I just read a recent article stating that the era of $59.99 price range for video games could be over (see: http://adjix.com/3ndr).
The article stated the current trends of retailers cutting down prices of Xbox 360, PS3 and Wii games from $59.99 ($49.99 for the Wii) to $39.99 up to $49.99. Any knowledgeable gamer knows that price reductions are common practice for older or less popular titles, but the current global recession and retailer bankruptcies (i.e. Circuit City) have placed these reductions front and center. It used to take at least six months or so before game titles go down in prices but these days, prices are low on relatively new titles such as Mirror’s Edge, Madden 2009, Saint’s Row 2 and Prince of Persia.
Although this may be a welcomed treat for gamers like me, this can be a hard hit for the bottom line of Developers and Publishers. I just saw an article that Electronic Arts would eliminate another 11% of its workforce (see: http://adjix.com/3nbw). This proves that the once recession-proof industry is finally feeling the crunch and is slimming down their operating costs.
The price cuts could help drive individual sales for game titles but with a smaller profit margin for publishers and console makers, this could spell some trouble with the whole gaming industry. Is the growth of the gaming industry in danger?
My answer is no.
Here are the reasons why:
- Gamers would be gamers. Gamers would continue to purchase quality video games and would rank gaming as their number one source of entertainment.
- The recession is forcing more and more people to stay home. This would equate to increased time spent gaming.
- Gaming has become Mainstream. With the success of the Nintendo Wii, Nintendo DS, Guitar Hero, Rockband and online gaming in luring casual gamers, the demand of video games would increase exponentially in the next few years (my own opinion only)
- Video games are not only for fanboys and for geeks anymore. With the Wii Fit, The Sims and Bejewelled, casual gamers are discovering gaming’s “IT” factor.
So what is the verdict? Are cheaper prices good for the gaming industry? For consumers, of course it is good. Cheaper prices mean more spending money to try out other lesser-known game titles. In the short term, it would hurt developers and publishers but if they invest in the long term and use their brains, this could be the best thing that happened to the gaming industry. The good old parental excuse of video gaming as an expensive hobby is obsolete. Gamers are now more willing to try out other genres and titles. In addition, this would force developers to churn out quality games over quantity. The problem I had recently is the tidal wave of games that flooded the market (Not all releases are great… most are just crap). A good variety and supply of new games are good but a flood of games causes frustration and confusion with gamers who do not have the time and money to try out all these new games. Basic economics… less supply, more demand = higher prices and profit. Games such as Halo, Gears of War and Grand Theft Auto sell out for a reason. Such games are in demand for the gaming quality and replay value that gamers respond positively.
However, developers and publishers should take this as a warning. They need to be more creative in what games they bring to the market. I understand the need to milk out their killer apps but this can get old. For instance, how many versions of Madden do we need to get closer to the NFL experience? (I think I just stepped on a couple of toes there). They need to develop new and creative IP (Intellectual Properties) to entice gamers and grow their audience. With this in their minds, the future of gaming would be bright.
As for now, I will enjoy the lower-priced games (as we all should) and HOPE for the time when I will be playing the next killer app games like Halo, Civilization and Sims. Only time would tell.
Filed under: Opinion, 2008, 2009, bankrupt, bejewelled, challenge, childhood, Circuit City, civilization, DS, EA, Electronic Arts, gamers, gears of war, grand theft auto, gutiar hero, halo, Nintendo DS, nintendo wii, online gaming, pink slip. recession, playstation 3, prices, ps3, rockband, the sims, video gaming, wii fit, xbox 360
