Warren Spector Wants Lower Prices

Warren Spector Wants Lower Prices

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Deus Ex designer Warren Spector says the videogame industry needs to focus on lowering the price of games in order to foster real growth as an entertainment medium.

"We need to get our price point down because we've been in competition with other media for years, it's nothing new," said Spector said at the Game Developers Conference last week. "We've been a niche medium that over-charges for its product and therefore generates a lot of revenue which makes us a little bigger than Hollywood, which is crazy."

"The key is removing barriers to the creation of content and removing barriers to the consumption of content," he continued. "Allowing people access to lots of it, at the lowest possible price where you can make a profit."

He also expressed disdain for the idea that the high cost of games is justified because they provide more hours of entertainment than other forms of media. "I've always had this anecdotal belief that there's this magic price point for entertainment. And it's not a per dollar charge. No one thinks about how many hours they're going to get out of their entertainment dollars," he said. "If I've got a 20 dollar bill in my pocket I can go buy a book, go to a movie, but I can't buy a game. I can buy a CD, I can do so much even now, but you cannot buy a game."

But he also expressed optimism that despite the current economic climate, the rapid pace of change in the industry is opening up a number of new opportunities for developers. "Five or ten years ago there was a way you did this, but now, there are so many more ways to reach an audience," he said. "It really gives me hope in a weird sort of way that the craziness in this business - the economy and all the lay-offs - it's remarkable how wide the variety of opportunity is."

Spector is currently at work on a new project for Disney Interactive and has a credit list that most developers would kill for, including Deus Ex, System Shock 2, Thief: The Dark Project, Ultima Underworld, Wing Commander and many others. And while I would never think to contradict a man with such impeccable credentials (although I'm about to), I for one do actually consider, in a general sense at least, dollars per hour when I making game-buying decisions. "Value" can be perceived in many ways but when you know a new game is going to shave entire days or weeks off your life it's a lot easier to swallow a hefty price tag.

Source: GamesIndustry

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Mr. Spector makes a very good point. The only $20 games you can "go out and buy" are used, old or casual. None of which are really "good" for the industry.

Malygris:
...while I would never think to contradict a man with such impeccable credentials (although I'm about to), I for one do actually consider, in a general sense at least, dollars per hour when I making game-buying decisions. "Value" can be perceived in many ways but when you know a new game is going to shave entire days or weeks off your life it's a lot easier to swallow a hefty price tag.

Andy, Andy, Andy... what are we going to do with you? ;-)

All you're doing is justifying the high price point. I'm with Warren on this one. I only have so much disposable income and if I have to choose between a single video game or 2 movies, a music CD and a book... I'll choose the latter in most cases. And that's where Warren is coming from; more people would spend more money on video games if the price point was actually acceptable.

Do you base your spending on which book has the most pages? ...which music CD contains the most minutes of audio? ...do you choose the longer movie over the shorter ones? Of course not, so why defend the price of games simply because they offer more entertainment time?

I think the price of a videogame should somehow relate to it's quality. Huge, obviously high-quality titles like Fallout 3, GTA or Blizzard games, on which a 100 people have worked on for years, probably deserve that 50€ pricetag. Unfortunately however, those 50 bucks seem to be some kind of "price standard" for any videogame, and there are alot of games out there that should rather sell for 20€ or less.

On the other hand though, supply and demand sets the price, and there are many more videogames out there now than 10 years ago... still the price seems to have stayed the same. And I have to admit that I'm usually not willing to pay those 50€ for a brand-new game except in very rare circumstances (the games I'm fanboy of). Usually I prefer to wait until the price has dropped to the 20-area or I pick it up on Ebay if I can find a good offer.

I definitely don't spend $50-$60 on a game that doesn't score 80 on metacritic or higher. If it scores lower than that, I wait for the price drop. Unless I have brand loyalty. Like Call of Duty 4: MW. I shelled out for the brand new version of that without reading any of the reviews. If I was considering Hours/Dollars I would only buy old and Paradox Interactive titles, because those are the ones that will give me the most bang for my buck. Also realisim sims, like Flight simulators or those Silent Hunter sub games. And that's not to say those aren't great games, I love those. But I also like games that let me reach an ending at some point. Something I can walk away from with a satisfied "well, I did all there was to do there."

