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This Dumb Industry: Charging More for a Worse Product

By Shamus
on Tuesday Feb 13, 2018
Filed under:
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I really like Extra Credits. I think their analysis of Metroid: Other M is probably the most level-headed and constructive take on the game. Their Open Letter to EA Marketing is the most damning analysis of EA’s marketing behavior, and is greatly bolstered by the fact that they’re not trying to create some rage-filled rant to appeal to angry fans but are honestly trying to show how harmful these practices are to the industry in general and even to EA itself. Their analysis of what went wrong with the animations in Mass Effect: Andromeda might involve a bit of speculation, but along the way you’ll get a great education in just how complex modern animation systems are.

I often agree with the show, and it’s pretty hard to make a weekly column out of “Yeah! What that guy said!” There are tricks you can use to pad something like that out to a 3,000 word essay, but those tricks are very, very, very, very, very, very, very, very, very, very, very, very, very, very, obviously obvious. So despite my admiration for their content, their videos just don’t work as conversation starters for me.

But last month they posted Games Should Not Cost $60 Anymore – Inflation, Microtransactions, and Publishing. It makes a lot of points I disagree with, so now we’ve got something to talk about. Yes, I’m aware this behavior is one of the reasons I get a reputation of being overly negative and nitpicky. But look, I’m only criticizing the show because I’m a fan. There are lots of popular YouTube channels out there that I don’t like and don’t care about, and I don’t waste time arguing with them. On this site, we criticize because we loveOr sometimes because we’re angry..

Finding The Right Price


Link (YouTube)

The argument is that prices need to go up because publishers need more money. Except, that’s not how prices work. Do you really think Starbucks spends five times as much making their $5 coffee as McDonald’s spends making their $1 coffee? The prices aren’t really based on how much it costs to make the coffee, but how much the consumer is willing to pay. If everyone was suddenly willing to spend more money on coffee then coffee prices would go up, even if the cost of producing it didn’t. A really big company (like a global brand or publisher) can experiment with prices and get a feel for what consumers are willing to pay. They will put prices as high as they can possibly go without hurting sales. If costs go up then it might hurt the bottom line, but unless there’s an economy-wide disruption going on then it’s not going to change how much the consumer is willing to pay.

Of course, this is an imperfect science. It’s not like everyone in the world has a fixed limit where they’ll spend no more than $5 on a coffee. Some people are willing to go up to $6. Some will even pay $10. For a lot of us, even $5 is too much. Some are okay with $5, but will stop buying if the price goes above that. Or they’ll switch to cheaper alternatives. Or they’ll just buy less of it.

In reality, it doesn't follow a nice predictable curve like this. It's shaped by seasonal shifts, the activity of your competitors, and human psychology. Have fun figuring it out!

In reality, it doesn't follow a nice predictable curve like this. It's shaped by seasonal shifts, the activity of your competitors, and human psychology. Have fun figuring it out!

If you charge $0.1 you’ll lose money and if you charge $100 you’ll never sell any. Between these two you’ve got a curve that ramps up and then back down, with the peak of the curve representing the price where you’ll make the most money. Where is that peak and how do you find it? That’s why you went to business school, sparky. You’ll need to do the market research to find out. Mess around with prices, gather up the results, and then fire up that spreadsheet and see what the numbers say.

Let’s try a thought experiment: Let’s imagine that EA manages to produce a high-quality, full-featured, modern-day AAA title with all the bells and whistles. And somehow they manage to accomplish this for only one dollar. I don’t know how they did it. They paid a single U.S. dollar and got a market-ready AAA game. Maybe a genie was involved.

The game cost one hundred millionth of what games normally cost to produce. So the question is: What will they charge for it? It doesn’t matter what you would charge. What would Electronic Arts Incorporated charge for this game?

Go ahead. Think about it.

You Already Know The Answer

On one hand, that $10 gift card sounds pretty good. On the other hand, you have to buy Final Fantasy XIII to get it.

On one hand, that $10 gift card sounds pretty good. On the other hand, you have to buy Final Fantasy XIII to get it.

