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Retail

Pachter: Activision's Modern Warfare pricing strategy 'is a test'

Wed 22 Jul 2009 1:10pm GMT / 9:10am EDT / 6:10am PDT
Retail

Subsequent 'hot' games will cost more if 55 price point is successful

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Analyst Michael Pachter reckons Activision's controversial decision to raise the price of Modern Warfare 2 has nothing to do with a weak Great British Pound.

"The price increase is a business decision," he told Eurogamer, noting that the pound is worth more today than when Call Of Duty 5 launched last year.

"Activision knows it has a 'hot' game, knows that the market will pay an additional ten per cent, and has decided to increase price accordingly."

Pachter thinks the question of whether this is fair is "a difficult one" to answer. Games, he explained, are cheaper to buy today but contain better graphics, gameplay and online functionality. And the latter service, while free to users, costs Activision to provide - although Xbox 360 owners must pay Microsoft for the privilege.

"My guess is that this is a one-time test for Activision, and that they will re-think the strategy after seeing if it angers consumers," offered Pachter. "If there is no consumer backlash, I think we may see higher pricing on other games, regardless of the GBP/USD translation rate."

And, he added: "The repercussions could be significant and lasting. If Activision is successful, we may see increases for other 'hot' games in the future. We see tiered pricing to the downside for more casual games, so why not tiered pricing to the upside for hot games?"

Activision revealed the suggested retail price of Call of Duty: Modern Warfare 2 would be set at GBP 54.99 earlier this month. Retailers may only take this figure as guidance, but the bump will be felt nonetheless.

And it's not just MW2; Pachter suggested keeping in mind the price of the Guitar Hero franchise, which has generally gone up. Band Hero, he adds, will be more expensive than GH World Tour, and Tony Hawk Ride and DJ Hero will cost a considerable GBP 107.99. And on all platforms; no discount for PS2 and Wii any more.

What does Activision have to say? "I'm afraid we don't comment on our product pricing strategies," a spokesperson said this morning.

"This is the year that Activision raises prices selectively for several games," concludes Pachter. "and the US increases don't have anything to do with foreign currency translation."

5 Comments

piracy++

Posted:5 years ago

#1

Sam Brown
Programmer

235 164 0.7
I'm always puzzled over the use of the word "fair" in these situations. In what way is the price fair or unfair? Surely Activision can charge what they think the market will support?

Yes, they may be charging silly amounts of money. But this is capitalism, and you're allowed to do that. Someone might be dumb enough to pay it. ;)

Posted:5 years ago

#2

Jonathan McEnroe
Freelance 2D artist

47 20 0.4
54.99? That is crazy! They have a cheek to pull Sony up on their pricing after this, 54.99 is way too much money for one game.

Posted:5 years ago

#3

Dave Herod
Senior Programmer

517 734 1.4
54.99 RRP yes... but no one ever sells at RRP anyway. At least, most games RRP is 50, but Amazon/Play.com etc always usually charge 40. So actual retail price for MW2 will probably be 45 in most places.

Posted:5 years ago

#4
If its rrp is 55 then its mean the unit cost is higher to the reatailer as well so unless retailers wish to cut their margins (highly unlikely) MW2 will more likely to a fair bit higher. Its a stupid strategy to sell it at a higher price, they will inevitably sell less. Much better to sell more at a normal price. MW sold on the strength of its online gameplay, unless there is huge improvements, I doubt many gamers will be willing to pay full price, many may stick with MW. But then again, Activision will prob pull the MW servers forcing gamers to buy MW2 for online.

Posted:5 years ago

#5

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