Video Game Prices: Why Games Are $60, Where Your Money Goes, & Who Benefits Most

By | 1 year ago 

Video game prices have been firmly stuck at around $60 for some time now, and that doesn’t seem to be changing. While indie games are typically cheaper than AAA, the stagnant nature of video game prices leads to some interesting questions. Why $60? Where does that money go? And who does the stable price most benefit, game publishers or gamers?

We’re taking a look at some of the statistics to break down the price and learn a little more about how the industry works.

Why Are Video Game Prices Stuck at $60?

Sixty dollars feels like a pretty arbitrary number–and it kind of is. It’s not a coincidence that every AAA publisher sets their game price at $60—it’s a guaranteed method of leveling the playing field for game sales. Publishers set the bar at a minimum price of $60 because it guarantees their cut will be substantial enough to support them, with more being made from collector’s editions, DLC, microtransactions, and other extra goodies.

While this price point certainly works well for publishers, it doesn’t do all that much for the shops themselves. Many stores actually take a hit on stocking new games, which is part of the reason used game stores like GameStop offer little cash for used games but sell them at a much higher price—used game sales are what keeps the company afloat, not the revenue from new games.

Steam and other online retailers have thrown a bit of a wrench in the model with frequent sales that have gamers slavering for discounts—many people wait until big titles go on sale to purchase them. But without the cost of producing a physical game, publishers still do well from digital sales.

How Video Game Money is Divided

Where Does that $60 Go?

Publishers aren’t the only ones who depend on video game sales for their livelihoods. When we break down the price of a $60 video game, it goes to about five different places.

Alex Pham discussed the video game prices division back in 2010 with the New York Times. We can assume that some things have changed since these statistics were gathered, but it’s still a good starting point. From every $60 video game sale, we can estimate that roughly 27 of those dollars go to the publisher (Ubisoft, for instance), $15 goes to the retailer (GameStop, Target, or other stores), $7 each goes to returns (games that don’t sell) and the platform (such as Xbox), and the remaining $4 goes to distribution and cost of goods.

Publishers aren’t usually forthcoming with game budgets, particularly since they don’t often know exactly how much a game will cost to make. CD Projekt Red estimated The Witcher‘s budget at around $5 million, The Witcher 2 at around $6 million, and The Witcher 3 at around $26 million, and that’s on the cheap end for AAA games. That’s a pretty significant jump, and it’s certainly something you can see reflected in the game with its gorgeous graphics and excellent gameplay. But that kind of a jump leads into the question of why games remain at a static price despite increasing costs.

The answer is simple: at this point, we’ve accepted that games cost $60 (or less, if they’re on sale). We’ll pay extra for extra stuff, as we do with collector’s editions, DLC, and other accouterments. But even as development costs grow, the price of games stays at the same level because we’re not willing to pay more than that to get the product we’ve gotten for cheaper for so long. Publishers know that games will sell at this price, so it’s beneficial to keep it stable and make money in other ways.

What does that translate to? The prevalence (and annoyance) of paid DLC, extravagant CEs, and microtransactions. It’s hard to have sympathy for these kinds of things when you realize that a game like The Witcher 3 made around $100 million in the first two weeks of its release (though CD Projekt Red is offering DLC for free, a rare exception in the AAA sphere), but as the cost of producing a game rises, so do the costs of marketing, production, and various other necessities. We may not like the move toward DLC and microtransactions as additional moneymaking, but as costs increase, profits for big companies shrink.

The Witcher 3 Good Old Games

Who Benefits Most From Fixed Video Game Prices?

Surprisingly, video game prices being stable at around $60 has benefits for both gamers and game companies. The price is one that gamers are willing to pay, and game companies have settled on it as a way to make a stable profit.

With rising production costs, however, $60 may not be the starting point forever. The increasing popularity of the digital market means that companies are making more money with lower costs thanks to the lack of physical production, but because digital copies are typically the same price as physical copies, it wouldn’t be surprising for an increase in physical video game prices to coincide with a rise in digital prices as well.

But that’s something it’s impossible to predict, and for now, $60 is the price that works. We might not like the prevalence of paid DLC, microtransactions, and other additional purchases beyond the $60 price, but it’s unlikely to go away as costs continue to increase.

Sources: The New York Times, Consumerist, Marcin Iwiński’s 2012 GDC Talk, Puls Biznesu