Prices of Console Games May Rise
An article at GameDaily (Are Big Budget Console Games Sustainable?) discusses the economics of developing new games for next-generation (PS3, Xbox360) consoles, predicting that total costs will rise to $25 million per title, compared to current costs of about $14 million. At that level, a title will need to sell more than 1 million units in order to break even (at the typical $50 consumer price point).
Third party publishers, led by EA and Activision, have signaled their intention to charge $10 more for next-generation software, believing that many gamers are not price sensitive. However, there is also a fear that this new price point will cause many less-hardcore gamers to simply keep their old consoles and not upgrade to the new boxes.
The rise of the video game industry has lead to frequent comparisions to the movie industry, and the rising production costs will only accellerate this trend. The article predicts that larger game budgets will lead publishers to play it safe by not risking their development time and money on new gaming concepts, causing the video game industry to become even more like the movie industry, where sequels, and high-concept, generic star vehicles featuring famous names are the rule.
The advent of clones is hardly news in the casual game market, of course, but the cause may be different. In films and video games, high production costs yield copycats. In casual games, copycats exist for just the opposite reason - development costs are so low, and clone games can be produced so quickly. It’s not about risk mitigation so much as about cashing in on a popular idea.
Of course, as production values rise, budgets for casual games will likely rise as well, and eventually these costs may be passed along to consumers. There has been some discussion of changing the common $19.95 price point for casual games (Casual Game Price Elasticity, Casual Game Price Points and Conversion), but this does not appear likely to change in the near future.