Obviously they would charge sixty dollars, because that’s what consumers are willing to pay. Sure, they could charge five bucks for the game if they wanted and they’d still make loads of money, but then they would be making less money for no reason. If $60 is the optimal price for a game that cost a hundred million to produceFor the sake of argument, we’re assuming this is the case. then it’s also the optimal price for a game that cost nothing to produce, and also the optimal price for a game that cost a billion to produce, because the consumer doesn’t actually care how much you spentAssuming they’re of roughly equal quality.. The average consumer doesn’t look at a price tag and think, “I wouldn’t normally pay this much, but I heard this game went way over budget and they probably need the money.”

Yes, there are indeed companies that deliberately keep their prices low and forego profits because of principles. I can understand that. As an independent creator my goal is to get as many people to see my work as possible while still covering my expenses. I’d rather 50,000 people paid me $1 each for my book rather than just one guy paying me $100,000 for the book, even if the second option makes me more money overall. But if you’ve been a gamer for more than three minutes then you know that EA, Activision, Ubisoft, and Microsoft are not those kinds of companies. The big-publisher mandate is to maximize profits.

Inflation

Inflation is a myth. I just checked, and my money is exactly the same size it was ten years ago.

Inflation is a myth. I just checked, and my money is exactly the same size it was ten years ago.

Extra Credits makes the case that the $60 price tag was set back in 2005 or so. Since then U.S. inflation has pushed the buying power of the dollar down by roughly 2% per year. Using these figures, they conclude games “ought to” cost about $70 right now. As I pointed out above, this is looking at it the wrong way. A better angle to take might be to say that “consumers ought to be willing to pay $70”.

Now, some people make this argument in this condescending tone: “You should be willing to pay $70 for games and the reason you’re not is because you’re ignorant and entitled.” Extra Credits doesn’t take this tone, but I’ve seen the argument made. Again, this ignores how consumers behave and assumes we all do inflation calculations when we shop. If you’re buying from a faceless entity then you don’t look at the price and think, “Do they deserve this money?” You look at the price and think, “Is the product worth this much to me?”

In a practical sense, consumers are always “entitled” and sellers are always “greedy”. The buyer always wants the price as low as possible and the seller wants to charge as much as they can, and this tug-of-war ends up setting the priceThis is obviously ignoring edge-cases like Humble Bundle, Kickstarter, or meta-game purchasing decisions like buying a full-price game you don’t really love from (say) Obsidian or CD Projekt RED because you want to support their overall work.. If EA gave me the option of paying $30 or $60, I’d take the $30 every time. If I gave them the option of charging me $60 or $100, I’m sure they’d pick $160 because that’s how they roll.

So rather than lecturing consumers that they’re being unreasonable, a more productive question ought to be, “Given the rise of prices due to inflation, why aren’t consumers willing to pay more than $60?”

We’ll answer that question in a bit, but first let’s talk about…

The High Cost of High Fidelity

Hey, remember how everyone quit playing World of Warcraft in 2010 because the visuals were six years old? No? Me neither.

Hey, remember how everyone quit playing World of Warcraft in 2010 because the visuals were six years old? No? Me neither.

Next the EC team makes the argument that given the rising cost of game development, games ought to cost somewhere in the $90 range. For the sake of argument, I’m going to accept all of their assertions at face value: The cost of making games has increased dramatically, perhaps even as much as 3× or 4×. The availability of engines and middleware has created some savings, but not enough to offset the sheer cost of having dozens of artists working for years to fill these games with cutting-edge visual content. Fine. I might have some questions about how this works, but let’s just go with the Extra Credits numbers for now.

But Like I said above, the price can’t go above what the consumer is willing to pay. If Honda Motor Company took their popular $20k Honda Civic and upped the price to $100k because the new models are gold-plated, you’d be correct to say that they need to charge more money to pay for the gold. The problem from my side is that I still have no reason to go above $20k. I don’t need the gold. I just want a machine that will take me to work without killing me.

Publishers are free to spend as much as they want on developing a game, but their spending more doesn’t automatically translate into me wanting it more. If I don’t feel like the game offers good value for the money, then I’ll just buy something else.

