My new boss thinks that games today are too expensive.
Riccitiello says the $31 billion gaming industry will suffer if it doesn’t start to reevaluate its business model. Game executives at Sony (SNE), Microsoft (MSFT) and Activision (ATVI) must answer some tough questions in the coming years, like how long they can expect consumers to pay $59 for a video game. Riccitiello predicts the model will be obsolete in the next decade.
“In the next five years, we’re all going to have to deal with this. In China, they’re giving games away for free,” he says. “People who benefit from the current model will need to embrace a new revenue model, or wait for others to disrupt.” As more publishers transition to making games for online distribution, Riccitiello says he expects EA will experiment with different pricing models.
I tend to agree. Especially now with XBox Live, where I can buy a full copy of Puzzle Quest for a little over ten bucks.
The thorny issue that both makes this problem worse, and makes it so publishers are reluctant to take it on head on, is rentals and resales. When games are resold or rented, game developers and publishers get nothin’. From a recent editorial on the subject:
“Clearly from the developer and publisher point of view, the second-hand market is a real problem. The shops are essentially defrauding the rest of the industry by this practice, whether they intend it or not. It also means that while newly released games do still sell well, it is only a matter of a month or so before pre-owned stock often saturates the channel – with a single copy rumored to go around the sale/return/sale loop ten or more times – amounting effectively, to rental.”
The problem is that games have gotten so short. Games today are often less than 10 hours in length, whereas it used to be that going below 40 hours of gameplay was considered making a short game. This is not altogether bad – there are now so many games to be played, that 40 hours of gameplay means you’d never finish. But the flip side is that it’s harder for players to justify spending $60 dollars for something they’ll start playing on Friday night and be finished with on Saturday afternoon. Especially if they can rent it, get a used copy, or get it from Gamefly.
Online purchasing via subscription or a secure XBox Live arcade is, of course, intriguing, as it provides a situation at least fairly resistant to rentals, resales and piracy. I’ve been eyeing this in hopes that the bigwigs running things would see the upcoming downloadable revolution as a chance to lower prices for customers. I had figured it was only naive optimism. It’s encouraging to see Riccitiello is starting to muse in that direction as well.
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