I'm with Warren as well, but it's not going to happen...prices on games and systems will continue to rise as long as consumers continue to purchase them.

Consumers tend to have a "do want now!" mentality and it's my opinion that video game consumers are the worst of the bunch...waiting in line for hours to spend $899.99 for a brand new system so it can collect dust until games start coming out for it is a tad absurd in my book, especially when the system they have at home is still getting releases.

This is not a new trend however and goes back to the N64 era...probably even beyond that, i was working at Funcoland at the time of the N64's release, even though there was a shortage of games people simply didn't care, they wanted the system even though they had nothing to play.

While I agree that gaming is too expensive from my POV... How the hell do high prices inflate the revenue? As the price goes above the optimum price the sales lower, producing less revenue as a result. The optimum price is the price at which the profit per unit times the expected sales is maximized. If games are overpriced for the market then lowering the price will actually INCREASE revenue as the sales increase more than the per-unit profits decrease. If Specter is just saying we should throw all business sense out of the window and make games out of the love for the subject he'll have to deal with the unemployment that follows.

However what I suspect is that (core) gaming is already at its sales maximum as most of the people who even want these games are either willing to shell out full price or just wait until the price drops to the level they want (that's the aprpoach I take). That's what I suspect is the reason for the price increase this generation, the customer numbers are stagnating and the only way to get that mandatory growth* is to increase the prices those customers pay. I don't think the customer pool for core games is limited by the price, it's limited by the appeal of the subject matter and as such lowering the price won't help with the whole stagnant revenue problem the industry is facing.

As for dollars per hour, the bigger consideration to me is fun per dollar. An 80 hour RPG usually contains less fun per hour than some of these super-condensed 3-4 hour games that are pretty much pure extatic fun for their whole duration. In fact a game with too low a fun density will end with me quitting it early so all that other time is wasted. Conservation of content: Games will always have roughly the same amount of content, a longer game just stretches it more with filler (c.f. MMORPGs). Movies usually have a much higher fun density than many games hence people are more willing to pay for them, especially if you consider that the time needed to "mine" that fun could be considered an additional cost.

*=A company is expected to produce at least a certain amount of growth each year, anything else is seen as failure. It's in part because you have to stay above the inflation to have actual growth rather than being effectively poorer because the money you make is worth less than it was before.

Echolocating:
All you're doing is justifying the high price point. I'm with Warren on this one.

Of course I am - sometimes. Some games are a bargain even at their full price - I can't complain about paying 70 bucks for Fallout 3 when I got 150-some hours of kickass gameplay out of it. And even some short games, albeit a very few, are worth their hefty tags - Once again I'll go back to my favourite short game of all time, Max Payne 2. Not many games could get away with being eight hours long after bending me over the EB counter but MP2 was just good enough to do it.

But I've passed up on a lot of games lately, good games, because what they're asking and what I'm getting just don't mix. Call of Duty 4 still isn't in the house, neither is the Orange Box (although that will change tomorrow, 30 bucks at Walmart), STALKER: Clear Sky, all sorts of games I really want to play but that are just too expensive for what they offer.

I'm "with" Warren in the sense that, yeah I'd like to pay less for my games. Hell, I'd like Warren to swing by my house every couple weeks to give me an update on whatever it is he's doing at Junction Point these days. But more realistically, I think what we're really talking about here is value - and just like some movies are worth the price of admission while others aren't, so too are some games worth their high initial prices while others just can't justify it.

Malygris:

Echolocating:
All you're doing is justifying the high price point. I'm with Warren on this one.

I'm "with" Warren in the sense that, yeah I'd like to pay less for my games. [...] But more realistically, I think what we're really talking about here is value - and just like some movies are worth the price of admission while others aren't, so too are some games worth their high initial prices while others just can't justify it.

Value is subjective from game to game, gamer to gamer, and has nothing to do with my point. Simply put, by keeping the price of games high, the video game industry is actually stifling its own growth. Only those with large amounts of disposable income can regularly buy quality games. The people who fit into this category are typically adults with no children and mostly kids. With the entrance price restricting the audience to this demographic, developers are fearful to make anything that won't cater to the youths and their expectations. Also, parents could be buying their children quality games, but shovel-ware prices are what they feel comfortable affording. A lot of quality games aren't worth the current price tag, and combined with a short shelf life, typically never see an expected price drop before they disappear entirely. If units were constantly moving (lower price), shelf life would likely increase, like every other entertainment medium that's reasonably priced and more units would sell over time.