But Shamus, what if they can’t make their money back at $60?

Then that game loses money and people stop making those sorts of games. If the cost of producing a game requires you to charge more than what the consumer is willing to pay for it, then that’s a game the market can’t support. Make something else. Or better yet, find a way to make it for less.

Back in 2014 we thought visuals like this looked good. What fools we were!

Back in 2014 we thought visuals like this looked good. What fools we were!

According to EC, to make a game with graphics up to the current standards of fidelity, it costs four times more here in 2018 as it did in 2005. Even if that’s true, are you really getting a return on that budget increase? Or to put it more directly: What if you dialed back the graphics to 2012 levels? Let’s assume for the sake of argument that this would only make the game cost twice what it did in 2005. How much would that drop in “realism” harm sales?

We don’t know the answer, and neither do the big studios. We can tell they don’t know, because they haven’t done the homework. They haven’t experimented with making a game with current gameplay, current marketing, but last-gen visuals. Sure, the indies have been messing around with this stuff, but the extreme differences in marketing, brand recognition, gameplay, and scope makes it impossible to get a worthwhile comparison. Knowing that Avant-Garde Tearjerk Walking Simulator sold 100k copies with 2012 graphics doesn’t tell us anything about how (say) Call of Duty would fare with the same technology. Publishers are willing to experiment with all of these techniques to wring extra money out of the consumer, but they haven’t even done the most basic homework to figure out how much the consumer values extra visual fidelity, much less figuring out where the optimal spot on the cost / benefit curve might be.

Like I keep saying, the people at the top of these companies are not informed about the consumers needs. They’re selling products they don’t understand. They’re focusing on graphics because that’s the most obvious and superficial attribute of a game to an outside observer.

(For the sake of brevity, I’m lumping all the big publishers together. Obviously this is an oversimplification. Blizzard has a really good handle on how to make good visuals, Valve was really good about playtesting back when they made games, and Sony has been really good about letting Naughty Dog leverage their cutting-edge visuals effectively. I think EA is the worst offender when it comes to overspending on visuals, but they’re not the only offender. Every company is a little different and every franchise has different needs in terms of visuals and budget, but I don’t have the patience to diagnose the problems of every individual publisher in this space.)

You don't need to roll graphics back THIS far. I mean, probably not. Actually I guess you should probably experiment a bit and find out.

You don't need to roll graphics back THIS far. I mean, probably not. Actually I guess you should probably experiment a bit and find out.

And before you reductio ad absurdum me, I’ll point out that I’m not saying that graphics don’t matter at all. Games were niche in 90s, and its true that the audience has grown along with fidelity. I love 1999’s System Shock 2, but I can understand why lots of people might find the blocky graphics a little hard to deal with. You really do need to use your imagination a bit when playing those old titles. And I understand if you’re young and you grew up on modern graphics then those pellet-headed, mitten-handed character models might look unintentionally comical, which would clearly hurt your experience with a game designed to be tense and scary.

On the other hand, have a look at the visuals of Mass Effect 3 (2012) Deus Ex Human Revolution (2011) Spec Ops The Line (2012) and Dead Space 2 (2011). Sure, if you compare them side-by-side you can see they’re not quite as sharp and detailed as the games of today. But… does the consumer really care? Is the difference so extreme that a player is going to look at those visuals and say, “No, I just can’t get into this because the visuals don’t look realistic enough for me.” I won’t say that people like that don’t exist, but I will say they must be a very small minority.

Moreover, the pursuit of cutting-edge graphics carries tremendous risk. Assassins Creed Unity, Arkham Knight, and Mass Effect Andromeda were all seriously hurt when their development teams tried to make the jump to “next generation” graphics. How many extra copies did those enhanced visuals in Wolfenstein II sell? These games generated bad press, product returns, lost sales, and support headaches for the publisher. Moving to a new engine is hugely disruptive to a development team. Everyone has to learn new tools and master a new system. It will slow down development, which means you can either allow the game to take longer or you can hold the release date and put out a buggy, broken, unfinished mess.

