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Original post by GBGames
I think it is kind of hard to understand how an industry can claim that it can justify $50-$60 for games in order to pay its expenses when movies can be so much cheaper, even when put directly to video instead of a stint in theaters.
Movies sell in far greater quantities, therefore price is cheaper. Movies go straight to video when there is no hope of distribution in cinemas, so they go for video to try to recoup something, but they know full well they won''t get their money back. Likewise, games sell in far fewer quantities, therefore price is higher. Games go straight to bargain/discount prices when they are so bad that retail will not stock them at full price because they know they won''t sell any, and/or when publishers don''t stump up the placement cash to purchase shelf space in retail outlets because they know they won''t recoup their money.
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I know that games pay your salary. Does this mean that movie makers and such are starving in the streets?
You''d be surprised. A friend of mine who is a top-paid & highly sought after film editor earned just £6,000 in the last 18 months. Most scripts don''t get bought or optioned, and of the ones bought, most don''t get made. Of the ones made, most don''t break even. The movie industry, like the games industry, relies on a few hit products to generate enough profits to pay for the others that didn''t. Would I encourage my sons or daughters to go into either the movie industry or the games industry? NO. Both are highly unstable industries. Where else do you get laid off once or twice a year?
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Does it mean that I should pay so much for a game? If games were $200 each, would the current "small" market be smaller or no?
The problem is not that the market is small, but that it is fragmented. If I make a film I can distribute it through cinemas, on video, on dvd, on television... and it will probably get repeat revenue for years to come on tv.
A game on the other hand will only sell to a niche market or a series of niche markets if I spend money (a lot of money) to convert it from PC to PS2, or to develop for both platforms from the outset (also very expensive - there are no cheap options in game development) and has a retail shelf life of only 3 to 4 months (only the top few percent of all games stay on the shelves for longer than this). You just have to look at the statistics to see this. You''ll have to pay to look at the statistics though, they are not freely available. I have worked in publishing and development and have had access to the figures. Most game sales are in the first 6 to 8 weeks, and they tail off pretty dramatically after that. So you spend $1,000,000 making a pretty cheap and average-looking game for PC and Xbox that wasn''t based on any license (so at least you or your publisher didn''t have to shell out a million or two for the privilege of naming and branding your game), and your publisher is pretty bad so only spends $100,000 on advertising and promotion, so your game has only a few magazine adverts, the PR people in the reviews don''t get taken out to lunch so they don''t give you a very good review (you think I''m joking?) and you don''t buy much shelf space in the retailers and you definitely don''t buy the prestigious window shelves or shelves near the front of the shop or the promotional shelves. So how many units are you going to sell? Probably only between 10,000 and 30,000. How much is $40 times 10,000? This is without your retailer deciding to drop the price of your game after only three weeks of release, because its not selling fast enough and they want to clear the shelf space to sell for the next game coming along so they can pocket more money... but you''ll notice that the retailers are not getting so rich either, as anyone working in that industry will tell you, its the publishers who call the shots, they take the risks, they pocket the cash.
As developer, after your publishers pay off the retail costs, shipping costs, warehouse costs, distribution costs, manufacturing costs, etc etc etc you received approx $7 per unit towards paying off the development costs that they advanced you so you could make the game for them. If you are lucky, you made enough of those $7 to encourage the publisher to consider giving you another contract.
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I think NeoGeo showed that there can be little to no market for games that are too expensive.
Super NES games were $65 at one point. Final Fantasy 3 (or whatever its real number was) was $75, even after a year if you tried to order it direct from Square.
Somehow someone has to explain how games have become more lucrative now that they sell for $40-$50. Is the market just bigger now? Did it get less costly to produce?
If so, was there a spike in production costs during the SNES era?
Yes the market has bigger niches now. Last time I looked, there were enough PS2s sold to justify making games for that console. But for quite a while there were only a few million Xbox sold, so publishers and developers weren''t seeing any money there. Luckily they stuck with it as it is relatively easy to port from PC to Xbox, and eventually sales grew and Xbox looks lucrative.
What will really bake your noodle though, is that a long time before the release of PS2, publishers stopped commissioning games for PS1. This never made sense to me, as just before PS2 came out the PS1 market was the biggest it had ever been, there were tens of millions of consoles to sell to, and the games were mostly going to be compatible with PS2. But publishers didn''t want to know, they decided that people wouldn''t want to buy PS1 games any more, so they stopped paying developers to make them, with a (very) few honourable exceptions.
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Fair Play showed that games can sell for even $10 and still make a profit for everyone. I think it is a bit idealistic because you have to sell over a million copies of the game to do so, but then again, with the price that low, wouldn''t games then be impulse purchases? Buy more than one game a time? I think a million copies sold is reasonable then.
Can you list me 20 games that have sold over a million copies? Even at $10? Are there any retailers that would stock a $10 price point when there are hundreds of $40 price point games paying more money to get on the shelves?
It would be great if this were true, but the public associate price with value. When you walk into a shop do you view the $10 games and the $40 games the same? Retail conditions us to see cheaper games as yesterdays games, and to expect the new releases to be the higher prices.
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No, I have not worked in the industry. I am just a hobbyist at this point. Still, people need to stop getting mad at Fair Play and simply point out to them exactly why it is not feasible to sell games for less than $50. The arguments that they are refuting don''t make sense, but then again it could be sensationalized and real simplified. Can someone give solid evidence of this?
What is Fair Play not telling us, if you think that games are not too expensive or in fact they are too cheap?
I don''t think it''s unfeasible to sell games for less than $50, but we have to be clear about how we will do this. $10 games sold on the internet? Yes, because you can cut a lot of publisher and advertiser and distributor costs. $10 games in the shops? No, because it won''t cover your costs. If games sold at $10, publishers and developers would have to scale down their production costs by 80%. So that would mean a lot less game, a lot less sales, a lot less people buying consoles, a smaller market.
If publishers thought they could make more money by selling more games at $10 rather than less games at $40, believe me they would have already done so. But there are good financial reasons why budget publisher brands like Sold Out and White Label etc are the ones selling old games at low prices, while the big boys sell new games at high prices.
