The price of video games is a contentious issue that is rarely discussed in reconciliatory terms. They are a luxury product, but one with a value that has been extremely distorted by a series of questionable market decisions made over a decade and a half. That’s why every time an executive says that video game prices are too low, we react with surprise. But what if that were true?
All of this comes in the context of recent statements from Capcom’s president, Haruhiro Tsujimoto, who believes that the company’s video games are priced too low. He explains this by pointing out that the cost of development has grown exponentially, while the price of games has not followed suit, suggesting that increasing game prices would be a “healthy option” for the industry.
According to Tsujimoto, development costs are a hundred times higher than in the 80s, while software prices have hardly increased. And while it’s true that the recession is something to consider, he believes it’s not something that affects the industry, as demonstrated by the 2008 financial crisis.
Up to this point, it may seem like the discourse of someone completely disconnected from reality. However, he’s not saying anything that is untrue. Since 2004, the video game market, particularly on PC, has kept the base price of games practically unchanged. This means that prices have remained virtually the same for 20 years, even when there has been double-digit inflation that may well be approaching three digits rather than just one. This has recently changed for most AAA console games, increasing the price to 70-80 euros from the previous 60-70 euros, even though on PC, prices largely remain at 50-60 euros for base games.
How is it possible that these prices have remained until relatively recently? Essentially, it’s due to the constant influx of players. The increase in players over time has been exponential. Starting with the arrival of the PlayStation, but particularly with the PlayStation 2 and the complete democratization of the PC, the internet, and mobile phones, the number of players exploded. This allowed them to continue maintaining prices even as margins became increasingly marginal. They made less money, but they had more buyers.
That’s the problem. Big companies like Capcom, EA, Sony, Microsoft; they can afford to do this. But it creates a suffocating situation for small and medium-sized companies. A situation where it’s practically impossible to create games beyond a certain point without underselling your product.
Small companies, indies, have to sell their games well below their market value because between the prices set by big companies and constant sales, a too-high price would result in very few full-price sales. This makes the viability of a small studio entirely dependent on creating a game that sells in the six-figure range, something generally exclusive to large companies, or creating moderately successful games consistently, with none of them failing, to keep the company afloat.
In fact, this explains the near-complete disappearance of AA games, those medium-sized games leaning towards the larger side, and with it, the disappearance of medium-sized companies. As their production costs have increased but the perceived value remains the same, they must sell them well below their cost. Therefore, they must either be a resounding success or a failure that questions the viability of the company, essentially making it impossible to take such risks.
Is it better, then, to create a large game? Not necessarily. AAA games are so costly in terms of production and marketing that even at their price point, they need to sell millions to break even. The difference is that big companies could scale them down and create less expensive games, in line with the prices they charge, to balance the equation, instead of constantly scaling up, seeking an unsustainable limit — of people willing to pay whatever, of a constant influx of new players. Something they won’t do because that’s the ideological foundation of capitalism: the physically impossible perpetual growth.
That’s where the problem lies. Big companies keep scaling up, relying on an infinite market of potential new customers, creating an entirely unrealistic value scale. This makes medium-sized companies unsustainable, unable to compete, and forces small companies to devalue their product, forcing them to subsist to ridiculous levels or take insane risks that no one should take. Such as mortgaging their homes, betting that the game will be a resounding success, as many indie developers who have succeeded have done, and many more who have not and have ended up on the street, and we haven’t heard about them.
That’s why Haruhiro Tsujimoto is right. Games cost less than they should. Specifically, indie games, medium-sized games, cost less than they should. But not the big games from big companies. A new Resident Evil could simply scale down to fit a realistic value scale. 70, 80, or 90 euros for a video game is a lot of money. Raising it even further, as if people’s purchasing power were infinite, is a gamble they shouldn’t want to take.
Therefore, what’s healthy for the industry is not for AAA games to raise their prices. What’s healthy for the industry is for indie and medium-sized games to raise their prices, and for AAA games to become smaller and less grandiose. Have worse graphics. Be made by smaller studios. What’s healthy for the industry is for the difference between a blockbuster and an indie game not to be measured in numbers equivalent to the GDP of a medium-sized country. Because as long as it remains like this, no matter how much they raise or don’t raise the price of games from big companies, the industry will continue to be on the brink due to an economically unsustainable model.