Have video games really become more expensive over time?

In general, we like to think we know how much something is worth. This decision is based less on logic and more on emotion, an intangible gut feeling. When it comes to video games, we know when a game is underpriced, or more often than not, overpriced. Unfortunately, when we want to consider inflation in determining the value of the game price, this ratio is disturbed. Of course, I must also mention that this article is written according to global and general statistics, and if we want to consider only the conditions of our own country, the discussion may be completely different and more complicated.

BingMag.com Have video games really become more expensive over time?

In general, we like to think we know how much something is worth. This decision is based less on logic and more on emotion, an intangible gut feeling. When it comes to video games, we know when a game is underpriced, or more often than not, overpriced. Unfortunately, when we want to consider inflation in determining the value of the game price, this ratio is disturbed. Of course, I must also mention that this article is written according to global and general statistics, and if we want to consider only the conditions of our own country, the discussion may be completely different and more complicated.

Inflation recently. It has become a serious problem in the world. No country is immune to it, and there is a real fear that higher interest rates and depressed or even reduced demand could lead to stagflation or, worse, a global recession. Reports of rising prices of essential commodities are becoming a daily occurrence.

At the time of writing, UK inflation is at its highest level in four decades and is on the verge of It is becoming two-digit. We see the effects of inflation everywhere. The prices of goods and food have all increased. McDonald's raised its prices for the first time in 14 years. Amazon Prime is raising its prices for the first time in eight years. Even technology, which typically lowers prices over time, is not immune. Meta has announced that it's raising the price of its Quest 2 VR headset by $100, two years after its release (although there are reasons other than inflation, which is specific to Meta's business, as to why it's doing this). Even technology-based products, which usually decrease in price over time, are not immune to this issue. Meta recently announced that it is raising the price of its two-year-old Quest 2 VR headset by $100 (although there are reasons other than inflation, which is specific to Meta's business, as to why it is doing so).

What about video games? In addition to the prices of certain collectible games, when the prices of older games or old consoles go up, you know there is a problem. Is it possible that the price of PlayStation 5 and Xbox series games will be higher than 70 dollars? It hasn't happened yet, but anything is possible. If energy-related costs and the cost of goods continue to rise, how long will publishers put up with rising production prices before they pass it on to you and me?

Unfortunately, this article Can't answer these questions, but it got me thinking, how expensive are video games these days? Let's put aside this intangible gut feeling for a moment and go with accurate facts and figures. How expensive are new games today compared to last year?

Thanks to an article by Robert Grosso for TechRaptor, we can gauge how much new console games have cost over time. My charts below are based on that analysis.

As shown in Chart 1, the price of new games has increased over time with a 5-7 year cycle. This price increase seems to occur during significant upgrades at the start of a new generation of consoles (such as when advancements in game-related technologies lead to new graphics enhancements or when optical drives are used in consoles). For example, between 1993 and 2001, the average price of new games for different consoles was $49.99, but in 2005, with the release of Xbox 360 and PlayStation 3, the price of games increased to $59.99.

BingMag.com Have video games really become more expensive over time?

Chart 1

It is clear that prices increase over time. have found Given the power of modern consoles, the cost of making games, and of course inflation, we should expect something like this. In chart 2, we see the same prices in the previous time period, but this time they have been equated with today's inflation rate.

This means that an Atari 2600 console game in 1977 would cost approximately the same price according to today's inflation. It was priced at $200 today. This shows that with the passage of time, the price of games will decrease relatively. If publishers wanted to apply inflationary pressure to game pricing, Xbox One and PlayStation 4 games that sold for $59.99 in 2013 would have to sell for about $76.30 today. Even $69.99 games released in 2020 would cost $80.13 today (if game prices were held constant for inflation). This represents an increase of 14 percent.

BingMag.com Have video games really become more expensive over time?

Chart 2

This means that Although the average price of new video games has increased in absolute terms, they have become relatively cheaper over the years. Between 1977 and 2020, the average relative price of games decreased by approximately 2 percent each year.

In Figure 3, these two prices, absolute (real) and relative (inflation included), are shown side by side. are given.

