Video Games Are About to Cost $70. They Shouldn't Even Cost $60

this video is brought to you by skillshare an online learning community with thousands of inspiring classes for creative and curious people use the link in my description to get a free trial of skillshare premium membership now onto the video so i'm sure many of you have noticed an interesting trend in the pricing of video games they are going up much like our parents and their parents and their parents we are now subject to our favorite things getting more expensive as time goes on 49 became 59 and now well yeah now it's given that if something goes up in price you're gonna be met with some disgruntled mumblings and half-hearted boycotts and it's been quite the hot topic on whether video game companies actually need to do this they've given their own reasons a common argument that with inflation rates games needed a price hike and they needed one for a while the other argument is that game simply cost more to make now both of these points are somewhat valid the inflation one is undeniable but my first reaction to all this and probably most of yours was yeah this is all [ __ ] the very fact that microtransactions in day one dlc and special editions exist well that more than makes up for the inflation rates and the ballooning budgets i've talked about how much money these micro transactions make reasonably every game that has micro transactions could cost a fraction of its retail listing or even be made free and still make huge profits for the corporation it's funny that the games that are subject to these price hikes right now are often the most egregious for this practice so yeah go to the investor reports of these companies and they'll be glad to tell you that revenue is up profits are up and this is the best they've ever been of course this is contrary to their official statements but they lie they always lie so yes straight to the point games don't need to cost more but if it was just as simple as this well i probably wouldn't make a video about it so instead i want to cover every other reason why games don't need to increase in price why they probably should be cheaper and why this anti-consumer move is probably just going to end up hurting the publishers in the end now the issue of game development costs isn't as simple as getting a few numbers around from the internet there isn't really an average game cost we have indie games double a games aaa games and most recently the quadruple aaa game indie games cost anywhere from simply your time to maybe licensing fees to maybe a few million bucks scaling up from there you have double a games these were popular before the mid-2000s they were intended to be close to aaa quality with a much lower budget aaa games are the most common games you'll probably think of today your call of duties your gta's your assassin creeds and nbas the budgets for these games aren't always disclosed to the general public but from what we can go off of they vary from 70 million dollars up to around 200 million the problem is that these budgets don't mean the cost of paying developers to make the game not entirely much like making a movie that budget is mostly reserved for marketing and in games this even goes further the reason the most expensive games of all time are the most expensive games are usually just because they got a lot of ads it's almost entirely marketing costs it's like beats the cost of the product is inflated just to supplement the ability to market more so you are literally paying a premium so the company can make a premium overall budgets have increased yes it cost more to develop this than this but using just this metric is incredibly misleading since so much of that money doesn't affect the final product in any way and finally we have the new breed of the quadruple a game [Music] basically if you hear these publishers talk about higher budgets just ignore that because unless the marketing and development costs are explicitly disclosed they're probably just talking about ads so yeah you're kind of paying more right now than you probably even need to this gets worse when you consider the digital storefronts when games started going to these stores it was expected that prices would begin to decrease not increase because no longer were publishers subject to distribution costs retail stores wouldn't take a cut of these profits and there's no disc to produce but yeah physical copies still haven't been completely phased out and this presents an interesting problem have you ever wondered why steam sales seem so much better than microsoft and sony's well this is because the console manufacturers can't just decrease the price digitally not without the retail partners agreeing at least if they make it more enticing to buy the digital option walmart gamestop and best buy will just quit selling the games out of protest even worse they'll quit selling the console so yeah instead we have the price hike and it always seems to come around at the same time the release of new game consoles now i have to admit back in the day this was kind of necessary the costs were pretty absurd when cartridges were expensive to produce and when discs replaced them that price did drop it's just now that they're steadily going up again yes games were most expensive to buy back here but making the argument that something should cost more because it costed more in the past isn't well anything so why did they do it well because they can say you produce uh lamps you sell all your lamps to everyone in town for for one dollar a pop say you have some competition across the street you generally compete with who has the lower prices but say you walk over there and you say hey buddy why don't we just set our lamps to two dollars two dollars a lamp and we're not gonna fight over prices anymore no more price war and we both win because the customer can't go anywhere else this is called price fixing and it's illegal but it does require proof of that contractual agreement and at the same time law and technology are never quite on the same page so proving it would be yeah take two activision and sony use various justifications for why it's necessary to increase the price of games however if this was any market beyond video games a market more understood by the powers that be this