At DICE last year I sat with a former EA executive who rephrased my entire conversation into one sentence. “So wait” he said. “What you’re saying is that the entire industry has the pricing model wrong”. “Damn right!” I said.
On July 18th I wrote a piece in regards to fair pricing of video games in Australia.. It discussed how pricing hadn’t evolved past the retail model, arguing that although digital delivery now exceeded retail sales, pricing for games still revolved around a price model that considers several redundant margins in the end user price.
In the past weeks, there has been a fantastic example of this disconnect with a significant increase in the price for Ark: Survival Evolved.
Once announced, the articles begun appearing online almost immediately. “As we head towards finishing up Ark and launching it at retail, the retailers wouldn’t allow a price discrepancy between digital sellers and physical sellers,” community manager and associate producer Jatheish Karunakaran said in an email. Sounds legitimate…...
There was much weighing in including RocketWerkz CEO Dean Hall whom openly criticised Studio Wildcard for its decision to increase the price. According to Hall, Ark is “nowhere near” a state that could justify a AAA price. He also added “symptomatic that those making the price decisions don’t care about the state of the game and just want to get into boxed retail as quickly as possible.”
All this begs the question, why put it in a box in the first place?
As a developer, I guess having a game in a box caries a certain amount of status with it, but the results are clear for everyone to see — it doubles the price. How? Well that’s a easy piece of math’s. Retail demand 30% margin and the distributor requires 20% margin and of course there is the cost of the media and printed materials which can come to — maybe 1.20 Euro.
So why on earth would you put it in a box if its existence in a box compromises your players (your customer’s) pocket. Lets face it — the boxes will inevitably be stripped at the wholesale point and the keys recirculated via marketplaces and what seemed a logical 59.99 euro price point will quickly be eroded by that 30% margin that gets taken away when the wholesalers sell directly to end users.
The point I am trying to make is that pricing in the games industry is being driven incorrectly by retail, a force that no longer represents the majority of sales on ANY platform. Pricing models should be dependent on the game quality and what fair price that user base is prepared to pay for the experience of a certain game.
Companies like Riot, HiRez, Wargaming and Valve have managed to completely step away from pricing models set by retail and build completely new structures around a F2P models and in game items.
So use your imagination, have some faith and be assured that there is no comfort to be found in seeing a game in a box on your studio shelf.
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