Toy Soldiers, Explosionade, Enslaved, and why $60 price point does not fit all

This is another area where it seems like gaming has taken a step back from the previous generation.

On the PS2 at least, games were released for all kinds of pricepoints. On the PS2 alone, Sony released many of their first party titles for 40 bucks, God Hand came out for 30, Persona 4 was 40 IIRC, and there were scads of games reaching shelves at 20 bucks right out the gate.

I also remember when there were a wide variety of price points that one could choose when purchasing games . And while agree with the post, I don't think that we will be seeing any lower cost titles in the near future. I think Developers fear that consumers will pass over games, because of the mentality that if a game cost less it must be of lesser quality. The current industry model depends heavily on early advertising to build up demand for new titles. Lower prices would mean smaller advertising budgets and a heavier reliance on word of mouth to build interest in a game. I'm not sure that developers have a much confidence in word of mouth among gamers to sells games as they should. Just think smaller titles that rely heavily on the quality of their titles to sell, rather than getting the cover of next month's big gamer magazines.

I see this playing out in different way however. Assume that developers did space their releases along different price points. I don't think they would do it necessarily along the lines of which titles they think are the best, but which titles they think have the largest mass market appeal. Marketing for the higher price titles would most likely stay intact, while lower price titles would have smaller marketing budgets. My thinking is that you would actual end up with titles that are of excellent quality in the lower price brackets, simply because developers are apprehensive about how they would fair on the market, because of either content or themes. What could emerge is a group of developers with smaller budget creating games that are actually quite good, but rather than rely on standard market advertising to promote their games, they rely on gamer word of mouth.

I agree with this in general but there's a danger it might go too far.

Different price points implicitly means the game needs to be packaged in different ways, so that the publisher is able to price discriminate by introducing tiered pricing strategies. Consumers are not homogeneous and have differing budget constraints. This would enable the publisher to capture a larger market share as marginal consumers who would otherwise not have bought game package A with functionality X, Y and Z, could instead go for less-costly package B with functionality X and Y only.

E.g. Sell multiplayer functionality as a $15 addition to a single player price point of $20. This would only work if the demand for games is highly price elastic. That is if pricing really matters, then dropping the price by a little bit means capturing a proportionally larger share of the market hence raising revenues. If demand is *in*elastic however, the opposite would be the case and you would be left with lower revenues. Are there lots of people out there only interested in single player, and unable to afford RRP $35 as opposed to $20? I'm not so sure....

Besides, 'additional' content is already such a price discrimination mechanism. However, the logical and frightening conclusion to this trend is for *every* chapter in a game to be downloadable as an add-on. Clearly consumers do not want this - publishers\developers will then be able to maximise their profits on each individual chapter of a game, which implicitly means increasing the overall consumer cost compared to what it would have been if the entire bundle of downloads had been sold as a single off-the-shelf package.

As nobody wants to play just a few chapters, this must mean the whole approach to game design will require changing - that of packaging up each individual chapter as a standalone unit. Perhaps a compromise will be reached in having longer individual chapters for standalone play (i.e. shorter games). I believe the two Half Life 2 add-ons are an experiment in this and I'm actually wondering where\when the third installment is...?

It would not surprise me in the slightest if Mass Effect 3 or Fallout Vegas ends up substantially shorter than it's predecessors in the main game, but with more downloadable chapters and missions. That's great if you're not on margin, but less exciting if your budget is already stretched by the 3000+ Microsoft points you spent on the previous installments.

So differing price points is good in that the market will get larger due to capture of marginal consumers, but monopolistic competition means the pricing will be more to the advantage of producers than consumers. The benefit to consumers of being able to better pay for exactly what they want must be balanced with the 'disbenefit' of increased costs to those consumers who are not prepared to compromise on the entire package.