes your markets are bigger, but there’s more competition and fundamentally it’s still winner takes all - big names sell 20/30/40 million units, while if the game isn’t either a big well known franchise or an absolute 10/10 hit it struggles to pay for its own development cost. And the length of games plays big part too - my wife took 100h to complete Assassin’s Creed Valhalla and there’s still tonnes to do, it just meant that she wasn’t ready to buy another big AAA game for like 3-4 months.
- gruez 5y ago
  >according to them as little as 10 years ago there was maybe a dozen big, AAA, 50h+ long releases each year. Now there’s 100+ a year and increasing. What's the criteria for "AAA"? 100+ AAA releases per year seems a bit on the high side.
ekianjo 5y ago
> I found it weird how the video doesn’t account for the massive economies because it's a bad video made by someone who understands nothing about economics.

Leftium 5y ago

One additional major revenue stream not mentioned is merchandise. Pokemon's merch revenue completely dwarfs game revenue: https://youtube.com/clip/UgxvU_ygdejMiTGyChN4AaABCQ https://youtube.com/clip/UgxvU_ygdejMiTGyChN4AaABCQ Merch is great because it allows "whales" to spend as much as they want without the questionable gambling aspect of loot boxes/gacha.

TheRealNGenius 5y ago
That’s not exactly a fair comparison since Pokemon is more of a multimedia franchise in that it has trading cards, tv shows, movies etc. It’s more like a brand than just a video game. So barring these huge franchises (along with Minecraft/Fortnite), I would assume physical merch sales for most games is low by comparison.
- Leftium 5y ago
  I think Pokemon is a brand because they started with the video game and capitalized on its merchandisable nature. I don't think there was was a Pokemon card game (or anything else) until after the video game was released. I agree some games are less amenable to the merch model, but that is within the control of the game designers. In fact, some games were designed explicitly to support the sale of merchandise. I think Rovio's Angry Birds and/or Seriously's Best Fiends used this strategy, but I can't find the source, now... Apparently Garfield is a cartoon that was created solely to sell merchandise. It's quite blatant: https://youtu.be/1ei_eNTmCsU?t=33 https://youtu.be/1ei_eNTmCsU?t=33 I don't see why the merch strategy can't be applied to games, too.
  - detaro 5y ago
    Yes, the original Gameboy game was first. The other branches followed quite quickly though, so they probably fed into each others popularity and I'm not sure it would have made a huge difference if e.g. the anime had come first and a bit later then the games. EDIT: that all these channels were there was probably quite important though. Japanese releases: Game: early 1996, second late 1996 TCG: late 1996 TV series: 1997 movies: 1998

mister_tee 5y ago

in response to the video's message - I get that $60 in 2006 inflated to $80 today. And that development costs have gone up rapidly (so have sales IIRC but I know that's not evenly-distributed). Might the move to digital distribution, even if not complete yet, already be giving publishers substantially increased profits per unit sold? A decade ago, an article suggested publishers made $27 on a $60 physical game, and the platform holder a $7 royalty[1]. With digital, retailers lose out and no longer get a cut, cost of goods is reduced, and returns go away. With a $60 digital game, don't Sony/Microsoft/Nintendo/Steam all charge a 30% platform fee for infrastructure/store costs and their profit? They'd take $18 (+157%) and leave $42 for the publisher (+55%) (edit:math). Is that the extent of the pie or is it divided more? Multiplayer still requires a $60/year fee on console systems too, correct? And all the extra and ongoing costs mentioned in the parent post are unlikely to go away with increased base price, right? I don't mean to be skeptical but feel we're going to see some price increases (beyond gaming too) just because businesses can. [1] https://latimesblogs.latimes.com/entertainmentnewsbuzz/2010/02/anatomy-of-a-60-dollar-video-game.html https://latimesblogs.latimes.com/entertainmentnewsbuzz/2010/...

muststopmyths 5y ago
Most of what used to go to the retailer apparently goes to the console maker now ($7/60 vs $18/60), so the studio hasn't really gotten much of a benefit from digital. Multiplayer fee does not go to the game maker either. And costs are astronomically higher. A mid-market AA game with a studio of 80-100 people will cost in the order of 15-20 million USD a year to produce. Art is enormously expensive in 3D, even outsourced. My numbers are a few years old, so it's probably worse now. It's ludicrous to assume that in the cut-throat gaming market (unless it's the 1000th iteration of a franchise) game developers are looking to increase the price "just because they can". They actually can't because gamers have shown themselves to be incredibly hostile to price increases. The main reason there are no more mid-market games (i.e. between AAA franchises and indie small-scales) is that it is absolutely not profitable or sustainable. You can put all your money and energy into a game, but unless it's a huge hit, you will never recover the cost. It is just not worth it to most of us these days to even try.
- 5y ago

dkersten 5y ago

> sustainable The popular AAA games have been making record breaking amounts of profit in recent years before you even include the microtransactions they've been adding. The market is bigger than ever. This is from the earning reports. This is just an excuse to try milk more money out of consumers.

Wowfunhappy 5y ago
Which ones? The big yearly franchises rake in tons of cash, just as superheroes do at the movie theatre. But if you go a bit deeper, the situation is more mixed. Bioshock Infinite just about bankrupted Irrational Games, for instance, despite being very well-received.
- lostmsu 5y ago
  Sounds like they should have put $80 price tag on the game. It was worth it.
- dkersten 5y ago
  The big publishers (EA, Activision, Ubisoft, Zenimax) have had numerous record years. Irrational Games has been a subsidiary of Take Two since before Bioshock Infinite.
  - Wowfunhappy 5y ago
    That doesn't mean the individual games or studios were profitable. https://www.polygon.com/2014/2/21/5431332/what-irrational-games-closure-means-for-the-industry https://www.polygon.com/2014/2/21/5431332/what-irrational-ga... > Earlier this month, Irrational co-founder Ken Levine announced that less than a year after the release of BioShock Infinite, the studio would be "winding down," which meant that everyone but Levine and 15 others were being laid off.
    - dkersten 5y ago
      I mean that whether or not the studio closes is at the parent companies whims. According to Wikipedia, Bioshock Infinite sold 11 million copies. If your development is so costly that 11 million sales, vastly higher than most games sell, isn’t a success then maybe you should go out of business. That’s not a price point problem but a budgeting problem with unrealistic expectations. If you look at the top selling games, the top 50 ever bottom out at 20 million sales so they were half way to being on the top 50. If your game has to be in or close to the top fifty selling games of all time in order to be profitable then you’ve planned something very wrong.

ekianjo 5y ago

AAA games sell a more than they ever did, with digital distribution.

pankajdoharey 5y ago

A good solution would be to make these games in places like India or China where they have advantage of exchange rates. And relocate the Devs and Artists to these places or maybe they can work remotely and save on expensive office costs?