Wandering into a videogame shop can be a pretty depressing experience – and not just because it takes four hours to get to the checkout. £34.99 for Mass Effect? £49.99 for a console game?
And those price tags tend to stay the same, at least until savage reviews tell everybody the game's a duffer and the shops cut its price in panic. Still, there's always the pre-owned section, where you can get the same game with added scratches, bashes and jammy fingerprints. The savings? A few quid if you're lucky. Somebody's having a laugh, but who? And why?
Games are costly, and the obvious reason is that they're expensive to make. The days when industry-defining hits were the creations of bored teenagers hammering away on home computers are long gone. Today, a games studio is more like a film studio, with huge teams spending years on a single project. Budgets in the tens of millions aren't unusual, and that means games have to sell an awful lot of copies just to break even. The overwhelming majority simply don't.
Even many of the bigger names still coast from project to project, struggling to keep afloat. Most recently, Flagship – the creator of Hellgate: London, largely made up of Blizzard alumni – closed its doors after just one game. Ritual, a group of successful FPS developers who'd worked on licences such as Quake, Heavy Metal and Star Trek, collapsed after the launch of the first episode of its new SiN series, and met the most humiliating fate of all – being bought by a casual games company
Everyone wants a cut
There's more to it than that, though, because every other type of entertainment technology – from music formats to DVD – has become cheaper over the last couple of decades, despite ever-growing budgets. Games haven't, and one of the main reasons for this is the sheer number of people with their fingers in the money pie.
Take stores. When you buy a game from a shop, the retailer keeps around 20 per cent of the money. That isn't pure profit, though: retailers have to pay for staff, marketing, premises and all the other costs of running a business, including tax. That's why offshore, Internet-only retailers can sell games much more cheaply without immediately going out of business.
Digital distribution is even better. Bandwidth isn't a huge deal when you're buying that much of it, saving a fortune in packing, postage and other materials. Valve's Steam is the most famous of these services.
Sometimes the retailer takes even more money. If the game gets a snazzy display, the retailer will often expect a contribution towards the cost. In some cases, retailers might ask for an extra bit of cash just to stock a game, safe in the knowledge that if they don't stock it, it won't sell. As for those Top Ten racks and similar promotions, they're not always based on sales…
The munch bunch
Once the retailer has taken its cut, there are plenty of other people waiting in line. The distributor gets a share, which equates to 1-2 per cent of the retail price. The publisher takes a similar cut, and a further 5 per cent goes to pay for the manufacturing and packaging. Attention-grabbing box designs and limited editions such as a copy of Halo in a metallic space helmet will obviously cost more.
What's left of the money at this stage finally goes back to the game developer, at which point it's divided further. If the developer has used someone else's game engine – which many do because it works out much cheaper than building their own – then they'll have to pay a royalty to the owner, and if the game uses characters or content that belongs to someone else (such as comic book superheroes, characters from films or music from big-name artists) then that's another royalty payment. Engine and character licences can each account for around 5 per cent of the total price.
Some of the remaining money then goes to cover the cost of building the game, losses from less successful titles (or games that were started and then canned) and all the other costs of being in business. That doesn't leave much for kick-starting the next project, leaving most scrabbling around in search of another contract just to keep the studio alive.
Console mania
If you're creating for consoles, there's even more money involved – which is partly why console games are more expensive than PC ones. Partly? Cynics suggest that because consoles don't really suffer from piracy, they can charge prices that PC owners simply wouldn't stomach.
Your comments (14) Click to add a new comment
castaway666
October 14th 2008
14. At the end of the day it's the hardcore gamers who'll pay up straight away, of we can wait a few months then we'll save through promotions to shift stock no longer top of the chart or preowned... if we deman they supply.. if we can stop the demand and voice concerns as a whole then we'll have some chance of the prices dropping.... this will never happen, unless more titles become exclusive or there is a big influx of new consoles to make companies more competative with each other...
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lth
October 10th 2008
13. Incidentally, after a quick look on Amazon, I can't find a single console game for sale for more than £40.
This article is retarded; the price of new games, DVDs and CDs on the high street has hardly changed in the past ten years; what's changed is that you can get all of them online for less. Two-year old movies, games and CDs are all less than half the original price.
If anything, it's games and CDs that have gotten cheaper, with new CDs going for £12 instead of £15 and PC games at £35 instead of £40.
