Are downloadable games too cheap?

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In an interesting article published on Gamasutra today, writer/editor, Simon Carless states that one of the most popular phenomenon to come out of this generations platforms, cheap downloadable games, may not be a sustainable business model. And that company’s should probably start jacking up the prices a bit.

Now as a consumer I’m sure your blood may have risen a bit and obscenities may have started to come out of your mouth, but from an industry standpoint, he may not be wrong. Even if gamers have to take it on the chin a little bit in the process.

Carless argues that with the “honeymoon” period of downloadable games effectively over, it would be smart for developers to pressure Sony, and Microsoft to allow them to boost their prices up, in order for them to do more than just break even. With the high cost of game development, which can be in the 100k-300k range, and the small number of units sold (especially compared to traditional boxed games), many games are simply not making their money back.

Article excerpt: “…there’s an immense amount of complexity and necessary payment in both testing and localizing an Xbox Live Arcade game, and the burden shouldered by developers is reportedly as high as $50,000 per game in terms of getting proper bug reports, making sure the game is localized into the correct amount of languages, and so on and so forth.

So that would take the developer cut down to perhaps $120,000 – which is an incredibly small amount for making a complex professional game from scratch with multiple development staff. If you go through a publisher (with THQ and Sierra being two of the ones signing up XBLA titles recently), the numbers look even worse, with many of those titles clearly not paying for themselves.”

He goes on to state that not all games should get a boost, with retro, and remake games staying in the $5 to $8 dollar range. But more fully-featured titles would probably be able to make the jump from $10 dollars to $20 dollars, with minimal effect on their overall sales.

In closing Carless realizes though that it may be too late. With the precedent of $10 and under games (with a few exceptions here or there) already set, it may be hard to pull off without alienating consumers.

This a slippery slope. Developers and publishers alike need to be careful not to push games that many gamers consider to be somewhat neutered—compared to what they get on a disc— in a way that makes them seem greedy. But on the other hand, DLC is the way of the future with games like Warhawk, Grand Turismo:Prologue, and the upcoming Socom title for PS3, leading the way for games that can sell well in either market.

It would seem that Carless’ suggestion of demographic specific pricing would be the best solution to the problem. But will gamers stand for it?

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