But the industry is growing. Spector's argument reminds me a lot of the story earlier today about the chick who called on the industry to "grow up." It's a nice idea in some ways but ultimately you have to ask yourself, why? The industry may be doing a lot of things wrong but growing and making money doesn't appear to be on that list. And until that does become a concern, until solid-but-not-necessarily-brilliant games stop being multi-million sellers at current prices, I don't think you're going to see a change. Because there's no need for it.

But his point about alternate means of reaching an audience may make it all moot anyway. Independent devs can reach huge audience through systems like Steam and Xbox Live at significantly lower prices than mainstream releases, and as that becomes more commonplace maybe the industry will decide it needs to do something about the current pricing structure. But maybe not, too. It's not as though I have tons of money I'm looking to get rid of but I just don't see any real imperative for the industry as a whole to do anything about prices.

I want games for less, plain and simple, and don't care if a multi-billion dollar industry has to reduce its profit margin a bit by lowering said prices.

Malygris:
Spector's argument reminds me a lot of the story earlier today about the chick who called on the industry to "grow up." It's a nice idea in some ways but ultimately you have to ask yourself, why?

I agree with Warren and that chick so I guess we'll just have to agree to disagree. ;-)

And to me FO3 was a waste of money because I didn't play the game much and didn't really feel like I got anywhere. With a movie I would have gotten the full entertainment out of it in just two hours.

Yeah, Orange Box is one of those games where I'm not sure if they're worth the money either. I didn't enjoy HL2 at all (also quit pretty early, Ravenholm) so I doubt the episodes would hold any value for me and I'm unsure if TF2 is worth the money but I want Portal and Portal alone is too expensive. Still haven't bought it.

Echolocating:
Value is subjective from game to game, gamer to gamer, and has nothing to do with my point. Simply put, by keeping the price of games high, the video game industry is actually stifling its own growth. Only those with large amounts of disposable income can regularly buy quality games. The people who fit into this category are typically adults with no children and mostly kids. With the entrance price restricting the audience to this demographic, developers are fearful to make anything that won't cater to the youths and their expectations. Also, parents could be buying their children quality games, but shovel-ware prices are what they feel comfortable affording. A lot of quality games aren't worth the current price tag, and combined with a short shelf life, typically never see an expected price drop before they disappear entirely. If units were constantly moving (lower price), shelf life would likely increase, like every other entertainment medium that's reasonably priced and more units would sell over time.

I'm still not sure that price is actually what's preventing growth there, I think it's more the content itself being unappealing to the vast majority of people. Look at Wii Fit, that sold tons even at 90$ by being something people want.

Malygris:
But the industry is growing.

No, it isn't. There is almost zero growth in the industry outside of Nintendo (who according to their own numbers apparently makes up 99% of the industry growth). Most games simply have zero appeal to someone who isn't already a long time gamer and as such won't expand the gaming audience. Publishers are revealing numbers that show their revenues aren't growing anymore but the costs are.

Malygris:
The industry may be doing a lot of things wrong but growing and making money doesn't appear to be on that list. And until that does become a concern, until solid-but-not-necessarily-brilliant games stop being multi-million sellers at current prices, I don't think you're going to see a change. Because there's no need for it.

They aren't making much money anymore, they're making losses. News about layoffs, bankrupcies and buyouts are pretty common lately, this is caused by game development becoming more risky as the breakeven point for core games moves higher and higher (the recession is not to blame, to destroy a healthy company it takes more than a few months of recession, especialyl when that company is in the entertainment industry, the only possiblity is that these companies were extremely unhealthy before the recession started). The likelyhood of breaking even has decreased greatly this generation. The blockbuster mentality is obsolete already but publishers are slow to realize it and until they do there will be more losses and bankrupcies.

A drop in prices more in line with other forms of entertainment would certainly drive sales up. On Steam, whenever a game gets a temporary price cut, its sales tend to go up. I don't have the figures, but it does sound a bit like common sense. After all, if a game costs 60 bucks, you're not going to go out and buy one on a whim. A cheaper game, on the other hand, is more easy to swallow as an impulse buy.