I remember many people were really critical of this game. Why was that again? Was it because the graphics weren't photorealistic enough?

I remember many people were really critical of this game. Why was that again? Was it because the graphics weren't photorealistic enough?

These publishers are supposedly afraid of rising costs and risk, and yet they keep pushing the one thing that makes both problems substantially worse!

And even if we insist that Call of Duty and Battlefront really do need cutting-edge graphics to please the fans, that still doesn’t mean the same is true for all genres. Can anyone seriously argue that Mass Effect: Andromeda would have been worse off if the team stuck with the familiar (to them) 2012 version of Unreal Engine 3 rather than migrating the the latest Frostbite Engine? How much does the average Tomb Raider or Hitman player really think about graphics when making purchasing decisions?

I think developers are chasing after better graphics because it’s the one thing guys like Andrew Wilson can understand. Wilson can’t tell if the new Shoot Guy game “feels good” to play. He can’t tell if the balance is right, or if the pacing is a bit off. But he can look at the game and see that the cinematics are “more cinematic” and the visuals are “more realistic”. Andrew can’t intuit just how much it would ruin a multiplayer game to have pay-to-gamble-to-win mechanics in place, but he can tell that these new screenshots look better than the screenshots from two years ago.

Keeping Prices Down

The truth has been staring publishers in the face for years: It's not how much you spend, it's what you spend it on.

The truth has been staring publishers in the face for years: It's not how much you spend, it's what you spend it on.

Next Extra Credits also makes a point that emphatically I agree with: Competition is keeping prices where they are.

If we were still buying games at retail stores, if the indie revolution hadn’t happened, if GoG wasn’t giving us access to two decades of cheap retro games, and if the mobile gaming craze had never taken place, then it’s possible game prices would have crept up to $70 or even $90 like the Extra Credits team says. In fact, I find that very likely.

Back in the 90s, games were really “expensive” for me in terms of justifying their cost in my budget. I only shopped at retail so I only had access to recent AAA titles. So I got one new game every few months. Sometimes I’d only get two or three new games a year. If retail was still the only way to get games and they cost $90 now, then I’d probably still be following those very conservative buying habits.

But now the indies, the mobiles, and the retro games are all competing for those same gaming dollars. If AAA games jumped up to $90 then I could easily get by on the other stuff. AAA publishers don’t have the leverage over me the way they used to. Now the only time I’m obliged to pay $60 for something is if it’s part of a series I fell in love with in decades past. And given how many compromises those games have made in their transition to the modern age, it’s easier than ever to walk away.

Second Stage Monetization

LITERALLY UNPLAYABLE

LITERALLY UNPLAYABLE

Publishers are engaging in aggressive and annoying new methods of monetizing their games. Pay-to-win microtransactions. Pay-to-skip-the-grind microtransactions. Lootboxes. DLC that feels like it should have been part of the core product. Let’s call all of these these techniques “Second-stage monetization”. It’s money you pay for the game after you’ve supposedly already bought it.

The excuse is that inflation and rising expenses have “forced” them to adopt these practices, but like I said above: Spending more doesn’t automatically make the consumer willing to pay more. These companies want to make as much money as possible. If these monetization techniques are a good idea now, then they would also be a good idea if budgets hadn’t changed at all in the last ten years.

When World of Warcraft began making more money every month than what Blizzard originally spent developing itI don’t know if this actually happened, but it’s a very plausible scenario given their peak subscriber base and the game budgets of the time period., the people at the top didn’t say, “I guess we have enough money now. Let’s slash prices to be nice.” They let the money roll in. And I don’t begrudge them that. Customers were happy, they were happy. Everybody won.

If these second-stage monetization practices had worked flawlessly, then they would have been added to every game – even ones that didn’t have trouble making money. Publishers would have let the money roll in, just like Blizzard let the money roll in back in 2010.

Publishers have concluded that $60 is the price ceiling for gamesIt’s possible that the various “Collector’s Edition” packages are (among other things) attempts to test for how open the market is to price increases. If the $80 or $100 version of a game sells really well, then it’s safe to assume lots of people are ready to spend more than $60. If nobody buys them, then the market isn’t ready for a price bump.. So these various experiments with second-stage monetization are their attempt to raise prices without raising prices.

