Why New Video Games Still Cost $US60

Why New Video Games Still Cost $US60

Call of Duty vs. Battlefield. Disney Infinity vs. Skylanders. Every year, intense marketing battles happen over which games will dominate certain categories. Why don't publishers like EA or Activision do what marketplace competitors do in other areas do and simply undercut the price?

The long answer is complicated and a little bit shady. The short answer? Everybody needs a cut of the profits. In a post over at The Consumerist, Kate Cox outlines some of the practices that have become standard over the last few years of selling video games:

There's a reason that pretty much every retailer in the US charges $US59.99 for a new video game on the week of its release. It's a price point that comes from the publisher, and all the retailers that sell the new product to consumers agree to abide by it.

Stores that choose not to abide by the price agreement quickly find themselves out of favour with the publisher for future shipments. So if Big Game Store wants to get players in the door for next year's Call of Duty iteration, they won't drop below the publisher's guidance for this year's.

That kind of agreement is called minimum resale price maintenance. From a retailer and publisher perspective, that flattening out of competition has a bunch of positives.

Publishers know what their cut of the game will be. Stores know that they don't have to cut into the bone on their own profits to try to get shoppers in the door. Retailers compete on convenience, other available goods, and other factors that aren't price. From a consumer perspective, well, consumers are utterly unable to make decisions based on price, and sometimes that really stinks.

Of course, brick-and-mortar stores aren't the only place to buy new video games and the increasing popularity of Steam and similar digital distribution hubs lets video game consumers creates a space where the dollar goes a bit further:

Blockbuster games usually launch on Steam at the same price as their console counterparts, or sometimes $US10 lower. But the launch price, on Steam, is never the price for long. The major sales are now so regular and so massive that they have taken on an iconic status of their own. Gamers can all but mark the seasons by them.

And so, too, can competing online game sellers. Smaller gaming-focused sites like GamersGate, GOG, GameFly, Desura, and plenty of others also now tout regular deep discounts to subscribers — but it's not just the specialty shops. Amazon, too, has developed a habit of pushing major game discounts with remarkably coincidental timing to Steam's big sales.

So might this kind of price-cutting come to Xbox Live and PSN? Probably not:

Nearly a decade later, in 2014, Xbox Live and PlayStation Network do have robust digital offerings, and both offer monthly sales and occasional promotional discounts. Same-day digital release is a reality for more and more games every month. The tech is ready… but the element of competition is still missing.

The digital storefronts for both major consoles are walled gardens: Sony and Microsoft have the final say, and you're not going to see a Steam app hawking relatively new games for $US5 on the Xbox One anytime soon.

Imagine that though: an official outpost of Steam or GOG — which would even be more attractive, given its specialisation in out-of-print titles — on a console. Won't happen in the near future but we can dream.

[The Consumerist]


Comments

    $60, that'd be nice.

      Keep in mind, the minimum wage here is almost $10 AUD more than the US, plus they probably still have to pay tax on that $60 at the register.
      Considering those things, picking up Titanfall at Target on release for $74 instead of $60 is not such a bad deal is it?

        Eh, purchasing power parity as an argument doesn't really hold sway when we're coming off a period when the dollar was so high and distribution is getting more efficient.

        Then keep in mind that cost of living is a lot lower there too, and average monthly wage is higher.

        Fact is, o'seas companies have traditionally been able to charge higher for games (amongst other things) in Australia, using distribution and lower AUD as an excuse, but when those have less of an effect, they are reluctant to give up that extra margin when they don't have to.

        It was $74 because of the consumer protection laws we have in Australia, if the same deals existed as in the US, where there is minimum resale price maintenance in place, you'd find they'd all charge the same amount as EB Games. Likely the $100+ mark.

        That said, comparing minimum wage is the wrong measure. You should be looking at disposable income. Most people earning minimum wage, no matter where they live, will be too poor to be buying brand new video games.

