Colin, you mentioned that MGSV still hasn't made back its development cost. I'm curious how the math works. We know that the game grossed around $180m on day 1 sales. What is the number that a game would need to reach to break even on a $80m budget?
I mean, what a game grosses isn't really all that interesting. That takes into account the full amount of money paid for a game, doesn't include the cut anyone along the chain makes, doesn't include taxes and fees, et cetera.
What a company nets on a game, on the other hand, is interesting. You have to assume that after all is said and done -- after the retailer gets its cut, printing and manufacture is paid for, shipping and handling, and everything else -- that a publisher might get their hands on half of the money. But that's just a guess.
So if a game's budget was $80 million -- which doesn't take into account any ancillary costs associated with the developer or publisher, which could be extraordinary, nor does it take into account marketing and everything else -- you have to assume a game would need to sell somewhere around what MGS5 sold. But again, costs aren't contained to just development, and I'm merely exploring the issue with some educated conjecture, as I find it interesting.
Hi Colin.
Hello!
It's extremely unlikely that a digital future would lead to cheaper games.
No it isn't. It's extremely likely that an all digital future will level the market and force the publishers to actually compete with each other. People are really missing the point on this one, which is surprising to me. (It especially surprises me that people don't see that it could go both ways, for better or for worse.)
As an example, if the baseline for a retail, AAA game is $60, what happens when, say, Ubisoft starts charging $50 for all of their games to undercut their competition and gain a competitive edge? Do you think EA, Activision, the first parties, et cetera, will hold to the $60 price point? Or do you think they'll have to compete, since consumers will now say, "well, I just paid $50 for Assassin's Creed 14, why the hell would I pay $60 for Call of Duty 18?" Right now, the publishers compete with each other in the realms of IP, and quality, and name recognition, and a bunch of other places, but they absolutely don't compete with each other on cost. And they absolutely will if they're allowed to charge whatever they want. Let's not forget that we've already seen this at retail, too, though not for a long time (i.e. NFL 2K5).
And, as I said, this could go the other way. Games like Fallout 4 and Witcher 3 could arguably be worth MORE than $60, depending on who you ask. So what's stopping Bethesda, for instance, from saying, "Fallout 5 is the most robust game we've ever made, it's going to be hundreds of hours, and we're going to charge $100 for it." Is the game worth $100? A lot of people would say yes. I'm not saying I want publishers to start charging more, of course, but it does open up an interesting marketplace where what we deem AAA products could run the gamut from $30 to $100 depending not on MSRP, but on what the market thinks the game is actually worth. The competition will give consumers choice, force publishers to consider the demands (or lack of demands) from the market, and act accordingly.
If you want to keep paying $60 for a game, keep worshiping retail. If you want there to be a massive range of pricing beyond the "indie" versus "retail" model, embrace the inevitable all-digital future. Games are already cheaper than they've ever been, by far. Just wait until the market can really function. And that can only happen when the first parties and publishers are no longer beholden to their retail partners. That's my two cents.
Yup assuming corporations will pass on their savings to you is naive.
That's only a small portion of the argument, but it's not even the salient portion. The salient portion is what happens when the publishers are able to really start undercutting each other on digital platforms without having to worry about retailers.
Open competition forces prices to drop. Period.
Except for one small minor problem - it's bullshit because look at the game I used as an example - The Evil Within. It's been reduced to $40 in stores but yet, it's $60 digitally.
Considering this isn't even the argument you made in what I originally quoted, I'm not sure who you're arguing with. You suggested that a new retail game could be dropped in price on digital platforms compared to retail, to which I told you that that's simply not the reality of the market right now. And it isn't.
But it could be. And, in my opinion, it absolutely will be one day.
I just hope they never decide to account for inflation. While $60 is a lot, it's a far cry to what some games used to cost in the 90's (some were $80 or $90) and that was in 90's money. Today those games would cost way much more!
A lot of younger gamers don't have any context when they talk about the expense of games, which is why I bring it up a lot.
If you could time travel to 1995 and tell SNES and Genesis owners how expensive a $60 game is in 2015, they'd laugh at you, since they're paying twice as much in real money for their games.