That’s actually a legitimate goal. If you can charge some people $60 and other people $70 and other people $80, then that’s great. People with lots of disposable income will think nothing of dropping a few extra dollars, and you can get that extra money without driving off the people who can’t (or won’t) spend more than $60.

We're charging for ketchup packets, straws, trays, and napkins because it gives consumers more choice and flexibility in their dining decisions. Our goal is to always give our patrons the best value for their dollar.

We're charging for ketchup packets, straws, trays, and napkins because it gives consumers more choice and flexibility in their dining decisions. Our goal is to always give our patrons the best value for their dollar.

The problem is that most of these second-stage techniques harm the overall quality of the product in the process. Allow me to repeat an analogy I used a few months ago:

Back in 1991, McDonald’s rolled out their "value menu". They noticed a lot of people just bought a drink and a burger, and didn’t bother getting the french fries. So they introduced the "Value Meal", which included drink, fries, and a burger for one "low price". This sped up ordering, since someone could simply order a "Number 1" without having to list all of the items individually. It also created the false impression that they were saving money by ordering the meal. (If you added up the cost of items individually, they were within a few cents of the cost of the equivalent meal.) And most importantly, it got people to buy more food.

It sped up order times, it got people to order more food, and it made the customer think they were saving money! You might not like this sort of behavior, but it was effective and clever.

Now imagine a version of McDonalds run like EA. The company leadership doesn’t really eat fast food except to sample their own products, and going to a fast food restaurant with the family isn’t something they would ever do.

So when they decide they want more money, the idea of a value meal doesn’t occur to them. Instead they just charge more. Charge for ketchup packets. Charge for napkins. Charge for bags.

There’s an outcry, and the leadership doesn’t understand why. They did the math and they figured these new policies should only add a few cents onto the usual order. What they didn’t foresee was just how much this change would hurt the overall dining experience. Now a lone mother with three kids has to stop and calculate how many napkins her children might need before they place the order. A guy who runs out of ketchup has to go and stand in line to get one more packet, while his food gets cold back at the table. Cheapskates try to save money by going without lids and straws, which results in more spills for the staff to clean up.

Pay-to-win microtransactions, lootboxes, and turning key parts of the experience into DLC is the equivalent of charging for napkins and straws. Yes, it might squeeze a little more money out of additional customers. But what you can’t measure is how much it damages the experience of using your product. If you understood your customers it would be obvious, and if you don’t understand or care about your games then you’ll never understand it. If Andrew Wilson had been personally looking forward to playing Star Wars: Battlefront II then he would immediately have sensed how upsetting the lootbox policy would be. He’d be able to say, “Wow. 40 hours of grind just to unlock Luke Skywalker? That sounds like a complete killjoy. That might even ruin the game for me.” But instead he only understands games as products for “other people”.

The publishers are trying everything they can to get more money out of consumers, right at the moment when consumers are spoiled for choice and awash in cheap games. The one thing publishers aren’t doing is working on keeping costs down, which is the source of all their alleged financial difficulties. But to fix the problem of skyrocketing budgets, you’d need a deeper understanding of videogames than “Does it look pretty in a trailer?” Instead they’re doubling down on the visuals and then trying to squeeze the customer for more money, thus creating a whole new public relations problem.

They’re working very hard, but there is no substitute for knowing what you’re doing.

Footnotes:

[1] Or sometimes because we’re angry.

[2] For the sake of argument, we’re assuming this is the case.

[3] Assuming they’re of roughly equal quality.

[4] This is obviously ignoring edge-cases like Humble Bundle, Kickstarter, or meta-game purchasing decisions like buying a full-price game you don’t really love from (say) Obsidian or CD Projekt RED because you want to support their overall work.

[5] I don’t know if this actually happened, but it’s a very plausible scenario given their peak subscriber base and the game budgets of the time period.

[6] It’s possible that the various “Collector’s Edition” packages are (among other things) attempts to test for how open the market is to price increases. If the $80 or $100 version of a game sells really well, then it’s safe to assume lots of people are ready to spend more than $60. If nobody buys them, then the market isn’t ready for a price bump.


