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THQ: Consumers "might end up spending $130" if game prices drop to $40

Fri 12 Nov 2010 2:08pm GMT / 9:08am EST / 6:08am PST
Business

$60 games "keeping people out" but DLC sales can trump RRP drop - Farrell

THQ president Brian Farrell has predicted that the age of $60 console games may come to an end, to be replaced by DLC-based revenue streams.

Speaking at the BMO conference either this week, he claimed that current pricing was "keeping people out," and that a move to $40 could be to the industry's benefit.

"Investors are thinking 'can we hold the $59.99 price point?' and what we're thinking about the business is turning it on its head a little bit - it's not how high a price we can get, but how many users we can get.

"It's one of the things we've learned from China and Korea. If you can capture everyone under that you can make the most money."

Referring to the publisher's last MX vs ATV game, he reveaed that "When we launched it at $59.99, we'd do some units, and then when we brought the price down to the mass market-friendly price of $39.99, it would just pop. It's a very mass market title.

"So the thinking this time is, let's initially launch at $39.99 - it's a very robust game, very high quality, so this is not about trying to get a secondary title out."

The drop in RRP could be recouped with additional content, he argued. "With a series of downloadable content so people can extend their experience, people might end up spending $129.99."

He estimated that DLC had historically contributed 15 to 20 per cent of revenue to THQ games which offered it - a figure he was confident would grow.

"We think this type of game monetisation is going to work. If it does and we do have a superior return on our investment, of course we'll take it to other games."

"It's a play on the freemium model, and it's sort of a way to get there from here. It's an interesting experiment, but we think that's the way games are going go in the long term."

Farrell reiterated that the publisher was also increasingly looking towards digital for the future too. "Where we're allocating a lot of our capital now is these growing online and digital segments. What we're seeing from a lot of consumers is a lot of digital migration - and we do think it is going to be a migration and not a hard stop into digital."

He claimed that "the fastest growing segments of the market are in these digital markets and in wireless, predicting that mobile and online would constitute 11.2 per cent of sales by the end of 2013, compared to 7.2 per cent at the end of 2009.

Nonetheless, "We think the majority of sales over the next few three years through 2014 will be on these traditional gaming platforms.

"The PS3 and 360 seem to be poised for additional growth due to the price points and the price opportunities they have to expand the market, and then also these new motion controllers that they each have."

Farrell was also bullish about THQ's impending uDraw accessory for Wii. "It's an incredible value proposition for consumers in this environment," he said of the $70 drawing controller.

"We're looking at it as a long term revenue opportunity... to have additional software over the next several years."

Despite the company's earlier troubles, he was confident about THQ's forthcoming slate following what he called its 'year of investment' in 2010: "It's one of the strongest pipelines I've seen in my ten years at THQ."

3 Comments

Shane Sweeney
Academic

365 292 0.8
$60? Its $120 in AU, and the currency is 1:1.

Posted:3 years ago

#1

David Amirian
Writer

59 3 0.1
so what they're saying is they're leaving money on the table...

Posted:3 years ago

#2

Alfonso Sexto
Lead Tester

813 642 0.8


Also, I fully agree with this guy and I also add: the requirement of the videogame prices to drop is mandatory. Everyone in Spain is importing games from UK because of the rediculous prices in other European countries. Are they waiting for the sales to go completely down or what?.

The better keep they greed aside before they will regret it.

Posted:3 years ago

#3

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