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What Price Victory: The Rising Cost of Console Gaming

What Price Victory: The Rising Cost of Console Gaming

Fri 29 Nov 2013 1:06am GMT / 8:06pm EST / 5:06pm PST
RetailHardware

Sony is set to triumph in day-one sales, but the British public is confused by AAA pricing on both consoles

Here we are, touching distance from the outcome of the first battle of the console war. Of course, to suggest that the fate of an entire generation could be decided in a single day's trading would be absurd, but the notion that neither Sony nor Microsoft would value a day-one sales victory is equally preposterous. Thankfully, there's no need to wait for the official figures to roll in: the Xbox One and the PlayStation 4 may have both celebrated reaching 1 million sales in 24 hours, but Sony had yet to turn its focus to Europe. And judging from the queue streaming along the pavement of London's Covent Garden, Kaz Hirai and co. will be able to celebrate the sort of unqualified success that has become something of a rarity. But for an act of God, it will be round one to Sony.

" Would you really want to watch television while playing a game? Microsoft was sending very confusing messages. I don't think they even knew themselves"

For many, this will be the inevitable outcome of a series of unfathomable mistakes by Microsoft; mistakes so egregious that no amount of backtracking and spin could eradicate their stain. There were people queuing in the cold today whose blood once ran Xbox green, but they now bleed the vivid, neon blue splashed across the walls of Sony's Covent Garden launch HQ.

"With the Xbox One it was a bit confusing," admits Zia Qadri, an Xbox 360 gamer who started queueing for his PlayStation 4 more than five hours before midnight. "[Microsoft] didn't seem to know what audience they were targeting. Is it a games machine? Is it a media centre? Would you really want to watch television while playing a game? Microsoft was sending very confusing messages. I don't think they even knew themselves."

Qadri is one of many, a chorus of voices expressing bemusement, frustration and, in some cases, anger at Microsoft's strategy for the Xbox One. But there are larger issues at play here, concerns that transcend the rivalry between these two companies, both attempting to reassert their authority in an industry that has changed in such profound and irrevocable ways. There are more platforms now, more options, and the 52.99 price-point set by Sony for Knack and Killzone - and, by extension, the prices set for next generation software across the board - has left many here questioning the value AAA gaming now represents.

1

"The top level games are now costing a bit too much for comfort," Qadri says. "Now that they're doing the [same] games as downloads, they should make them cheaper to download. But they're not. They're charging the same price, or more."

For Chris Watford - a loyal Sony fan who is nevertheless hoping that a friend will take the plunge on an Xbox One and Titanfall - a price increase is to be expected, if only due to inflation. Watford's claims about inflation don't necessarily survive close scrutiny - at launch, PlayStation 3 and Xbox 360 games generally sold for 39.99, effectively unchanged from the previous generation - but he takes his share of the responsibility. For Watford, it is up to the consumer to seek out and find the retailers willing to undercut the manufacturer's suggested price.

"I buy a lot of my games online [through online retailers], and you can get them considerably cheaper than 52.99," he says. "I guarantee that, on Amazon, Knack and Killzone will be considerably cheaper. It's still an increase on what you'd normally pay for that sort of game, but if you buy online it's not a massive increase."

"The digital version of a product should be a hell of a lot less expensive. Steam does it right. It's cheaper, and at times phenomenally cheaper"

However, Watford does take issue with the increasingly common appearance of microtransactions in full-price games. The most prominent example right now is Microsoft's Forza 5, in which Turn 10 has altered the series' traditional levelling system to accommodate a new approach reminiscent of that used in free-to-play games. Indeed, practically every third-party publisher is now experimenting with this technique, including Ubisoft in Assassin's Creed 4: Black Flag, one of the games on Watford's shopping list.

"There will be a gamer backlash against this sort of thing. People will resist it," he says. "I don't mind paying if you're getting something extra: a Call of Duty map pack, for example, because that's a genuine add-on. But paying extra for in-game resources is just a way of making more money out of you. If you're going to do that, you shouldn't charge full-price for the game."

On both Xbox One and PlayStation 4, it is difficult to spot where potential relief from the rising cost of console gaming might arise. For James Brown - another gamer abandoning the Xbox for PlayStation - the lower price-points and frequent sales on Valve's Steam platform should serve as a template for next generation digital commerce, but the early signs are far from promising. Sony and Microsoft have given no indication that their games will be more keenly priced on their online stores, while third-party publishers like EA and Ubisoft are actually selling their digital games at a premium: Battlefield 4, for example, is around 10 more to buy on the PlayStation Store than it is in a typical bricks-and-mortar retailer like Game.