 
 
Comments (331)

  1. Zaxares says:

    This has not happened in overseas game markets like Australia though. Over the past decade or so, games have slowly crept up in price. Back in the 90’s they did used to cost around $60 or $70. But as the 2000’s rolled on, they gradually crept up to $80 or $90. (Also note that at the time the Australian dollar was experiencing an unprecedented growth in purchasing power. At one point we even almost hit parity with the US dollar. And yet the prices for our games just kept on going up!)

    • Rack says:

      I think that’s another point of demonstration for this. Australian purchasing power increased and when pressed australian consumers were willing to pay more, so prices rose. If the same were true anywhere else in the world we’d have seen similar rises.

      • Blork32 says:

        There’s more to it than that though. Americans have had and still do have more purchasing power than Australians. The reason Americans still pay lower prices (which actually means they have more purchasing power because they have both a higher per capita GDP and lower prices) is because they are, for whatever reason, less willing to pay higher prices.

        I have two main theories on why this might be the case. One is more options (and therefore more competition) than other countries, because due to America’s size they probably tend to develop more games. While I agree with Shamus that the question is about what consumers are willing to pay, localization can determine whether a game is even released in a given country, so costs do matter in that situation and localization has a big pay off in the US as well as a lower burden if it’s made there. The other theory is that they may have more gamers, but the average gamer is less willing to pay higher prices (because it’s less niche). There are likely those who would pay $70 or so, but their harder to ferret out and they’re obviously happy to pay less when that’s where the price point is.

    • Lars says:

      Prices went up in Germany as well. But not that much. The rising points were always a new console generation. A PS1 game 80 DM (about 40€ after we changed currency in 2001). PS2-games were sold for 50€, PS3 costs 60€, most recent AAA-games for PS4 go by 70€.
      PC games had a much lower curve, where there was a jump from 45€ to 60€ in the midst of the PS3-era.
      So once in every hardware-era prices rise, and I think, that’s fine by me – if it weren’t for the hardware-price-tag first-hand. Getting new expensive hardware and than be charged extra to make use of that hardware is off putting.
      So yeah: Germany is more of a PC-country.

    • CloverMan says:

      Same here in central Europe, games doubled in price in the last decade while the purchasing power of local currency rose by app. 30%.

    • Blake says:

      While it’s true the prices grew for a time, they levelled off (and I think they even dropped slightly) probably a decade ago. I do remember seeing a couple of games above $100 at one stage, but that clearly didn’t take so they didn’t stick with it.

      I think a while ago all new games were $90+, but these days there is a reasonable amount of sub $80 new releases.

    • Ysen says:

      That wasn’t what I experienced, although this might have been because I lived in a country town growing up – which really demonstrates how important competition is.

      When I was a kid, there was one shop in town that sold video games. They had a small selection, the staff were clueless about them, and the prices were ludicrously inflated, with prices of A$120 or $110 for several console games. Of course, they “had to” sell them for that price because of the “high costs of distribution”. It was terrible, but what else were you going to do? If you wanted a better deal you had to drive 100km to the city.

      Then online shopping started to take off. Suddenly you could buy from stores with bigger selections and better prices without having to drive for an hour. And then games started going digital, and you could just buy directly from Steam. And an EB Games store opened down the street. Prices at the original store gradually dropped from $120 to $70. Amazing how the “price of distribution” seems to magically fall as soon as consumers have an alternative…

    • DaMage says:

      The price of a game in Australia is now about $90 ($70US) for a PC game, and about $110 ($86US) for consoles. This sort of Australian price gouging has carried over to all sorts of media, including streaming and digital goods. If I want to buy a new game, I generally buy retail because it’s cheaper than digital, it’s insane.

      What has this done? Are more Australians willing to pay these prices? Of course not, Australia is one of the pirating capitals of the world right now. Yet they still shill out these products at inflated prices and expect us to pay for it. I personally haven’t bought a new game in over a year now, nothing has been released that is interesting enough for the price required.