might fall into that illegal territory you need explicit proof of the companies conspiring to jack up the price but in a market where game development budgets can be fudged so easily by these marketing costs well getting around this isn't too hard it's also pretty easy to confuse a 70 year old congressman why electronic video game has gotten more expensive [Music] so what we get is three companies jumping in at ground zero at the exact same time increasing costs of games that don't need to cost more the idea is that if a consumer buys a new video game box well they're gonna want to buy some games but they can only buy games made from this platform these games have to be regulated by the manufacturer and there's only one digital storefront to choose from if all the major publishers begin charging 70 of pop well there's no repercussions for doing it because where else are you going to get your games in many ways this is just a situation of the market getting too big for its own good something i find interesting is how the volume of these sales doesn't really affect the pricing in any way say you make uh refrigerators for every fridge sold it costs you a hundred dollars to make them but you sell them for 150 bucks so after every fridge sold you get 50 bucks when you start the process the profit margins are rather thin you might even lose some money once everything else is accounted for but as more people start buying these fridges you can drop the price and still make a profit with video games and software this is a bit different the cost is up front the initial investment but after that every time it's sold it's pure profit even the discs cost but a few pennies to manufacture and again those are on the way out back when i was but a wee lad gaming was much smaller than it is today selling 10 million units was a massive achievement and now it's expected you can look at the growth of all of these companies of the global markets in general and it's easy to see that volume is higher than it's ever been before now here's the funny thing i don't think this is going to work there's a good reason why games have not jumped to 69 us dollars before you know how everything costs like x dollars and 99 cents it's never exactly on the dollar mark and that's because of basic marketing manipulation studies show that your brain reads the first number and more or less disregards the other two 199 is sometimes associated with a hundred dollars in the brain it just looks a lot better than 200. the entirety of retail is proof of this but people also recognize numbers in a different way say you have a number like 59 subconsciously people seem to round that to half a hundred bucks the problem is 69 well that's 60 which can be rounded to 100 bucks even worse since this pricing is under pretty high scrutiny people round that up to 70 bucks which is pretty close to a hundred dollars the difference is subtle it's only a few percentage points of a pricing difference but in the brain this is a huge leap people associating buying a new game with either half a hundred or a hundred dollars but as for right now these new pricing models are not yet time tested it's entirely possible that as more people buy ps5s and xbox boxes everyone just gets accustomed to paying more for these games on pc it's it's never gonna happen but the pricing here can be set to whatever they want but i can tell you right now considering all the information out there in this year of 2021 70 for a game is not justifiable the reason these companies do this is because the aaa market is a plague a disease that's hard to get rid of and stays around it even though nobody seems to like it the only way to cure it is if everybody gets together and says well [ __ ] you bobby [ __ ] you forever [Music] hey tyler what you doing there wondering how you got in here or how you're moving i'm the skillshare skill bear here to tell you about the exciting developments and skillshare skillshare is an online learning community with thousands of classes for creative and curious people [Music] explore new skills develop existing interests and get lost in creativity as a whole world of magic awaits you okay i was gonna get back to what i'm doing a little bear okay okay i'm here tonight because your game kind of sucks i mean look at that how how is that acceptable to you what what do i do well uh you could probably add some movement i mean it is still in early development it can improve we can improve no not this time not by yourself uh how do i do that exactly well i don't know tyler but i think i know who can help [Music] i don't think i know it personally i find myself spending much of my free time trying to learn new skills for various projects but learning a new program or skill all buyer loans himself is hard and it takes a really really long time this is where skillshare comes in you can find courses taught by experienced professionals with prem production quality lessons that will give you all the tools you need to master whatever it is you want to do recently i've been trying to get back into 3d animation after taking a long break and the course blender 3d your first 3d animation taught by remington markham has been a perfect way to relearn those things i've forgotten and learn a bunch of new stuff along the way you'll find resources and community members that can help you in achieving whatever it is you want to achieve and the first thousand people to use the link in my description will get a free trial of skillshare premium membership and after that it's only ten dollars a month i did it mr skill bear i finished the game thanks tyler but i think your game needs a bit more work i mean it's better but uh did you finish the whole course [Music] get out of my house [Music] now [Music]

Channel: KnowledgeHub

Views: 193,583

Rating: 4.9256129 out of 5

Keywords: KnowledgeHub, Next Gen Consoles, Next Gen, $70 Games, KnowledgeHub 70 dollar games, 70 dollar games, next gen hardware, knowledgehub games, video game sales, game budget, Video Games Are About to Cost $70. They Shouldn't Even Cost $60, Xbox One, Microsoft, Sony PS5, Sony Activision, Activision practices, activision games, 2K, AlternateHistoryHub, gaming history, gaming economics, economics

Id: xQxa7lZH5xE

Length: 15min 16sec (916 seconds)

Published: Tue Jan 19 2021