Gaming Economics

Supply and demand you say? What do you think this is, 1810?

The truth is, the economics of gaming is much more complex than simple supply and demand. A game that costs $2500 to make makes $20 million, whereas a $45 million game barely breaks even – both sell well, both are quality products. It’s not always that way either – there are plenty low-budget games that struggle, and of course Call of Duty. Which makes millions of dollars of profit without even trying.

The digital content, too, doesn’t even play by base economic rules. Games that cost money to licence and port are sold at a price that is essential for survival – and if you don’t buy it, then the prices go up rather than down. Rather than dropping the price to push more units, the accepted belief these days is simply to either raise the RRP to recoup as much as you can, or drop it like a ton of bricks. Unless you are cosy with the idea of snuggling up to big giants and tucking underneath the dragons wing, then the digital world is as scary as any market.

And then you have the angles of Downloadable and Episodic Content. These were meant to help stem the bleed of financial resources on companies and their big projects – but we have plenty of examples that this hasn’t happened and if anything, has made matters worse. Valve haven’t even given us a whiff of the fabled Half Life 2: Episode 3, whereas Telltale Games churn episodic games out quickly – regardless of the scattershot quality of their output. Equally, downloadable content varies wildly. Sometimes it’s a hit – the latest Fallout: New Vegas dlc pack Old World Blues is a prime example of that. But equally, the previous packs were shockingly poor value for money. And then let us not forget Dragon Age 2 – the Legacy DLC pack was utterly sublime. But it feels like it was wrenched from the actual game itself, which leaves people wondering if sometimes this content is being purposefully held back in commercial releases and taking something away from the games, rather than adding to them.

The economics of the gaming landscape are complex and rocky. But, much like politics and voting, if you’re not in it – your say is kind of weakened. And many complain about the DLC of Dragon Age 2, and the quality of output from TTG. Many point out the varying peaks and troughs of the X-Box Live Arcade, the pricing of the PS Network, the approach by Nintendo to offer DLC through their services. Many say games are going up in price – and they are, they cost more on the development end, those prices get passed to us (No other way to justify the £65 of The Old Republic otherwise, is there?). But equally, the amount we spend is going down – the lull in the gaming industry is being felt. Sony, Microsoft and Nintendo have got what they wanted, a wider market – but that wider market is also a picky market, one whose whims and tastes fluctuate with the times. And as we approach another tricky global financial crisis, people are buckling down and spending less – the good times, as Homestar would say, are definitely over.

So, is this all doom and gloom? If you’re not buying you can’t complain? Not exactly. People are allowed to have their opinions – founded in factual basis or not. There’s not much bloggers like me can do to combat the fanboyism of the more hardened gamer, or the ingrained hate for Nintendo in PAL regions, or the painfully agonising wait for Half Life 2: Episode 3.

But if you want certain things, you’ll have to swallow some pride and take the bitter pill. If you want Nintendo games faster, you’ll have to buy more of them. If you want the 3DS virtual store cheaper, you’ll have to support it in its early stages enough to justify Nintendo dropping prices, especially when they have to take a hit on their hardware profits. If you want Half Life 2: Episode 3, then you’ll just have to keep begging Valve to get on with it. Want better DLC? Shun the crap and buy the good stuff. It can be hit and miss, but a content patch with 8 hours of content for 800 points is a better thing to support than a 400 point pack with a few reskinned weapons, or a couple of extra costumes.

The economics of gaming are tricky, because the days of simple supply and demand haven’t applied for some time – budgets dictate prices, popularity dictates offers, names dictate premiums, PR is the king and the consumer kneels in its wake. The only way to change it, as a consumer, is to support the products and services you want and vice versa.

But you have no recourse to complain over the products you choose not to support. If you don’t buy Nintendo, stop complaining about their price and release schedule. If you haven’t played the previous Half-Life games, stop demanding Episode 3. If you don’t buy DLC, stop moaning about it.

The reality is this – it does look like we’re being taken for mugs. And… we are, to a certain degree. But you can’t change a complicated scenario standing on the outside pointing fingers – you have to be in their inner circle, actually encouraging change, rather than demanding it. Money is always the motivating factor, and if we’re not prepared to part with it, then we don’t exactly have much room to negotiate do we? It costs money to change things, sadly.

It’s a lesson we consumers are going to find hard to learn in the future. But if we don’t, the situation for us will get far, far worse… and we’ll only have ourselves to blame.

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