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Are the price of video games on the rise?

t the recent E3 Expo in Los Angeles, plans were unveiled for the next generation of videogame consoles. All three key players in the field (Sony, Microsoft, Nintendo) either demonstrated their new consoles or openly discussed their plans. Microsoft will bring out the ‘Xbox 360’ to consumers this holiday season, while Sony and Nintendo will wait until 2006 to reveal both the PS3 and the Revolution, respectively.

It is a common trend that a console will launch at a certain price (in the case of the PS2, $299 US) and gradually the price declines (the PS2 is now $149 US). It is also common that games come out at $49 US and then often drop as low as $19. It is unclear if this trend will continue with the next generation.

Recently software publishers have been testing the market with so-called ‘Collector’s Editions’ of many popular titles. They usually include special packaging and some other extras, such as a bonus DVD. These special editions cost anywhere from $5 to $20 more and so far have been selling very well.

The interesting thing about the price of games is that it really hasn’t changed much in twenty years. The average price of a game was $49 but what has changed are the development costs. Games used to be developed by one or two people over a six to twelve week period. Today, the average development team is 20-50 people and in some cases, the size can exceed 100. Most games take 18 to 36 months to develop. This translates into development costs that were as low as $20,000 to over $3 million. Although it’s true the games sell in much higher numbers than they once did, the profit margins are often much leaner.

As the worlds of Hollywood and videogames move closer together (in some cases, flat out colliding) it appears that the budgets are also moving closer and closer. But do we really need to spend more money to make better games?

The vast majority of the money that goes into game development is for human resources. Games now require art directors, artists, animators, musicians, and sound effects technicians in addition to the programmers, designers, and quality assurance personnel. In the early days of development, one person often performed all of these functions. Granted, the games were simpler but were they any less fun?

Gameplay is what it’s all about. Sure, great graphics can be a draw to a game but if it isn’t fun, it doesn’t matter how pretty it is. The fear is that there will be too much focus on the visual and aural experience while sacrificing what is most important. >{?Personally, I see the next generation games starting at $59 US (around $75 Canadian) for the AAA titles and the budget games at $29 US ($40 Canadian). As consumers, we should demand more if we are going to pay more. I would be more than happy to pay the additional money if that meant more hours of gameplay, more replay value and more extras.

There has also been speculation about the pricing of the new systems. The XBox 360 and PS3 deliver graphics that rival $1,000 video cards for PC’s today. It is expected that the 360 may ship at $100 more than the original Xbox did in 2001, while Sony has hinted that their system should start at the same price as the PS2. Either way, most people agree that Nintendo will come in at the lowest price point.

The cost of experiencing the next generation of videogames may not only be for the system and games themselves. The manufacturers have all insisted that their titles be High Definition compatible (HDTV) and although every title should work on your current television, the full experience is going to require you to make the move to HDTV if you haven’t already. Then there’s a surround sound receiver. This is sounding more like Hollywood by the minute.

All in all, videogames still represent value that is hard to beat. Even at $75 a game, 20 hours of gameplay (plus an additional 10 hours of replay) works out to around $2.50 an hour for interactive entertainment. That’s one of the best deals around.

Article Copyright ©2005 by Syd Bolton. Original publication date: 5/28/2005.
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