    • Kdansky says:

      Prices for games in Switzerland went down by a lot. In the nineties, we paid close to 100 CHF for a AAA game, and nowadays it’s only 60 CHF. The reason I suspect is the ability to order online from Amazon and Steam at Germany prices (which are roughly identical to US prices).

      Again, this is competition working: Without a couple tiny specialized gaming stores having complete market control, the prices became more competitive.

  2. Mokap says:

    I recently watched a YouTube video about the same Extra Credits video – https://www.youtube.com/watch?v=wTHPFh9YNr0.

    They also make the point that, since digital sales are becoming more and more common, publisher’s profits increase as the cut that digital storefronts take is less than the amount of money needed to manufacture the game cases/discs etc. I don’t know if he’s right, though, I’m not on EA’s Board of Directors. Either way, another thing to consider.

    • Daemian Lucifer says:

      If this were not the case,we would see the physical copies being far more numerous and marketing them over digital ones would be massive.Since thats not happening,its safe to say that digital stores are far less expensive.

    • Decius says:

      I have trouble believing that the cut that Steam takes is larger than the total of the cuts that Gamestop, truckers, shoplifters, and manufacturing take.

      • Daemian Lucifer says:

        Ah,but for steam you have to pay the boiler and the stokers,the maintenance of the internet tubes,pirates,and the people working in the complaints department.

      • Abnaxis says:

        Physical distributors take a cut too. At the company I used to work at the distributor’s cut was in the same range as Steam’s, even before you consider manufacturing costs, shipping costs, and inventory costs.

        In general, we shot for a 70% margin based on fabrication costs for making a decent profit. As in, 30% of the money that went into engineering and manufacturing was in the price, the other 70% was distribution, marketing, shipping, and 10%-ish profit. Now, I would be surprised if printing disks for mass market has the same cost per unit as the (relatively) few sales my company’s products had, but I’m absolutely certain that the Steam cut is at most half as much as sunk costs involved in putting products on physical shelves.

        Seriously, 30% is chump change compared to selling in big box stores. I know everyone balks at it, but it’s still extremely cheap compared to the alternatives.

        • Blake says:

          ” Now, I would be surprised if printing disks for mass market has the same cost per unit as the (relatively) few sales my company’s products had,”

          Worth noting: Sony and Microsoft (unsure about Nintendo) require quite a few dollars per disc printed for their platform as a licensing fee, which makes every disc orders of magnitude more expensive then they could be.
          They obviously take a large cut of the digital sales too but in the digital case there’s not the excess stock issue to worry about making it safer for publishers.

          • Decius says:

            Is there a legal basis for that? If I write a program for a computer, why should I have to pay a licensing fee to burn it to a disc for sale? Does it matter if the program is written for Unix or for PlayStation?

            • Droid says:

              I think the fee is for using the proprietary formats that iirc both Sony and Microsoft use for their PS/Xbox respectively. You can of course write anything you want to a disc without incurring fees, but making the contents readable by a PlayStation/Xbox requires you to use special file formats / disc protection that have to be licensed.

    • Primogenitor says:

      And the existence of UPlay backs up Shamus’s point – digital distribution is more profitable, but direct digital distribution is even more so (no more 30% (or whatever) to Valve).

      But again, UPlay has none of the consumer benefits of Steam – convenience, price, novelty (for the time).

  3. Flashia says:

    The majority of this article assumes that those at the top really don’t know what they’re doing. While here may be substaintable evidence that that might be the case, I can’t help but feel like saying what you said about a Andrew Wilson and SWBFII as if it were fact rubs me the wrong way. What if he did have those thoughts that you implied he should’ve had, but didn’t, but other forces make him face differently?

    As far as inflation goes, I actually do wonder what would’ve happened if game pieces had kept pace with the rest of the economy. For certain, movie tickets have gone up over the years last I checked, so why didn’t game prices do so? Is it because the game prices themselves are already pretty high (being somewhere between 3-5 times the price of a normal movie ticket, and about 1.5 to 2 times the price of new blu-rays or dvds) and so increasing them even more carries even more risk than in other industries? It’s hard to say.