          I got Titanfall on the PC at launch for about $44, I consider this shopping around. Console gamers get screwed because their choices are limited. You can buy online copies of games only from Xbox Live / PSN, and retail games are always quite expensive, even if you gray import.

        I dunno...paying $51 instead of $60 for Titanfall is a better deal :)

      The JB Hi Fi round the corner from me usually prices it's new games at $60-$70.

      Even though it's above the $59.99 set rate, I respect that they are trying to push their costs down to match international prices the best they can.
      Compare to say EB, it's a breath of fresh air

        It's getting better. I've pre-ordered Infamous Second Son for $70 at EB (price matched to DSE). That was cheaper than OzGameShop's $80.

        EB usually does price match, but last time JB was about $30 cheaper than EB - EB refused to price match. If they don't need my business, then I am happy to take it elsewhere. (It was the exact same edition, not CE or anything).

          EB are absolutely ridiculous, they prey on the customer base of people who think it's the only place to buy games, incidentally the same people who buy those disc guarantee warranty things. Not that I'm still bitter about EB over selling pre-orders for the Zelda 3DS XL last year, cancelling my order the day before release (not giving me time to order from somewhere else, it sold out everywhere) and just sending me a sorry message.

          That is one of the main reasons I avoid EB.

          I have heard every excuse under the sun.
          You need to produce a physical copy of a current brochure, online versions not accepted. (They know what their competitiors are charging, it's just BS)
          They can only price match to stores within a certain distance (And yet they can't tell me what distance that is)
          They can only price match if competitive stores actually have stock. (This one I can actually understand in a way, but that doesn't make it true)
          We can only price match within a certain amount, so a $100 price tag can be dropped to $80, not the $70 tag from the comptition. (Pretty sure it's price MATCH, not price close-but-not-quite)

          The manager at the EB near me knows that if I am forced to come to their store, to not offer an EB membership card, to not offer disc insurance and to sure as hell not deny me price matching.
          (She gave me a price match on the midnight release of GTA5 without me even asking, but I overheard others in line talking about how and why they were denied the same service)

            it just sounds like you have some shitty EB staff. The official policy, and the one that HO will rain rivers of shit down on store managers if they don't follow it is:

            Competitor must be local, ie same shopping centre, must be open, and must have stock.

            anything else you can call them on their bullshit.

            If still baffles the hell out of me why people insist on shopping at EB. "But they price matched for me" isn't a good enough excuse to justify their price structure. For every 1 price savvy customer who asks for a price match, there's probably 10 who are gauged, just because they didn't ask the question?

            Support whoever offers you the fairest price. JB, Big W, ozgameshop.. support them and odds are you will continue to see reasonable pricing offered from them.

              That sums it up pretty well.
              BigW had Doom 3 BFG edition for $5 for sale (online only), I asked EB Games about a price match - Nope, ain't gonna happen. $5 went to BigW that day.
              My initial example was at Pacific Fair at the Goldie, where EB Games and JB Hifi are within 50m walking distance.

            Why bother with the price matching? Just go to the store that sells it at the cheaper price in the first place, problem solved. Maybe if everyone did that EB would go out of business.

              There was a time when JB also had high prices and it was a back-and-forth between the two depending on who was willing to snip a little off the price.

              Since JB started being more realistic in it's prices I barely ever go to EB any more, the last two times was due to a midnight release for GTA which JB does not do, the time before that is because some genius at distribution sent 5 copies of a game to JB for the release date.

              The only reason I price match at EB is the store is a short walk from me. The only other shop in the centre that sells games is Kmart - which hardly ever have stock. Everywhere else is a short drive away. I ride my bike to work so there is no popping in after work either.

    Look like a US article, not really relevant for us in Australia, unless you are one of those suckers that buys games from EB-Games.

    JB-HIFI and BIG W usually have week one release games for 20-30$ below RRP.

    And here i was thinking this was Kotaku Australia... Silly me.

