Inflation: Will the price of video games continue to rise?

Game News Inflation: Will the price of video games continue to rise?

Whether in our forums or in the comments of our articles, there is one topic that always comes up: the price of games and consoles. A completely normal situation because our love is dear for more than 40 years. Between the machines to buy, the PCs to upgrade, the accessories to add and the games to get, being a gamer requires a substantial budget. For two years, we have witnessed a rise in prices that would have tied the throats. Is inflation really the enemy of the consumer? Is it inevitable?

Summary

  • All come together for a more precious life
  • The more expensive, the better?
  • First denial, then acceptance

All come together for a more precious life

According to the definition of INSEE, inflation is the loss of purchasing power of money characterized by a sustained and general increase in prices. In other words, the euro you have in your wallet, earned by the sweat of your brow, gives you access to fewer things. Two years ago, Sony, Gearbox and Take Two launched their first apps for 80 euros instead of the usual 70 euros, i.e. a 14% price increase. Since then, these giants have been joined by Activision, Electronic Arts and Ubisoft, thus ending fifteen years of price stability for games.

The main argument that aims to explain the salt increase is in the increase of production budgets. In June 2020, Shawn Layden (former president of PlayStation Studios) was preparing the public to spend more on gaming as before. “Games have been $59.99 since I started this business, but development costs have increased tenfold” he explained to VentureBeat. Same story on the side of Strauss Zelnick, CEO of Take-Two, who expressed the protocol that the cost of production has increased by 200% to 300% in just one decade.

Inflation: Will the price of video games continue to rise?

Yes, make a game”AAAcost more than 15 years ago. Creating high-definition textures and mastering the latest rendering or animation techniques requires state-of-the-art equipment as well as qualified employees. In addition, buyers have high expectations and want to get lost in vast universes that must be expensive to create. This is the reason we find one of the best sellers in the history of titles like The Witcher 3: Wild Hunt, Elden Ring, Grand Theft Auto V, Red Dead Redemption II, or The Elder Scrolls V: Skyrim. Finally, in the last few months, the video game industry has experienced a developer crisis: studios are finding it difficult to attract senior profiles. In order to convince the best and keep the specialists in the area, some publishers increase the salary, which increases the salary cost. However, explaining the rise in prices through better working conditions for employees may be a partial mistake according to Oscar Lemaire. “The video game industry (…) is very good in general” he said to Twitter. Before adding:the problems of workers’ conditions therefore do not depend on the prices of games or consoles. The money is there, in abundance. These are the problems of distribution of wealth and organization of the studios“.

Inflation: Will the price of video games continue to rise?

The more expensive, the better?

Like other sectors before it, the game is also a victim of the increase in operational costs due to the crisis. in”difficult economic conditions” prompting Sony to increase the sale price of the PlayStation 5 by 10% in several territories, including France. Taking inflation into account, a software that cost 59 euros in 2002 is actually equivalent to 80 euros in 2022. The video game industry is therefore in the process of catching up, although it is complicated to apply strict price comparisons to games that are almost twenty years old.. In the auto industry, prices are experienced an improvement, but today’s cars include equipment that was only optional in the past. So the price of a product may increase while its quality improves. This can be used in video games, but the multiplicity of economic models as well as the expansion of the market also prevent a direct comparison with what we have 20 years ago. Many people have access to games and it is common to see the software being sold at high prices to have microtransactions that allow to earn more income..

Inflation: Will the price of video games continue to rise?Inflation: Will the price of video games continue to rise?

It should also not be forgotten that the increase in the consumption of dematerialized games has resulted in an increase in the margins of publishers and manufacturers. Sony, Nintendo and Microsoft will earn 30% back from every transaction made on PlayStation Store, Nintendo eShop and Xbox Store. This means that when a publisher like Ubisoft sells an Assassin’s Creed on the PlayStation Store, 30% of the value goes to Sony and 70% of the value goes to Ubisoft. The middleman of the distributor is gone here, the cake is divided into two parts, not three. Better yet, for first party games, manufacturers get back 100% of the bet. A situation that was very different 15 years ago, when stores were unavoidable in the equation.


First denial, then acceptance

It’s a fact, we have to get used to paying more for video games. Looking at the impressive numbers of Horizon Forbidden West, Fifa 23 or even Modern Warfare 2, the public seems willing to pay 80 euros for games. After all, many video game titles are played for tens or even hundreds of hours.. As far as home consoles are concerned, it is not excluded to see a price increase in 2023 from Microsoft. The American giant is considering this possibility, especially since the Xbox Series is currently sold below their production cost. Phil Spencer actually stated in the CNBC that his company loses between $100 and $200 on every Xbox sold, which is typical in the industry: we remember that various studies shows that the Xbox 360, PlayStation 3 and Wii U are offered below their total design costs. In India, the price of Xbox Series X as well as its accessories is known an upward movement whole year.

We’ll see if rising software and hardware prices slow down the adoption of gaming subscription services accessible across multiple platforms. With a Game Pass Ultimate that offers a large library of playable software in various media at the price of a standard Netflix subscription, there is reason to ask the question. Microsoft focuses on its latest quarterly results, released on October 25, 2022, with PC Game Pass subscriptions up 159% year over year. In January 2022, Xbox Game Pass had 25 million customers. But there again, There is no indication that the monthly price of the service will remain fixed in 2023.

Inflation: Will the price of video games continue to rise?Inflation: Will the price of video games continue to rise?

Fasten your seatbelt, we are entering a zone of turbulence. As the threat of a recession hangs over the gaming sector, the lack of components and rising operating costs are slowly reflected in the selling prices of our games and consoles. It now remains to be seen to what extent manufacturers and publishers, most of whom are in excellent financial health, will succeed in making efforts so that it affects the least impact on those who support them: the players.

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