Coupled with cutting back on production costs and bringing back the smaller, motivated developer teams (and laying off on the we-must-outdo-Hollywood graphics obsession), can't be all that bad of a thing, ey?

Well, with any luck, the urge to blow millions on advertising, hiring A list voice actors, paying over the top for 'real soundtracks', etc etc will slow down and they'll spend the money on more deserving things like gameplay and testing.

I'm not saying I want a return to the Atari 2600, but just that how much does a celeb voiceover really add to a game that a decent unknown actor couldn't have done.

I still maintain that Rockstar spending $200,000 on DRM for GTA4 was a mistake too, it's been beaten and I bought it for £19 thru Steam, most places seemed to be selling it for PC for under $40, so if their cut was even half, which it won't be, they've sold 10,000 copies for 'free', I can't help thinking I'd prefer the pirates to get the game than give it to the DRM companies, it feels like paying Norton to write viruses.

I will say in Rockstar's favour, that I'm running GTA4 on a below minimum spec machine, and it's gone from under 1fps at 640x480 to 10-15 at 1024x768 since the last patch,so at least that's been dealt with it, although I still think it could have been made more scalable.

I do think digital distribution is the way to go, look at Steam, they put a game on sale for $5 at the weekend, one that's maybe 10 years old, and it'll sell bucketloads, its almost like the achievement mindset, there's something pleasing about buying the entire X-Com back catalogue for $5 and adding all those games to my list.

Platinum For All !!

Malygris:
And while I would never think to contradict a man with such impeccable credentials (although I'm about to), I for one do actually consider, in a general sense at least, dollars per hour when I making game-buying decisions. "Value" can be perceived in many ways but when you know a new game is going to shave entire days or weeks off your life it's a lot easier to swallow a hefty price tag.

Tell that to the games I've cast aside after two hours. Highly-rated, widely-lauded big-budget games.

-- Alex

super_smash_jesus:
I want games for less, plain and simple, and don't care if a multi-billion dollar industry has to reduce its profit margin a bit by lowering said prices.

I'm trying to find a more erudite way of phrasing, "well, duh..." Of course you want games for less. As Scott Adams had Dilbert say, customers want perfect products for free; they don't give a damn for the production costs or profits or anything like that.

Meanwhile, developers are scared out of their Depends that rising costs for art assets, code, distribution, and promotion for modern A-list games are going to eat their lunches while underground copies of their titles get around for free. (Why do you think they're spending so much on DRM?)

You want cheap games. They want to get rich making games. Both aren't going to happen... and if either becomes too dominant, both lose. Welcome to the balancing act we call, "the free market".

-- Steve

Alex_P:
Tell that to the games I've cast aside after two hours. Highly-rated, widely-lauded big-budget games.

-- Alex

What can I tell you? I said games you "know" will fill your life with days and weeks of thrills and joy, not games you hope will do so. I don't buy games unless I'm as confident as I can be that they'll justify their price. Fallout 3? Collector's Edition on release day. Call of Duty 4? 50 bucks is still too high; once it hits 30, I'll be on it like Funk on a WoW-hater. I want "perfect products for free," but I also believe that some games are in fact worth their rather high prices. What those games are may vary from person to person. :)

KDR_11k:
There is almost zero growth in the industry outside of Nintendo (who according to their own numbers apparently makes up 99% of the industry growth).

But how does that compare to other entertainment industries? I seem to recall reading that movies and music are suffering some rather drastic declines of their own. We are in the middle of a economic slamdance, you know.

And not everyone is going to feel the same way about every game. You didn't like Fallout 3, I thought it was like an orgasm that just wouldn't quit. Millions of people around the world buy up PopCap games at their regular price, I refuse to touch them until they're available in one of those crazy "80% OFF!" sales they have. To me, 20 bucks is overpriced. It's all highly subjective, which is why I don't think you're going to see any concerted effort from the industry as a whole to get price points down. Not until the industry shows real signs of struggling with sales.

price is what keeps turning me off of some games, ill go into a store some times even with a gift card. look through the game section see a game i would like to try and decide it's not worth $60 to play "generic space shooter 7"...this last winter i hardly bought any games and instead spent my xmas gift cards on movies

KDR_11k:
I'm still not sure that price is actually what's preventing growth there, I think it's more the content itself being unappealing to the vast majority of people. Look at Wii Fit, that sold tons even at 90$ by being something people want.