      I think the Game Stop image should've given it away..

    Ignoring the lazy US article- the thing that shits me most is the price of games on Xbox Live.

    As someone who was broadly supportive of Microsoft and their plans for discless gaming I really would rather buy my copy of Titanfall online so I can play if from the harddrive.

    So what do I save by cutting out disc printing, case production, storage, shipping, shelf space, the wage of the bloke who sells me the disc? Its $26 MORE expensive than at my local Target!

    Downloadable codes were said to be the plan from MS (buy them at competitive prices from multiple sources) but they aren’t for sale anywhere I can find outside of people selling the free ones from their console bundles on Ebay. The current pricing is fucking disgraceful by MS (don’t forget I’m already paying them $100 a year to run the XBL service).

      Yeah, I mean why are Thief and AC IV both $99.95 on the playstation 4 store and $70-80 in physical stores?

        Yep- I’d be angry about it if the prices were the same.

        To add a 25% mark-up on something which is just being taken off a server which consumers are already paying an annual fee for is absolutely disgusting.

      Yeah. I struggled with that for Titanfall. Normally I prefer physical copies but I'm sick of DVD cases (and now Blu-Ray cases that don't fit in my DVD racks) and Titanfall is always online so keeping a physical copy of it to play 20 years from now is pointless. I ended up paying more for a downloadable copy of the game.
      For all their plans of an always on console you'd think they'd be trying to win people over on this front, but instead their pricing point scares people who actually want to go digital away.

      It's the usual behavior of being held to ransom by the bricks and mortar stores. Until the time that MS and Sony are certain they can deliver efficiently online and sales in stores begin to drop, then online prices will come down. Just watch out for the Sony and MS store sales.........buy big to deliver the message to them.

      First step - don't pay $100 for XBL - go to gamecard or ozgameshop and get a 12 month sub for $50

    Sounds like this:

    http://www.accc.gov.au/business/anti-competitive-behaviour/cartels/price-fixing

      Except it isn't.

        It has a lot of similarities. Where is the line drawn? "Stores that choose not to abide by the price agreement quickly find themselves out of favour with the publisher for future shipments." and video games that debut at US$60 instead of US$25-40 like a Blu Ray movie should make you wonder. It's not black and white.

          You see your falling for the old line that "If it looks like a duck, swims like a duck, and quacks like a duck, then it probably is a duck"
          ... but its not a duck...

          The retailers, although they may look a little like a duck will tell you the distributor swims like a duck so go speak to them ...
          The distributor on the other hand will tell you while they may swim like a duck the publisher quacks like a duck so go speak to them...
          The publisher on the other hand says they may quack like a duck the retailer looks like a duck so go speak to them....

          Where does this leave us? We have three groups that all have aspects of a duck but are in fact all self identified chickens.

            I am familiar with that saying, however the problem is that chickens do not quack. What exactly am I falling for? I deal with facts. If all the evidence points to something being a duck, then it probably is a duck... but if it really is not a duck, then where is the evidence to say that it's a chicken? Because it is self-identified?

            "Why don’t publishers like EA or Activision do what marketplace competitors do in other areas do and simply undercut the price? The long answer is complicated and a little bit shady."

            From the website: "Price fixing occurs when competitors agree on pricing rather than competing against each other. In relation to price fixing, the Competition and Consumer Act refers to the ‘fixing, controlling or maintaining’ of prices." The price is fixed at $60. By competitors. MAYBE legally it's not. I don't know enough law to see why though. If two games cost $25 and $35 each to make, should they both be sold at $60, or one at $55 and one at $60? I don't see why a business should be strong-armed into not being able to sell it for less.

            Read into it what you will. I think a lot of video game prices are artificially inflated in an anti-consumerism manner, and this is further highlighted by comparative differences with Steam, movies and regions, and I there are some very indignant middlemen trying to maximize their profit.