"A lot of my friends, who are all hardcore gamers, they're all buying PC set-ups and getting Steam accounts," says Brown. "I haven't done that yet, but Steam keeps on doing these incredible offers, almost every day. Nothing on Steam costs more than in a shop. Another example is iTunes: an album is 8, and if you got to the shop, if you're very, very lucky, you'll find it for 10."

3

Not everyone here has a clear idea of why these differences in price exist, but every last person I talk to states with absolute belief that a product made up of 1s and 0s should cost less than a product packaged in a box, distributed in a van, and sold in a shop. For many, the only solution is the thriving second-hand market, where the climbing prices of AAA games can be clawed back, little by little. For Peter Evans, who is switching from Xbox to PlayStation after one too many Red Rings of Death, as long as Need For Speed Rivals costs 50 at retail and 60 online, there will be no other option.

"It just doesn't make sense. It does feel like a little bit of a rip-off," he says. "I won't be buying my games digitally. I like to shop around to get them as cheaply as a I can. Retail shops are always going to be the cheapest. I never bothered with digital, even on the Xbox 360. You'd be paying 45 for a 3 year old game that you could pick up for 5 in CEX. Second hand sales are very important to me. Very much so."

Ray Barrett, Evans' fairweather friend in the frigid wait for midnight, agrees: "Absolutely, second-hand games will continue to be important. Over half the games I bought for my 360 were second-hand. I buy the games I'm really excited for [new], and everything else I'll wait until I can get it at a decent price second-hand.

"The digital version of a product should be a hell of a lot less expensive. They sold us on digital by saying that it would be less expensive. If you look at Steam, Steam does it right. It's cheaper, and at times phenomenally cheaper.

"All that companies like EA and Ubisoft are doing is slowing down their own progress, to make that next step to digital. They're shooting themselves in the foot."

21 Comments

Tosin Balogun
Studying International Business

23 21 0.9
Consoles are resisting the digitization force by discouraging consumers to buy digital. Problem is, the Digitization force does not stop, it will continue to impact the console business untill someone can take initiative to change up the 1984 political-economic structure of the console business

Posted:7 months ago

#1

James Prendergast
Research Chemist

730 411 0.6
The article's fine but I didn't quite understand this sentence:

Ray Barrett, Evans' fairweather friend in the frigid wait for midnight, agrees

A fairweather friend is a friend who is only a friend when circumstances are pleasant or profitable. The description of the "frigid" conditions doesn't suggest this sort of relationship...

[edit]

@ Tosin:

Actually, I'd argue the opposite. I think platform holders and the publishing houses are actively embracing digital - they just want to fleece the customer. It's the same whenever there's a broad spectrum change (e.g. the change to decimal or Euros) because they think consumers can't accurately compare and contrast. Unfortunately, for the current situation (fortunately for consumers) both digital and physical are being utilised concurrently so easy comparisons can be made.

The real problem for digital this generation is that neither console has enough space to accommodate a decent-sized gaming library. Sure, the XBO promises external HDD support in a future update and the PS4 has the ability to change the internal HDD but neither of those situations are ideal. Most users won't feel confident in changing the internal HDD to something larger and I'm not sure how streaming a game over USB 3.0 will affect performance when the games are designed to utilise the SATA interface... unless every developer is taking this into account?

I mean, just from the back of the envelope comparison:
SATA 3 = around 600 MB/s
USB 3 = around 512 MB/s

Edited 1 times. Last edit by James Prendergast on 29th November 2013 6:40am

Posted:7 months ago

#2
A significantly cheaper digital footprint and digital wallet will bring in gamers by droves and thus bring increase profits compared to the traditional route. It's very logical biz sense

Posted:7 months ago

#3

Klaus Preisinger
Freelance Writing

1,028 906 0.9
I mean, just from the back of the envelope comparison:
SATA 3 = around 600 MB/s
USB 3 = around 512 MB/s
The reality of most harddrives being that they usually do not exceed 100MB/s. Sure the interface is faster, but the magnetic head reading data off the disk isn't. Since USB 2 can only muster 44MB/s, you will notice a difference in speed comapred to USB3, but not between USB3 and SATA3, not even if you are using a 550MB/s Sandforce SSD drive.

