Supersized Cannibalism; Eating Tax and Inflation.

With all the talk of used games and piracy “cannibalising” the industry, I think the industry itself needs to look at itself and how it has, in its own way, been cannibalising itself for nearly twenty years.

I said not long ago that games haven’t changed in price. £39.99 from 1995 is the equivilent of £60.04 today. The reason for this is inflation and tax. The value of money has changed and arguably, not changed for the better.

The problem with that is that the money is being taken from somewhere – and clearly not from our own pockets. It has to be paid. We as consumers sometimes expect these costs to be offset by the studios, publishers and retailers themselves, and when you’re talking a few quid on a game, it perhaps isn’t unreasonable for us as consumers to ask this.

The problem is we buy in single units. So to us, we see only a couple of quid. When you look from the other side, that few quid is multiplied by many hundreds of thousands of times.

As a convenient example, although not game related, let’s talk the UK “Pasty Tax”. This is a 20% tax on hot take-away food (and Cornish Pasties are kind of a big seller in that regard, hence “Pasty Tax”). Let’s say that this equates to 20p more as an average on a bakeries hot goods. On one item, 20p doesn’t sound like much.

Except look at it from the point of view of the bakery. If they sell 10,000 items in a day, that’s £2,000 per day, or £744,000 per year that they will be losing by swallowing up that small twenty pence increase.

When you look at it from the other side, you realise that in that kind of supersized volume, it’s an awful lot of money. That’s often enough to keep a bakery open for a year in rent AND pay all its staff, with money left over. And we, as consumers, are expecting this to be swallowed by the seller – not charged to us.

From a games industry point of view, this gets worse. When you consider that if games had increased with inflation and tax they’d be £20 more, multiply that by an average of 750,000 units. I’ll shock you with the math. That’s £15,000,000. Fifteen million pounds. That is what the industry has essentially cannibalised from itself in the past two decades on an average game of 750,000 sold units. Now think how many games have been sold of late.

Once you get to this supersizing of numbers, you begin to realise in a small way why the games industry forever bangs on about money, sales and second hand games/piracy. Because they can’t blame themselves, and they can’t actually blame those of us buying the games new. So they blame other things that may or may not have a direct or indirect influence on their sales.

Except that is an issue too. Games have overtaken DVD and Blu-Ray sales combined this year. Piracy itself has fallen. The second hand market is worth far less now than it was three years ago.

This is largely why we’ve seen such a dependence on day-one DLC and breaking games up into smaller chunks to sell. It seems horrid. It is horrid. But as long as we stick at £39.99, a price point which is fast looking as unrealistic as the average airbrushed image of Kim Kardashian, they have to charge us more for the same amount of content somehow. By cannibalising their game, breaking it up, selling off the pieces.

This is probably a good argument for a rise in RRP. And it will mean a rise in what we pay for games, because unless we’re willing to part with more money, the industry will more often than not decide that breaking their game up makes more financial sense.

It’s taken a long time to get to the breaking point, but with a next-gen on the way – and more costs involved in that – many in the industry are becoming more and more vocal about their money worries.

It’s kind of that awkward moment where the facts and figures are damning enough to speak for themselves. And the industry is going to have to at some stage accept that it cannot itself keep offsetting an increased RRP, it cannot continue to swallow up these vast sums of money just so we can keep buying games.

Games are luxury items. And if we’re being honest, we’re already paying more for games by stealth – day one DLC, costumes and add-ons and the like. I just feel of the mind that it’s more transparent if we just bring it all together and be honest about it. “This game will cost £54.99”. Fair enough. For a big-budget title, that still seems rather reasonable if we take away the other costs.

And it means everyone on the chain gets more money to continue to do what they do. Cannibalising their own return in exchange for sales isn’t working, because eventually there won’t be much left to consume. And then you’re really in trouble.

Costs will rise one way or another. It’s time we were all honest about it, rather than blaming each other…

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