              I was taking the piss with the whole duck comment. They all look walk and sound like ducks but protest they are not and its just that we just don't understand. In my opinion, even if they are not breaking the letter of the law they are breaking the spirit of it, but unfortunately its the letter that counts.

              My advice to you, write to the ACCC. It wont change anything but believe it or not they will respond and explain it. I sent an email to the ACCC about a similar situation a while back (I think it was about steam pricing being dictated by publishers). I cant remember the exact response but it was along the lines of companies are allowed to set the price they want as long as its not colluded with the competition.

              TL:DR
              If you want to know exactly why or why not in this specific case, send an email to the ACCC, explain your thoughts and ask them why it isn't. They will reply and tell you.

              ...Or you can do what i do now and just make stupid duck jokes on the internet about it.

      More like this one -

      http://www.accc.gov.au/business/anti-competitive-behaviour/imposing-minimum-resale-prices

    I can't see prices for online networks on consoles ever being fair. Once your in their ecosystem, they basically have a monopoly on where you can buy. Steam has to offer deep discounts because they compete within the platform.

      The surprising thing is that the two major consoles in particular should be competing with each other and it just doesn’t seem to matter to consumers that they aren’t.

      Admittedly the PSN had a lot of catching up to do to match XBL when PlayStation Plus first came out but since then Sony have gone above and beyond to make the service worth purchasing. Have a look at the free games on offer and that service is really worth the money.

      MS on the other hand have done very, very little to match Sony on game giveaways and deals. 2 free (old) games a month and sales on their last-generation titles doesn’t really cut it, particularly when a new title downloaded from the XBL shop can have upwards of 25% markup compared to a physical retail version on launch day.

        The thing is - they only need to really compete on that first purchase of the console. My guess is, people are swayed more by getting a free game than long term costs (or else PC would be totally dominant).

        Well Steam has competitors on the same platform whereas xbl/psn really don't need to compete with each other since you have only one choice on that console. Hypothetically you could pick and choose between them for multiplatform titles but its probably more trouble than its worth for them to try and aggressively price individual content as a regular event.

        If there's one substantial advantage to games with gold over the PS+ freebies, its that you actually keep the games with gold stuff rather than just have access for as long as your subscription is valid. The fact that they are old games is a major disadvantage though, that much is certain, if they were going that route they could at least give you a choice of a few each month

      Exactly, if the publishers make the digital download cheaper than at retail, the retailers will stop stocking their products, so they don't dare do it until they are pretty sure retail would be dead anyway.

      It sucks though, digital distribution should be way cheaper, but they don't wanna piss off their retailers. Not sure how they solve that one.

        It's not that hard. As a transitional arrangement (at least) they could allow retailers to sell digital download codes and keep a cut. Or even better, let retailers sell single-use or account-locked USB-type devices with the games pre-downloaded onto them. They would sell a bloody bazillion copies in Australia.

        But they won't do this. They like having closed systems - they're not going to let retailers have access to account info for that sort of purchase. For the moment, they're probably fine keeping one foot in the future and one in the past.

        Last edited 18/03/14 12:30 pm

          This does happen- The vita has a 'party pack' with 10 preloaded games on it (LBP etc). And most stores (at least I know Eb does) sell codes for minecraft on PC/PS4, or PSN/Steam/Xbox live credit, but there's still a pretty huge market for people who want physical copies, I know I like my shiny collection :) I think the publishers/retailers need to consider both. I do think its a bit silly to pay the same cost for a digital copy as a physical, but I see why they do it.

        Nah, pretty sure there's a fair few of us who can't justify downloading games the size they are on our tiny data caps, thanks to being in a region that every telco rips you off in. Plus why would you want to download games currently when they're averaging 40gb each on the new consoles and the HDD in them are only 500gb..

    To be fair, PSN has really good prices when things are on sale, it's just their adherence to RRP during non-sales that makes me sad. :(

    So it's essentially an agency model? Here I was hoping it was either aliens or nanomachines.

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