Posted:7 months ago

#4

Nuttachai Tipprasert
Programmer

79 60 0.8
Consoles are resisting the digitization force by discouraging consumers to buy digital.
I kind to disagree. At the beginning, Microsoft was planing to make XBO to be fully digital by removing physical disc drive. But it was consumer who against that idea and made MS changed their mind. Sony is also encouraging PS4 and PS Vita developers to put all of their games on PSN store as well. It doesn't make sense for them to discouraging people from buying digital games while they were so eagerly going to be fully digital platforms in the first place.

Posted:7 months ago

#5

Klaus Preisinger
Freelance Writing

1,028 906 0.9
Players are not opposed to buying digitally.
They are opposed to the shift in ownership that comes bundled with that type of transaction.

Posted:7 months ago

#6

Christophe Danguien
games developer

67 82 1.2
@Klaus, yes that's exactly the problem. WHen you buy a boxed game, you kinda own it, that's yours. Digital, nope, you're like renting it, and that's one reason why I hate digital transactions.

Posted:7 months ago

#7

Alfonso Sexto
Lead Tester

761 574 0.8
@Christophe:

Well, technically you have always done that. When you buy a game you got yourself a lifetime rental. That is why in some countries is legal to have a personal copy of your music and movies but never your software. Having the physical disk is just a "placebo" of some short.

Although, all things said, took me quite some time to accept digital products.

Posted:7 months ago

#8

James Prendergast
Research Chemist

730 411 0.6
@ Klaus - thanks for the clarification!

Posted:7 months ago

#9

Klaus Preisinger
Freelance Writing

1,028 906 0.9
Is what Gamestop is doing to used games profitable? Yes
Do customers like what Gamestop is doing? Yes
Is there an impossible technical barrier preventing you from doing online what Gamestop does with offline discs? No
Would publisher rather keep things simple by disowning customers? Yes

In the end, video games publishers will not be the ones making the decision, since integrating a "Gamestop from home" solution into the platform is way too attractive for console manufacturers to pass. There will be a point in time when being competitive will be more important than being blackmailed by retailers of Gamestop caliber.

Then we can finally argue which console is morally more wrong. The one with the f2p hooks holding your free time ransom even after you paid money, or the one trying to be a quick change artist.

Posted:7 months ago

#10

Andrew Goodchild
Studying development

1,226 385 0.3
"PlayStation 3 and Xbox 360 games generally sold for 39.99, effectively unchanged from the previous generation"

Wayne my recall is flawed, but I seem to remember both 360 and PS3 charging around 50 at launch, and this gradually shrank back, partially to retailer competitiveness. Multiplatform titles were often at least 5 more on PS3 than 360 for a short time after launch. I assume it is an assumption that early adopters will pay more, combined with an attempt to recoup off small install bases.

Posted:7 months ago

#11

Cale Barnett
Animator

29 31 1.1
I find this article odd. Here in Australia, our new game prices have dropped by about $20 compared to last gen launch titles (about $80AU compared to $100-$110AU last gen).
Not only that but PS4 XB0 are way cheaper than the PS3 and 360 were at launch.

In my opinion gaming is much cheaper now than compared to the past.

Edited 1 times. Last edit by Cale Barnett on 29th November 2013 11:30pm

Posted:7 months ago

#12

Peter Dwyer
Games Designer/Developer

481 290 0.6
I sadly agree as someone who held both consoles last gen but, was firmly wooed by the quality of the 360's game offerings. But for a Blu-Ray drive the 360 would have been undisputed champion.

This round however. I pre-ordered the PS4 because of Microsoft's initial policy of practically punishing the gamers. Somehow still expecting us to be a bunch of 14 year old schoolboys with more money than sense. Something the core gamer arguably hasn't been since the days of the original playstation 1.

I picked up an Xbox one at launch too but, purely because I had been invited to the launch event and got a bracelet that allowed me to pick one up without a pre-order. What do I use it for well strangely I use the one to control my tv, soundsystem and play the occasional game of dead rising and fifa (fifa came free with the console). I feel that Microsoft are onto something with the XBOne but, they need to be careful. They have sacrificed raw power for feature set and, with a few software tweeks (system menu option to force fullscreen tv refresh rate for instance) and some media playback codecs like 3D Blu-ray, CD, DVD MP3 etc. etc. This will complete the package and win it a natural place alongside the set top box.

