Last month, some of the prices of the exclusive next generation games for the PlayStation 5 were released online. These games cost between 70 and 80 euros for one title. A noticeable price increase compared to the previous generation. For the average gamer, this is a large part of their available budget. What is the reason behind these increased prices?
It takes a lot of time and resources to create a game. As an example, the development cost of Cyberpunk 2077 is estimated to be near a hundred million dollars. The Witcher 3 – Wild Hunt, a different title of the same studio CD Projekt Red, is reported to cost an estimated 80 million to develop.
Grand Theft Auto V, one of the largest titles of the decade, costs around 250 million dollars to create and publish. At the same time, this is not even the most expensive game in the list of the most expensive video games to develop. The question remains why they are so expensive?
Longer development period and larger studios
The larger games in this list take between 2 and 5 years to create. To be clear, these development times add to the total cost of the game. The studios house between 50 to 250 employees to support the development of these titles. Gamers expect larger worlds and more content, but this adds to the development time and results in a higher production cost.
The Last of Us 2 is double the length of its predecessor and it took double the development time to create the final product, an expensive project. It may seem a logical conclusion, but this additional cost means that the game has to sell twice as many copies to remain profitable.
Difficult to reach a break-even point
The development cost has increased in recent years because the possibilities have been expanded by the current and next generation consoles. This may be good for gamers and publishers, but for game developers the games they work on become more complex and difficult to create. Expectations are higher to meet and this often results in an increased development cost.
Selling more games is the message for publishers to reach a break-even point, the point at which total cost and total revenue are equal or even. This requires a larger marketing budget to promote the games and reach an even larger target audience.
Make games more expensive
An alternative method for publishers to reach a break-even point is to increase the price of the games even further in this next generation of consoles and games. This makes the development process and marketing of games more profitable, but brings certain risks.
The current earnings model may no longer be sustainable for developers and publishers, but the question remains how much a game may cost before it becomes too expensive. Seen the prices of some of the PlayStation 5 and Xbox Series X games, the next generation games are more expensive compared to the current generation versions.
Sell additional content and lower the distribution cost
The most recent games are often released with a complete season pass of additional content. To enjoy this content, gamers have to pay an additional cost price equal to the value of the base game. This marketing tactic increases the price of the games, yet it gives gamers the choice whether or not to buy this additional content.
As a personal opinion, the additional content has to be included in the base game. Digital distribution lowers the costs for publishers and ensures that publishers have more control over the prices of their games. In our modern connected world, the transport costs for the distribution of physical games decreased over time. This also increases the profit margin for publishers.
More efficient marketing
To be clear, it seems a better option to keep the game prices the same between the current and next generation of games. Publishers and developers should instead focus on a more efficient manner to use the available budget.
Seen the marketing budgets of some games are even higher than the game development costs, it looks as if the publishers try to reach the wrong target audience, or are they trying to reach and convince all gamers to purchase their latest title despite the interest of the target group?
Indie developers as an example
A more efficient use of the available budgets can reduce the total production and marketing cost of the games. At the same time, the publishers may be able to reach a target group that is more interested in the content of the game and may purchase additional content in the future.
Maybe the larger publishers should take a closer look at the success stories of some indie game developers. Even with a limited budget, they seem to reach larger audiences as they understand the needs of their fellow gamers. The lower price of the games is also attractive for gamers to try the game.
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Disclaimer. This post contains copyrighted images from Gran Turismo 7, Spider-Man – Miles Morales and Demon’s Souls, different games developed by Polyphony Digital, Insomniac Games and Bluepoint Games and published by Sony Interactive Entertainment. The fair use of copyrighted works for purposes such as criticism, comment, news reporting or research is not considered as an infringement of copyright.