I still remember when I saw my first $60 price tag on a game. My jaw almost hit the floor. Now $59.99 is just what you pay for the latest title. Throw in the collector’s edition ($69.99) or the recent Halo 3 Legendary edition ($125) or the recent Rockbank release ($169) and you see the trend in gaming today.
So how did we get here? Where does the money go? Like any other product there is a breakdown of how the cash is spread around. Take for example a 360 title that sells around 500,000 units. $20 is to pay for the actual development cost of the game. This is everything from coding, level design, QA, etc…Then of course there is publisher overhead which warrants $9 of the $60. Next Microsoft licensing and manufacturing takes $12 for license (You know the Xbox 360 branding and Xbox Live stamps at the top of every 360 title). $7 is spent on advertising of the game. All of the POS materials, TV, magazine ads etc… the money has to come from somewhere right? The final take is the actual retailers cut of $12. This is your Gamestops, Best Buys, etc…
Now throw in strategy guides and downloadable content and the life of a game is now extended as is the profitability of the title. Take for example the latest EA title Need for Speed Pro-Street. It is the best example of a console game that leverages in game play with actual cash based (Microsoft Points) based extras. Don’t want to wait to get your dreamcar in the game? It can be yours for 200 Microsoft points. Not happy with your engine or injection system? No worries upgrade for 150 Microsoft points. It is a great move by EA to add this extra option. This also results in additional revenue for the title.
It will be interesting to see the continual evolution of gaming. I foresee a time when most of the content will be downloaded and the introduction of subscription models moving forward. We will have to wait and see.