For this gen I feel like the PS4 will be my main gaming go to. Certainly for multi-plat games at least. In fact the only thing that would make the PS4 more ensconced would be if Sony cheekily released a patch to allow XBOne or 360 controllers to work with it.

Posted:7 months ago

#13

Oliver Jones
Software Developer

21 21 1.0
In Australia this game price situation is really bad. I can buy games like AC4, Forza, and CoD: Ghosts at JB HiFi (one of our "high street" media and electronics retailers) for 79AUD (a 10AUD premium over last generation) but Microsoft is selling these games at 99.45AUD on the Xbox One download store. Given that Australia consumers still usually have fairly low data caps (most people in Australia probably only pay for ~50GB a month, my data cap is 150GB for around 70AUD/month) buying online digitally doesn't look very attractive to an Australian consumer.

This price premium in Australia really sticks when you compare prices of games in AUD with Canadian Dollars. The same game in Canada is RRP ~60CAD vs ~100AUD. The Canadian and Australian dollar is roughly 1 to 1 at the moment.

During this year I've pretty much moved my console style gaming over to PC and Steam (big picture mode is great). I'm tending to only buy platform exclusives for the consoles now. I did pick up a Xbox One on day one though. Kinda disappointed with it however. It shows some promise but I doubt I'll be very enthusiastic about the platform until next year sometime when more exclusive games are available. The PS4 sold out before release in Australia so I missed out. Retailers are suggesting it won't get restocked until sometime in the new year.

Posted:7 months ago

#14
Well charging more for a digital version is a blantant ripoff and shameless attempt to extract more money from gamers and provide no value in return, every company who engages in the practice will regret it one day as consumers have long memories and its only a matter of time before they get the opportunity to snub those responsible, EA's wish to not be though of as the most evil company around ought to start with not ripping of their customers, otherwise its a pipe-dream.

Posted:7 months ago

#15

Klaus Preisinger
Freelance Writing

1,028 906 0.9
Look at it from a retailer angle:
would you stock a product, if you knew you are being undercut online? By the very person from whom you order?

Look at it from the publisher angle:
do you pass up the chance to increase your profit margin, if you know players pay retail prices?

In the eyes of a publisher, you do not own less, if you own a digital version of the game. For the most part, physical boxes either do not cost much, or are bonus revenue because the cost of the trinkets included is far exceeded by the price. The real advantage of physical discs being their resale value. Which is again not something that benefits the publisher. Have you ever heard a publisher justifying a $60 price tag with the argument that you can resell it for $30 bucks later?

The only way for a customer to save money in this system, is the existence of retail, because that means there are profit margins and that means an online keyshop can operate on smaller margins.

The other strategy is, of course, being patient and not buying at release day when prices are the highest. Which is why there is an army of PR out there trying to prevent that from happening. Look at Nintendo, their customers seem to be a bit patient with the WiiU, which puts everybody in apocalypse mode.

Posted:7 months ago

#16

Daniel Hill
Head of Strategic Marketing

8 2 0.3
This takes me back - I remember paying 50 for the original Wipeout on PS1. Way to show my age ;-)

Posted:7 months ago

#17

Lee Chesnalavage
Writer

8 3 0.4
Buying content in-game doesn't bother me if I can obtain it by playing. If I spend 53 on AC: Black Flag I'm paying to play and earn the in-game content, but if somebody wants to spend more and spend less time playing then that's up to them. It's pointless and stupid, sure, but why should a developer/publisher ignore money being thrust in their faces?

I would be really annoyed if I paid 53 and then had to pay more to unlock levels that should already be available, especially if they're necessary to complete the game. That to me is unfair at such a price tag, because why am I being charged 53 for half a game?

Posted:7 months ago

#18

Craig Page
Programmer

382 218 0.6
Even 50 is too much, that's $81.72 USD. Even after taxes are included, games in the US and Canada are only around $68.

What excuse are you given for this price gouging? Does organized crime handle all of your game distribution?

Posted:7 months ago

#19
in denmark...isnt it something like 120 euros per game or something :)

Posted:7 months ago

#20

Alfonso Sexto
Lead Tester

761 574 0.8
@Chee
in denmark...isnt it something like 120 euros per game or something
And here I was complaining about the 60-70 in Spain and Germany...

Posted:7 months ago

#21

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