I remember hearing from a couple of people that the prices for games have never increased and adjusted for inflation, and therefore they are technically cheaper today than 30 years ago. Is this true? And if it is, does that ever concern the publishers or developers? Do they earn less money from games now than in the past? I'm thinking if prices never adjust for inflation, wouldn't that mean games might eventually not be viable to earn money from? Sorry if my question is all over the place.
You are correct. According to the US Bureau of Labor Statistics, using the Consumer Price Index, it would require spending approximately $192.72 today in order to buy the same amount of goods that $100 would have bought in January of 1990. Spending [$60 on a game in 1990 would be the equivalent buying power of $115.63 today].
Does this concern publishers? Absolutely. We earn much less per game sale today than we did in the past, and we spend much more to develop and market games today than we did back then. The big factor that you’re missing is the number of games sold. In 1990, selling 500,000 copies was considered a big hit. Chart-topping blockbusters sold a million copies. Today, we see the best-selling games getting numbers of 5-10 million regularly, and even failures can still move millions of copies. Two of the titles I worked on weren’t considered successes, but still sold over two million copies each. Diablo 2, considered to be one of the best games of all time, also sold around two million copies in its first year. The main reason that game prices haven’t needed to keep pace with inflation is that there are so many more money-spending gamers today than there were back then. As long as the number of game buyers continues to increase with the times, we can keep the price steady. We don’t get as much per game, but we sell a lot more games.
This brings its own set of problems along with it. The number of gamers continues to grow, but it’s grown in new fields - mobile and social gaming. Unfortunately, these gamers haven’t really transitioned into more hardcore gaming experiences. The number of console and PC game-buyers isn’t really increasing anymore, but the cost still is. Now that technology has improved to the point where we can see individual nose hairs, fingernails, and sweat droplets, it means we need artists to model those fingernails, animators to animate those nose hairs, and engineers to code the simulation of the sweat droplets running down the character’s face. Because the sales growth isn’t increasing like it used to, publishers are exploring other means of earning additional money past the initial sale. This is the driving force behind features like freemium games, microtransactions, paid DLC, loot boxes, subscriptions, season passes, etc. They are all ways to try to earn more money, because a strictly sales-based business model just isn’t cutting it anymore.
In addition to this, because the price of games hasn’t risen, there are other side effects, like setting expectations for the game-buying public. The $60 spent on a launch PS3 title in November of 2006 would be the equivalent purchasing power of $69.40 in November of 2013 (when the PS4 launched), but people today still complain that they aren’t getting enough value for their money, despite their money being worth relatively less than it was and games providing more technically advanced features and higher fidelity content than before. All of the newer and more powerful hardware means that we can write code and create assets that takes advantage of that hardware. But we still need the people, time, and money to build all of that stuff, and that total aggregated effort is greater than previous generations. Before anybody tells me that gameplay trumps graphical fidelity, let me remind my readers that Marvel vs Capcom Infinite is currently getting slagged by gamers in large part because, despite its great gameplay, it isn’t pretty enough. As much as we might like to believe that great gameplay would always be enough, it really isn’t.
I want to be clear here - I’m not blaming gamers for wanting more for their money. There’s nothing wrong with that. There’s nothing wrong with telling us what you want, or expressing displeasure at various business practices. I’m just trying to explain how it contributed to the situation we’re in. It’s not necessarily a negative or a positive thing, it’s just the reality of the situation. Publishers need to understand their customers if they are going to serve them and remain profitable, and this is our general understanding of them after looking at the data.
Ultimately, it’s a question of reaching equilibrium. Publishers are on an eternal quest to balance budgets and profits for growth. That means pursuing new business models like loot boxes and paid DLC, new technology to make developing games more cost-efficient, and basic things like being more judicious about game budgets and deciding which projects get the green light. The game-buying public is constantly evolving and publishers are constantly experimenting with the formulas in order to get ahead of the curve.
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