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lth
October 10th 2008
12. PC games have been about £35 for as long as I can remember; in the past ten years the price of money has dropped by about a third and yet the quality (at least artistically, if not gameplay-wise) has risen incredibly. I think £35 is a great deal. £50 for console games does seem high, but then I've never owned a console!
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gavin
October 10th 2008
11. I remember paying £75.99 for Vitua Racer on the MegaDrive - the reason was because it was "new technology". Doubtful you could get away with that these days, unless they throw in a steering wheel!
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pjmas05
October 8th 2008
10. What does everyone think about the preowned debate it seems David Braben of Frontier is still bemoaning the reselling of games many times over. Is this because he only releases one game every five years or does he have a genuine point
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watcherzero
October 6th 2008
9. Those really expensive snes games like starfox were because they added a extra co-processor to the cartridges, an expensive but effective way to boost performance of a console reaching the end of its life.
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castaway666
October 6th 2008
8. saying that I wouldn't say no to lower prices? I'm stupid not dumb!
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castaway666
October 6th 2008
7. saying that I wouldn't say no to lower prices? I'm stupid not dumb!
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castaway666
October 6th 2008
6. I agree with pjmas05, I remember back in the day SNES games being £40 upwards... Starfox good example, if you take into account inflation and general rising costs, £35-45 a game now i think is reasonable, considering we pay around £10-17 for a DVD or even more for high-def discs...
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watcherzero
October 5th 2008
5. I remember buying Day of The Tentacle CD edition for a whopping £40! that was back when games cost no more than 25-30. Mind you it did come in a massive toblerone shaped box.
Still I think PC games nowadays are cheap for the development costs, its console games that are expensive and thats because every time you buy a game your paying for the subsidized price you bought the console itself for.
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calphalon
October 5th 2008
4. Games nowadays are so god d@mn expensive that many people have gone out of there way to learn how to backup/copy games that they have either bought or honestly not bought. Years ago you might be able to get a game from around 20 people...Now you jump into a line of 100's...The more pirates I see out there, the happier I become - hoping someday they will lower those stupid prices. There are so many games out there that CLEARLY shouldn't be sold for $60 but instead $30 for the quality they bring!
Not to mention, Microsoft makes the xbox 360 as one of the worst piece of machinery to have ever been created; destroying not only all your f'in games before your even able to finish them but by your console dying out of no where. I've had 3 xbox's (xbox 360's) and they ALL RED RINGED (DIED). One was sent in and the other two I personally fixed with bigger bolts and washers...How silly is that?! A $300 machine being fixed with bolts & washers?! I'm truly surprised that there hasn't been a class-action lawsuit against these worthless-dying devices!
Who ever said, "If kids say video games are too expensive they should buy less of them, just the one they want." is a dumbsh1t. Buying less games is worse for the company selling the game. That's common sense. Shows your not a game-buyer/player yourself; thus your opinion means nothing.
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pjmas05
October 5th 2008
3. I can remember buying StreetFighter 2 Turbo Edition for £60 on the SNES now I can buy Bioshock on 360 for £20 quid in most bricks and mortar retailers. These games take studios of 200 odd people to make and cost a fraction of what they cost to produce most gamers below the age of 25 don't know they are born!!!
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lonyo
October 5th 2008
2. I'm confused as to how you managed to come up with this statement:
"digital is cheaper than boxed"
It's, to be honest, mostly ****. Steam is more expensive than retail. Direct2Drive is sometimes cheaper than retail boxed, but never than online/etail boxed.
Digital Distribution is a horrible ripoff when you consider the lack of overheads, and I'd guess that the % of sales going to the creators of the game doesn't really change.
Buying from online retailers like Amazon or Play etc is the most cost effective way to buy new games. Digital distribution services like Steam just allow consumers to be horribly ripped off.
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megalaser
October 5th 2008
1. We are not being ripped off if prices on everything don't keep falling, this 'everything is free' culture leads us to devalue everything. We now expect music and movies to be free, microwave ovens to be £25 and for a classic movie like The Sound of Music to come free with a newspaper - this has got to stop, the impression is that everything is worthless, this is one of the reasons for the poor state of our economy, declining markets and cut throat competition with everyone underselling each other. I am happy to pay something I want, not expect it for nothing. If kids say video games are too expensive they should buy less of them, just the one they want.
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