I have to wonder though if a lower price tag would also make video game piracy less appealing?

I agree that content is key, but my question is then why do developers typically choose to create such juvenile hardcore games and ignore the larger adult market? And that's what I'm trying to wrap my brain around. The current price point seems to keep the market at the young teen generation (having the most disposable income). Is there another factor that I'm missing?

Malygris:
What can I tell you? I said games you "know" will fill your life with days and weeks of thrills and joy, not games you hope will do so. I don't buy games unless I'm as confident as I can be that they'll justify their price. Fallout 3? Collector's Edition on release day. Call of Duty 4? 50 bucks is still too high; once it hits 30, I'll be on it like Funk on a WoW-hater. I want "perfect products for free," but I also believe that some games are in fact worth their rather high prices. What those games are may vary from person to person. :)

I definitely see what you mean.

I don't have any sure things anymore.

BioShock, for me, was a letdown. I abandoned it after two hours.
Half-Life 2, for me, was a letdown. I still played through it to see what everyone else was raving about, but I definitely think it doesn't deserve half the praise that it gets.
Both of these could reasonably seem as "sure things" to, well, anyone who's played video games, liked Deus Ex, liked Half-Life, &c. Yet they just totally blew it. Blew it so hard they even made me question why I liked those earlier games in the first place.

I've bought quite a few games at the $30-60 price range recently, and I've had a miserable hit rate. The only game I'm at all looking forward to is Mass Effect 2, and there's like a 50% chance I still won't buy it. :/

I'm definitely a total outlier as far as the jadedness goes, but, well, that's basically why I'm not spending any money on video games right now -- despite the fact that I have money to spend.

Then again, I imagine that, for some people, the "sure thing" is only worth $20 and the "maybe" is just a product they don't buy.

-- Alex

PedroSteckecilo:
Mr. Spector makes a very good point. The only $20 games you can "go out and buy" are used, old or casual. None of which are really "good" for the industry.

Or Braid.

PS: I will buy most any game, but my rule of thumb is it isn't allowed to cost more then 50 dollars. 50 or less. I need to get 2 or 3 games out of a hundred bucks. So I get alot of used's.

Alex_P:
I've bought quite a few games at the $30-60 price range recently, and I've had a miserable hit rate. The only game I'm at all looking forward to is Mass Effect 2, and there's like a 50% chance I still won't buy it. :/

-- Alex

Is it possible (and this is a serious question, I'm not being a smartass here) that you're just not a gamer? Or not a gamer anymore? If HL2 and BioShock couldn't turn your crank... not really sure what to say. Are you expectations too high?

But we're getting off track here. How about this: If BioShock had been 20 bucks, would you have come away satisfied?

I find it interesting that while Spector is calling for lower prices so the industry can experience "real growth," analysts are calling for yet another year of solid revenue growth in 2009. Maybe it wouldn't be a bad idea to nail down a definition of "growth" while we're at it.

Malygris:

Alex_P:
I've bought quite a few games at the $30-60 price range recently, and I've had a miserable hit rate. The only game I'm at all looking forward to is Mass Effect 2, and there's like a 50% chance I still won't buy it. :/

Is it possible (and this is a serious question, I'm not being a smartass here) that you're just not a gamer? Or not a gamer anymore? If HL2 and BioShock couldn't turn your crank... not really sure what to say. Are you expectations too high?

I'm kind of in the same boat as Alex, in that I hardly look forward to much of what's coming out anymore. I couldn't finish Half-life 2; it just got too repetitive and boring.

However, I wouldn't go so far as to say someone isn't a gamer because they don't appreciate mainstream gaming. The people who participate on this site are all gamers.

As my taste in movies and music has matured so has my desires in gaming, but gaming doesn't really offer much for me now. It's not that I've stopped being a gamer, it's that the gaming industry is hardly diverse enough to fill my current needs.

I appreciate the question you're asking because I've asked myself the same thing before: am I not a gamer anymore? But the answer is that gaming is stuck in an adolescent mindset and is slowly becoming less appealing to me as whole.

Personally, I can't wait for Mass Effect 2, but I also accept that I'll have to be content with only getting truly excited about two or so games a year.

 

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