If the price of new games were equalized according to the inflation rate for 2022, new games for the Atari 2600 would be four times more expensive today, new games for the Atari Jaguar would be twice as expensive today, and new games for the Xbox 360 and If the PlayStation 3 were released today, it would be 50% more expensive. (Of course, in our country, almost such a situation really exists!). The relative price curve starts in the 1990s and by the time we get to 2020 and the Xbox Series X and PlayStation 5 consoles, we get closer to real prices. This shows that technological advances in game making, economies of scale, efficiencies and cheaper production values were more felt four decades ago. The good news is that the trend has been downward.

BingMag.com Have video games really become more expensive over time?

Chart 3

Outside of commodities and energy resources, incremental price increases in everyday products (and services sold) keep their prices up for years at a time. This helps in forecasting quality production costs, consumer demand and investment planning. In times of high inflation, this feeling of confidence can be undermined. Game customers generally know the price of a new game before purchasing the product, and on the other hand, publishers are reluctant to accept higher prices for their products' suggested retail price (MSRP) due to this unspoken relationship with their customers. The pressure of inflation on the cost of producing games has existed for many years to the point where the price of new games must increase to compensate for these economic realities. It is $69.99. Let's assume that based on this calculation, these set prices will meet operational costs in the best way, earn money for publishers and provide an optimal price in relation to the audience's demand. Let's assume that $69.99 is the most "efficient" price to sell new games. As a fun activity let's go back and see how this was priced in the past.

Chart 4 shows how a $69.99 game would currently be priced in previous years at this rate of inflation.

BingMag.com Have video games really become more expensive over time?

Chart 4

While this is an interesting calculation, it reinforces the power of analyzing prices in relative rather than absolute terms. The problem is that people don't act or think in "relative" terms, we think in "absolute" terms. When prices rise, we evaluate the new price against the old price and judge the level of additional spending by personal wealth. It is by considering this human behavior that we find another beneficial trend. Absolute and real prices for all video games are also decreasing over time.

Chart 5 shows the absolute and real prices of complete physical games between 2018 and 2021. This data is taken from ISFE game sales data obtained by Belgium-based video game market research firm Sparkers.

BingMag.com Have video games really become more expensive over time?

Graph 5

All three consoles, Nintendo Switch, PlayStation 4 and Xbox One, have seen a decrease in game prices during this period. There are many reasons for this, for example, more console games are being sold at a lower price, and with the arrival of the new PlayStation 5 and Xbox series consoles, the demand for new games for older systems has decreased. Considering these factors, the fact remains that the average price trend is in a downward direction. As shown in chart 6, this phenomenon is also observed in the full prices of digital games.

BingMag.com Have video games really become more expensive over time?

Chart 6

To show that things are even better, the average annual earnings of UK businesses grew by 1.9% between 2018 and 2021. have been. On the other hand, the average price of physical and digital games (exclusive first-party Nintendo games are not counted in this statistic) for Switch, PlayStation 4 and Xbox One games has faced a negative decrease of 6.4 percent. As people have become richer, the price of the game seems to have become comparatively cheaper.

So, what does all this mean, given the high rate of inflation we are currently witnessing? For many consumers, video games are still expensive because of the value they consider spending on a game, even though they are now more affordable.

Whereas just a few years ago gamers spent $60 They used to pay for top tier games, now they are being asked to pay $70 for what is arguably the same game in terms of graphics or gameplay. Also, the fact that social media pressures gamers to buy games on day one, that video game publishers pocket high profits, or that many games come with extra-cost add-on packs or in-app payments, and that free-to-play games can Give the impression that paying for anything is too much, all of which make matters worse and do nothing to help.

BingMag.com Have video games really become more expensive over time?

Chart 7

Given the current situation and the negative reaction of players, if a publisher decides to increase the final price of its games (for Xbox series and Pricing the PlayStation 5 above $70 would be a bold move. However, that doesn't mean it won't happen, especially if the inflation rate is going to be consistently high for a year. It would be easier and safer for publishers to increase the price of games at the launch of a new console than in the middle of a console's life, but considering what we are seeing now, nothing is certain anymore.

I article I will end on an optimistic note. Some economists are predicting that we're past the worst of the inflationary pressures (of course they mean global inflationary pressures!), let's hope for everything that they're right.

Source: GameIndustry.biz

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