Next-Generation Could Set The Gaming Industry’s Problems Straight
As the cost to develop a game has dropped significantly over the years, the market has been flooded with new titles from all sorts of developers. Between indie, A-level and even AAA-level (triple-A) developers, there’s a massive option of available games to play.
The leading issue with this is that there’s little to no differentiation in how the games are brought across to the public. Triple-A games cost as much as your regular not-so-good titles, where the gamer is forced to pay the same amount for substantially less hours, quality and all-round “entertainment value¹”.
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Over the recent months, the indie-boom has found its market share in the gamer who wants something different, and new. The success of indie can be largely attributed to the developers’ great understanding of entertainment and how it should be priced.
Call it logical, that the easiest way to enter a saturated market is to offer lower prices. However, indie developers do not only share that mentality, but also the truthful understanding of what their game really is: indie. It is something developed without a massive budget, and for the love of the game. The reason as to why it is built is different to most, if not all other games available. One could say that money comes second.
Keeping that in mind, it is easy to see that indie–and even mobile–developers understand what the game is about and what gamers want. They understand what their game is, and price it accordingly.
This all makes sense. Indie developers offer the gamer their creation, at a reduced rate, because they would rather make some–or even no money–and have people play it. People playing is their leading concern. You can quickly see that this mentality differs from other games released by mainstream publishers, which ask for exorbitant prices for something with little to no entertainment value. Publishers do not share the desire to get people to play as much as indies do, instead, they want to make money. The mainstream publisher’s game quality is actually disguised by the price and gamers are tricked.
Borderline unethical? Probably.
Coming back to the point made above: there’s no differentiation between games sold in conventional box-stores. Indie differentiated and it succeeded, a lot. Other publishers and developers will need to do the same to survive. They will need to price their games accordingly.
Triple-A titles should be priced the highest. Two reasons as to why I believe this include, (i) high entertainment value; and (ii) the large budgets for marketing and development warrants this. Games with large budgets for creation are often better than those with smaller budgets. Of course this has outliers, where games with big budgets are not as good as expected, or at least certain people do not enjoy them as much as others. Taking averages into account, I am sure we can agree that the bigger the budget, the overall outcome is “good game”. Therefore, the reason as to why I will agree to a higher price for triple-A game is to–obviously–allow the developers to make their expenses back, and make a bit (a lot) of a profit. Simple. And very fair.
Non triple-A developers currently feel that their game, no matter how good or bad, deserves that same price. Game developers with smaller budgets, with games that have little to no entertainment value are, simply put, trying to capitalise on the profits and costs-returns that triple-A games are entitled to. They are not entitled to this, and they do not deserve this.
If games could be categorised accordingly, the market will be very different.
Games that are not triple-A, with modest budgets, should by virtue sell for less. The great thing about this is that economics dictates that supply and demand will look after the developer/publisher. The lower the price, the greater the demand. The supply is a non-issue, as the cost of the game is basically the cost of the first disc created, whereby everything thereafter is a mere copy. Creating duplicates is very easy. Supply issues, sorted. Online helps too.
People will readily approach games that cost less, and that is why indie is popular. It also shows that the developer is more ethical and willing to meet gamers halfway. They understand what their game is and what their market is all about. Game sales also enforce the point that gamers do want the game, just not at the price the developer sets for it.
Believe it or not, gamers want to play games. They will play anything. However, they probably will not play your game if there is something else available, slightly better, at the same price. If both games were priced reasonably both games could be afforded–and played. Both developers win, and so does the gamer.
Furthermore, nothing says that a cheap game is bad. And nothing says that a cheap game won’t “boom”, so to speak. A cheap game might be very good, and popular, leaving sales to possibly sky-rocket. That could lead to profits exceeding what they could have if the game was priced unreasonably in the triple-A bracket–because gamers are more readily to try a game that is not as expensive. The opportunity cost for a gamer investing in a cheaper game that-could-be-really-good is not as worrying, in other words.
Leading back to the title, all of this could change. Capcom firmly believes that the development costs of next-generation games could increase. Release schedules could shrink, and prices might increase. This is not good for the gamer.
“Development costs are projected to soar as advanced and multiple functions are added to hardware,” said the company.
“In order to lower development costs and shorten time frame for development, Capcom will restructure its development organizations, which are the core parts of the company’s business, increasing ratio of in-house developments by focusing on the overhaul of overseas development companies,” stated Capcom.
“Streamlining measures will also be taken over the entire business operations as part of efforts to strengthen the management system. Such measures will include further improvements in transparency, efficiency, cost reductions and financial structure.”
The above creates andopportunity for the differentiation I spoke of above.
As development costs soar, and companies consolidate with one another, the larger studios will find ways to keep their operational expenses down. They will find a way to get the game to the user at a reasonable price.
Smaller developers and publishers will have to mimic this strategy, however they will find it tough. To get their games out there, they will have to either cut costs tremendously or stop making games altogether. This is both good and bad. It’s good because less bad games will exist. Instead, games for sale will be almost worth their price, from your average developer who can afford to be in the market. It’s bad because of job losses and the like.
As new technology starts to age, operational costs will inevitably decrease. However, as they do, the opportunity to re-enter the market with new games will excite a lot of people. Hopefully, learning from what happened in the current-generation, new entrants might realise that they should price their game accordingly. These entrants should try to penetrate the market with their offering’s capabilities as opposed to following the mainstream pricing tactics. With next-generation sales, there is a chance that companies will soon realise that gamers are willing to scrutinise games so much, that if the price does not nearly warrant a purchase, it won’t be purchased.
Next-generation has the chance to actually categorise the price of games to the entertainment value offered by the game itself. If this happens, the game industry will grow, because players will immediately see the differentiation and purchase accordingly. If we think about the budgets of the games itself, a game that is not triple-A does not cost as much to make as a game that is. It should therefore not need to cost as much, because the amount that needs to be recuperated is not as much. This can be done with more sales at a lower price. Instead, developers are trying to piggy-back the system of pricing standardisation, which kills the industry very slowly. This is evident by the fact that people cannot afford each and every game, although they want to.
I understand that certain games do enter the market at a lesser price, and they still do not succeed as I have described. I believe that this is because the perception is that “low price means bad game”. If the standard was that games were ranked accordingly, players would understand their worth a whole lot more, and also know what they are buying into. It is tough for one company to set the trend, as it will have to be a collective effort. The more companies that take the approach, the more we as consumers will tend to think, “not all of these can be that bad, can they?”
And they won’t be.
To be honest, the entertainment world struggles with this concept. Locally, at least, we struggle even more. We pay the same to watch a movie, no matter how good or bad. But, you will see, the better the movie the more receptive the public is to paying the higher “3D pricing”.
Next-generation has the opportunity to save and recreate the gaming industry’s purchasing trends. It has the opportunity to make everyone a lot of money, and gamers very happy. Developers and publishers need to step back and agree on pricing. Either that, or indie games will continue to steal market share whenever they get the chance.
Money unfortunately corrupts, and just because Activision is selling it for a high price, it does not mean that you can. Or should.
¹: “entertainment value: a catch-all term that encompasses single-player length, game quality, and replayability (including multiplayer)” — a definition, found on VentureBeat, that I agree with.