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Stick To Your Guns

Comment: Publishers must act to end the vicious circle of price-cutting

Of late, when Nintendo boss Satoru Iwata speaks, we've found ourselves nodding our heads in agreement quite a lot. Admittedly, Iwata is in a uniquely privileged position which allows him to speak common sense that his counterparts cannot; he's the only platform holder boss who actually runs his entire company, and therefore doesn't have to worry about what impact his statements might have on other areas of the business, or check everything share price sensitive which superiors before opening his mouth. Iwata can speak his mind, and what's on his mind often seems to make sense.

It's not groundbreaking sense, admittedly; take for example this week's proclamation on the topic of videogame pricing. Iwata believes that the way the industry approaches pricing right now is wrong and damaging, because it leads to software being discounted heavily very soon after it reaches shelves - a cycle which becomes self-sustaining when consumers realise that if they avoid buying new releases, they can have the same games for less money in three months time.

That's just common sense. It's been said over and over again by people in the industry and external observers; heavy price discounting is stupid and self-destructive. The difference, aside from the obvious gravitas that comes from being the head of one of the biggest videogames companies in the world, is that Iwata has a solution (one which, admittedly, is as obvious as the problem itself), and that he's actually doing something about it.

Iwata's solution is dead simple - give things an appropriate price point from the outset, and stick to that price point for as long as possible. Rather than trying to make sure that games continue to be priced at 35 pounds for months on end, make a more realistic estimation of the worth of a product and price it at twenty pounds, or twenty five pounds, or perhaps even less for smaller, more niche games. Then work with retailers to ensure that those price points are adhered to for as long as possible.

Publishers have paid lip-service to this idea in the past, but are always put off by the hurdles in front of them. After all, won't consumers interpret lower prices as being weaker products? Isn't there a value attached to expensive products which will be lost at lower price points? Certainly, this is the case to some extent, but then again, the same consumers who pay 40 pounds for dinner in a posh restaurant every now and then probably indulge in ice creams for around a pound each on hot days. Just because this mentality doesn't exist among game consumers now is no excuse to shy away from trying to create it.

The other part of the issue, of course, is that many publishers suffer from the ages-old problem of assuming that all their babies are beautiful. While many titles which should be launched at budget price points are designed in that way from the word go, there are other products in the market which were conceived as AAA games but simply haven't worked out that way. There can be any number of reasons for this, but publishers generally aren't good at dealing with any of them. After funding a game for two years, it can be nigh-on impossible for the upper echelons of publishing, few of whom have actually played any of the games against which their latest and greatest will compete in the open marketplace, to accept that it's not quite what they'd hoped.

How publishers can manage that expectation is a tricky proposition, but before that's even addressed, the simple problem that the industry's business model doesn't really allow for multiple price points needs to be solved. This is where Iwata has taken major steps forward, with the brave decision to price some of the headline software for the Nintendo DS, such as the Touch Generations titles - Brain Age et al - at well below the general price point for new software. Brain Age is one of the most compelling pieces of entertainment software to appear in years, and yet it's priced far below many uninspired me-too products in videogame stores; not because Nintendo lacked confidence in the product, but because they evaluated what price point would be most attractive to consumers and most profitable overall, and stuck with that.

As a gamer, one of the most common phases you'll hear uttered in a game store is "I quite fancy that, but not at that price!" - followed by the game being returned to the shelf for another few weeks, waiting for the inevitable tumble into the bargain bins or the three for twenty pound ranges. Iwata wants to eradicate that phrase from the lexicon, and he's right - the only way to do that is to make sure that products are priced appropriately for their content, their audience, their production values and all the other factors that influence pricing.

Sound difficult? Well, yes - it's certainly more difficult than just slapping a 35 pound price tag on everything and hoping for the best. But it's a difficulty that every other industry in the world has learned to cope with, and if the videogames industry wants to creak through the next stage in its painful growing process, it's time it too learned the black art of appropriate pricing, rather than allowing itself to be tossed around and abused by market forces over which it exerts no control.

Author
Rob Fahey avatar

Rob Fahey

Contributing Editor

Rob Fahey is a former editor of GamesIndustry.biz who spent several years living in Japan and probably still has a mint condition Dreamcast Samba de Amigo set.