(Getty Images)We recently argued that console gaming's default $60 price point can't compete indefinitely against other gaming options. With over 6,500 comments, it certainly sparked some passionate debate.
So we decided to take a deeper look at the alternatives.
It's clear that if you're a game creator, the riskiest possible market to enter is selling a disc at retail for a traditional living room game console. While established, major brands -- the likes of Call of Duty, God of War, Halo, and Madden -- are still thriving, smaller disc-based games that don't take off result in serious losses for the publisher.
"That publishing model is like a 1950s record label," says Will Harbin, CEO of Kixeye, a free-to-play game publisher. "If I wanted to make a console game, I'd have to raise $50 million or have some BS relationship with a studio or hardware manufacturer. The Internet has, pillar by pillar, destroyed old industries and given consumers and publishers a direct one-to-one relationship. Pre-Internet helped the middle man, and we say f---- the middle man."
Kixeye is one of the many young, thriving publishers of browser-based games, a three-year old company making $100+ million in annual revenue from its three games in operation.
But just like with movies, the studio system does seem to play its part. Gamers looking for cutting-edge technology and "deeper" or more sophisticated gameplay on an HD screen in their living room can't currently get this in most free-to-play options. Even episodic games -- those that come in several bite-sized, affordable chunks -- haven't exactly caught fire.
"Where the idea worries me," says Justin McElroy, managing editor at video game site Polygon, "is what happens to the games focused on narrative. No episodic model has been particularly successful. Telltale Games was trying to pioneer in this area, but even their 'episodic' games require a seasonal purchase upfront."
But while episodic gaming is problematic, other "ease-in" approaches have gained traction.
Starting small to go big
Valve Software's Portal began as a student project, was later released as part of a larger bundle, and garnered enough fan appreciation to become a standalone $60 release with its sequel. Indie hit Minecraft was released as a download in an early alpha stage on the PC, and has been such a success that it's been able to transition to other commercial platforms like iOS, Android, and Xbox Live Arcade later this month.
Core gamers loudly complain that the alternative to $60 console game just don't resonate with them. Free-to-play, mobile and social games are not complex or visually advanced enough. But it's the openness of the PC platform that allows a low-barrier of entry for developers and easier experimentation.
"I think there's something exciting going on," says Simon Munk, a freelance gaming and tech journalist. "I grew up playing in the 70s and 80s when games were made by developers in their bedroom. And now that's happening again — loads of games recently wouldn't have been made even four or five years ago, but now have a chance. We're seeing a return to creativity and risks."
"It's healthy that there are different markets," says McElroy. "With music, many people buy albums but don't follow bands around. Most people watch movies, but don't go to every French documentary. It's exceedingly hard for people who play games casually in the mobile/social space to take an interest in a core game and vice versa."
Used or abused?
The used game market has long been a controversial issue between publishers and retailers. Publishers make no money when a used game transaction occurs and believe it cannibalizes away a new sale. They are retaliating by tying free features in their games (like multiplayer access) exclusively to the first purchaser. Buy a game used, and playing online might cost you extra.
Retailers, however, argue that money from a used game sale is usually funneled right back into a new sale. Is it possible that the popularity of used games is the symptom of high game prices and not the cause?
"Publishers/hardware manufacturers would love a future without used games," says Munk. "But they aren't as big a hit to publishers as they make out — the mathematics don't play out that people will buy more first-hand games if they can't buy used. They don't have more money in their pockets; they'll just buy fewer games.
"Making second-hand buyers pay additional fees is a 'less wrong' approach than preventing used game sales altogether. But publishers are gambling millions of dollars on their unproven games and then gauging money from consumers to help survive all the risks that don't pay off," Munk concludes.
McElroy says the clock is ticking on physical media, but the market for used games would deteriorate if there was more diverse pricing.
"Some games aren't as long or offer less value than other $60 games," McElroy argues, "and would be better served at a lower price point. When you say 'every game is going to be $60,' you put a requirement of length and graphical quality that's really restraining. If I wanted to release an amazing 4-hour game to retail, it would be impossible."
Other ways to play
New business models and technology further jeopardize the $60 status quo. Kickstarter, the crowd-sourced funding site, has enabled several highly sought game projects to initiate by essentially asking fans to pre-purchase the game before development has even begun. Streaming game service Onlive allows $60 games to be played on any PC or via a cheap set-top box by paying a Netflix-style all-you-can-eat subscription (there are downsides in fidelity, latency, and requiring a high-speed connection at all times).
Console makers like Microsoft and Sony could decimate retailers if they ever decided to release lower-priced, digital versions of their games day and date with physical copies. They won't bite the hand that feeds now, but with all the other forces at work, they won't care as much when they're being fed crumbs instead of feasts.
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