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In Defense of Why Games Are $60

You're shelling out 60 big ones, is it worth it?

Jun 24, 2010 11:12AM PST

There's a reason why each new game is $60. It is all well summarized by this article here.

Where does your $60 go?

I'll also summarize it here however. A developer and publisher together on average make $9 per game and if you divide in half between the two then the developer makes about $4.50 per game. Now lets get back to the big picture. You pay $60. What happens to it? Well the retailer who sells games for publishers like GameStop makes a profit of $12 per game. That means that the developer and publisher makes $48 per game. Now lets move to marketing.

Those big posters and huge cutouts of games cost the game maker on average $2 per game. The developer and publisher have to pay about $2 per game in order to afford putting up posters in stores. And that cost doesn't even include the printing, commercials, and internet ads. Marketing includes about 15% of the $60 price which means that it costs $7 for marketing (including the posters, internet ads, and commercials). So now  the dev/pub makes around $41 per game. But wait there's more!

Manufacturing costs about $1 per game. 15 cents for packaging, 15 cents for the case, and 30 cents for the disc. But unlike the DVD industry where each movie studio has their own manufacturer, Sony and Microsoft are in charge of manufacturing meaning that for example Bioware has to order the discs from Microsoft to publish Mass Effect 2. That's how Sony and Microsoft generally make profits off of games for their systems. They don't charge $1 for each disc but also royalties per disc which on average is $12. That leaves the dev/pub with a profit of $29 per game!

Finally the cost of development. On average a PS3 or 360 video game costs about $10 million to make. The cost to cover that today is about $20 . If a dev/pub manages to sell more than 1 million of a game, then each game sold will only cost $10 in development but with so many other games that haven't reached 1 million, many companies have to put $20 per game for development into their budget. Around 50-60 games have made it past 1 million but thats out of over 1500 games and with the use games market and rentals, it is hard for dev/pubs to sell over 1 million.

In the end a developer only makes $4.50 per game. The publisher gets the other $4.50. Overall the dev/pub  makes about $9 per game. If you lowered the price by 2 dollars then profits are drastically cut ($3.50 for the developer). 5 dollars off would just hamper the developers from even making the game. Hey I know my numbers aren't completely accurate but they're pretty close estimations.

Developers like these can only afford to make full console games at $60.

Now to approach another view that people have had. If $60 games are actually putting companies out of business, why are developers and publishers still making them and charging $60 for them? Becuase that's a lit. $60 is the price that developers and publishers need to sell a game to make a profit and $60 is also the lowest price that people will accept to buy games. It's called supply and demand in economics. Prices are made aty the point that suppliers are willing to sell and buyers are willing to buy. PC games generally go for for $50 due to digital distributution which is cheaper than manucfaturing royalties. It's a lot cheaper to pay Steam or Direct2Drive to hose a game for digital distribution. And now you know.

So should $60 stop you from buying a game? Hell no, if it's a good game go and get it! If you're not sure there are a lot of demos to let you preview some games and plenty of sites like 1up. Plus if you can't afford the $60 price tag just buy a used game from last year for 20 to 30 bucks. Current games don't always mean that they are the best games. Games released in the past can be gems too and plenty of fun. That and there are rentlas for those who think that some games have no replay value. All valid options.

Now go out and a buy that game you've been hesitatnt about. As long as most people have agreed that it's fun and you have the money, the price tag should NOT stop you. But if you'd rather use that $60 for something else, that's fine too.

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Comments (13)

  • Strictly_Nintendo
  • Why I don't mind

    Posted: Jun 24, 2010 12:00AM PST by  Strictly_Nintendo

    Developers work so hard to send out great entertainment and all people can complain about is not wanting to pay that much.  I think it is completely fair and I will continue paying what is necessary for my entertainment.  I recently started ignoring people's complaints.  I say if you can't afford it, then wait.  STOP PIRATING!!!

    • Tulriss
    • This just...

      Posted: Jun 24, 2010 12:00AM PST by  Tulriss

      further shows why I'd rather the next generation of systems to come out much later.  Developers are just now getting to a point where development costs are coming down and they can make games with more profit in mind.  If the next gen doesn't push forward graphically too much, we could be looking at $50 games again because the development costs won't skyrocket.

    • ShadowbladerXT
    • Yes

      Posted: Jun 24, 2010 12:00AM PST by  ShadowbladerXT

      because new technologies may decreases costs eventually leading to lower prices. But I don't think it'll happen right away.

  • BrokenH
  • Depends

    Posted: Jun 24, 2010 12:00AM PST by  BrokenH

    It depends on the game. Sometimes I feel like I get my money's worth but other times I do not. Put it this way if I can beat a game the first or second night I have it in my possession I at least feel a little gyped. Because I can only afford one game a month I at least want some replayability.

    If you ever put yourself on a small budget as a social/economic experiment you'll start knowing why people complain.

    As for pirating I disagree with the practice though it is a necessary evil. It teaches companies how to better protect themselves.

    • ShadowbladerXT
    • But pirating

      Posted: Jun 24, 2010 12:00AM PST by  ShadowbladerXT

      gives up those crappy DRM's that everyone hates.

  • Xcite79
  • I don't agree with it.

    Posted: Jun 24, 2010 12:00AM PST by  Xcite79

    The industry done a good job in providing an alternative way to play games to attract new consumers but it will be interesting to see how many stay dedicated as a gamer and continue to buy games. One of the biggest problems is the hobby is expensive no matter if the 60 dollars is necessary that some will automatically be turned off. It also hampers gamers like myself that are willing to buy more games but can only buy so many which still means some developers are losing out. I buy a lot of games but even I can substain what I am doing forever. That will mean I will have to buy used at some point at least time to time.

    I would also think that with all the game related merchandise and such that the game itself can't or shouldn't be the only alternative that a developer/publisher profits off of. Who is getting all the profit from that crap? I would also end by saying that its ridiculous that most games are even sold at 60 when so many of them are not. Not all games costs the same to make.

    • ShadowbladerXT
    • well

      Posted: Jun 24, 2010 12:00AM PST by  ShadowbladerXT

      Like I said these figures are on average. Royalities will always be the same and high quality games usually cost 10 million. Games with lower quality don't sell as much. Those budget games that cost 30-40 bucks when they first come out already had less than 10 million dollars for development which is why they can afford to lower the price. PLus the lower price point is to combat the skepticisms about a game's low quality.

  • The-Hero-of-Time
  • I'm all for the quality

    Posted: Jun 24, 2010 12:00AM PST by  The-Hero-of-Time

    The $60 price tag doesn't bug me, so long as the game itself is worth it. I think the reason there is an outcry from some gamers is because there are quite a few games on the shelf that simply aren't worth the price. Take into account that in this gen we have DLC to consider as well, which can give you more bang for your buck or screw you over. Take Modern Warfare 2 as an example...if you payed full price for the game, and bought the two map packs, that's over $90 you've spent on one game. Call me crazy, but even though I like MW2, I don't think it's that good.

    Anyways...good blog

    • ShadowbladerXT
    • Yea!

      Posted: Jun 24, 2010 12:00AM PST by  ShadowbladerXT

      I like MW2 but I think it's overrated at times.

      And thanks.

  • xxboredom
  • Put this

    Posted: Jun 24, 2010 12:00AM PST by  xxboredom

    on your new account!

    • xxboredom
    • Ah oh well

      Posted: Jun 24, 2010 12:00AM PST by  xxboredom

      good blog btw it was very informative. Hope to see more.

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