Thursday, November 11, 2010

The Need for Lower Prices on Lower Profile Games

Sorry that it's been a while since my last post, been busy writing reviews and having a busy work environment in my full-time job.  Just today I put up my review of Activision's James Bond 007: Blood Stone, a game with an original story with Daniel Craig, Judy Dench and singer Joss Stone supplying their looks and voices to the game.  I open up the review talking about game pricing and how with the 360 at its 5 year anniversary and the PS3 at its 4 year anniversary why the game pricing structure hasn't changed.

It is obvious if you play the game that the production budget was not as large as many AAA games out there like Call of Duty: Black Ops, Medal of Honor, Assassin's Creed: Brotherhood and many others.  Those games will sell like hotcakes at the $60 price point, but something like Blood Stone (which is a good, but not great, game) simply isn't going to sell well at that price point.  If they dropped it down to $50 or even $40 as I would recommend, there may be more people willing to buy it and in the long run I think they'd make more money than bringing it out initially at the $60 price point.  Sure, you're losing $20 on each sale, but the potential extra buyers at that price point should offset the loss.  Given the money put towards the game is less you should still come out better in the end.

So, let's say Blood Stone sells 100k copies across the 360 and PS3, that's $6 million profit on the game at $60.  Let's say at $40 the amount of copies sold are doubled to 200k, that's $8 million (at $50 we'd be talking $10 million) and with a larger install base the word of mouth could spread and the game has a "long tail" on sales.  Where the game may have only sold that 100k at $60, there is the potential to sell at a greater multiplier at the lower amount because more will pick it up because they save $10 or $20 on it.

My argument is that early on the companies could get away with $60 for a game (then there's Microsoft which started 1st party games at $50 with the 360, but now they are $60), but now that we're several years into the systems we should really start to see some games that are more regularly budgeted come out at a lower price point in order to maximize sales and get the word of mouth out there.  I just think these recently released games may have done better in sales at lower price points, including the obviously dying instruments/rhythm games that could have had stand alone copies dropped in price:

Guitar Hero: Warriors of Rock (my review)
DJ Hero 2 (my review)
Rock Band 3
James Bond 007: Blood Stone
Spider-Man: Shattered Dimensions
Castlevania: Lords of Shadow (my review, an excellent game that would sell well at a lower price)
Alan Wake (it is less now, but when it came out it may have sold better at a lower price)
Crackdown 2 (my review)

Those are just some off the top of my head.  Each game would be considered below a AAA game in terms of production budget.  Given it isn't a top notch game that will generate a lot of pre-buzz, why not bring the game out at a lower price point allowing more people to play it and possibly get the good word out on them.  All those games range from good to great from a critical perspective, but word of mouth could really sell them and potentially make more money for the publishers at a lower price point.

Maybe I'm out of line with my thinking, but as we move into the last half of a decade with the 360 and come close to the half decade mark with the PS3 I think it's time for them to tier prices, which may be a difficult thing for them to figure out, and attempt to make as much money as possible.  The budget conscious buyer out there is waiting for many of these games to drop in price before picking them up.  Why not make it enticing right off the bat at the budget price because we all know games generally sell big when they first come out and trail off from there.  There are aberrations out there like DJ Hero that had "long tails" on sales, but generally if you don't sell straight off you aren't going to sell.

So, what do you guys think?  I'm going to post this over at Colony of Gamers in the General Gaming forum to get some discussion going.