    Now as for HOW to reduce costs, despite what EC (and an anonymous game dev blog said about the topic) said in the topic, I still do believe that managing costs in market is still the best way to reduce costs. However, not only is the potential amount to be reduced isn’t quite as much as one might have hoped, you can’t just simply reduce market costs and call it a day, as there are whole different types of marketing. I think what we need is not simply “less” or “more” marketing, but rather “smarter” marketing, as in how to take the same or less marketing budget and use to reach not only the same or more amount of people but also gain more sales in the process. The exact science is way out of my field, but it’s something to think about, at least.

    • newplan says:

      The majority of this article assumes that those at the top really don’t know what they’re doing.

      He doesn’t assume it – he argues that it’s the case – specifically because they’ve locked themselves into increasing graphics which has increased their expenses without substantial experiments as to whether or not improving the graphics makes the customers willing to pay more for the games than they would do otherwise.

      The assumption part was where he tried to fill in their motivation as to why but it’s not unreasonable speculation. It very much seems like a situation where people who play games would have tried different approaches rather than simply improving the one area where they have metrics. The alternative is that the management understands this but is locked into improving things that they can explain to the board in the way Shamus describes. This is the exact same problem pushed one level up though.

      The other possibility is that any publisher who doesn’t keep up with graphics improvements makes a game that looks cheap to gamers and they avoid it because it looks like the publisher is trying to dump a rushed, substandard product out the door.

      • Flashia says:

        I know that Shamus is technically only speculating, but the way he words it gives the impression that he somehow got info from the inside, and unless there’s something he’s not telling us (I’m onto you, Shamus; kidding.), it seems a bit…for a lack of better term, dishonest.

        And I was referring to the board and the like when I mentioned “other forces”, but I didn’t want to bring it up because if I recall, it’s one of those things that’ll have Shamus pounce on me.

        • Silfir says:

          Just read his older articles; he’s linked one of them, specifically so he could avoid having to retread old ground. (Here, I’ll do it again.) They explain in more detail why he believes what he believes about EA leadership.

          • Flashia says:

            First off, that link’s borked. I can’t even get the URL from it. Might want to fix that.

            Second, I have read Shamus’s stuff on EA and the like., unless you’re referring to the REALLY old stuff (admittedly, I came here via the Escapist, and not even early or mid Escapist; I think it was somewhere around 2013-2015-ish or later or something that I bothered to check out the original blog. Pretty long range, I know.). That doesn’t necessarily mean that it’s 100% rock-solid, though.

            …even if evidence and patterns do suggest (though not prove) that perhaps a note of encouragement (of the good kind) ought to be passed along.

        • Shamus says:

          I can see why a new reader would get the impression I was just making stuff up.

          When writing, I was thinking, “I already did an entire column where I made the case these guys don’t know what they’re doing. I don’t need to re-hash all of that.” I did point a link to why I think this is the case above the System Shock 2 image, but you’re right that this doesn’t make clear that what I’m saying is based on analysis and speculation, not a concrete news source.

          • newplan says:

            It was clear to me that you were making deductions based on what we do know and how the facts at hand fit your interpretation but don’t fit the “EA execs are games” interpretation.

            • Echo Tango says:

              Even if it was ambiguous[1], the assumption should be that when somebody is writing a column, article, etc, that everything is their opinion, unless they specifically cite sources, phrase it as expert knowledge, or similar. Otherwise where are we left – assuming every single person on the internet is an expert or has insider knowledge?

              [1] I also think it was completely clear.

    • Methermeneus says:

      I’m thinking you’re relatively new to this blog; Shamus has in the past covered the many ways EA’s business practices don’t make sense even for an amoral (note: amoral, not immoral) money-making machine, and while CEOs do have to answer to shareholders, he’s also pointed out specific reasons that Andrew Wilson (and Bobby Kotick of Activision) specifically understands marketing schemes far better than he understands his customer base, in addition to CEOs being shorthand for the whole set of high-level execs in a given company (sometimes an unfair shorthand, but given the power A CEO has to shape company culture, often an accurate one).

      I’m also going to go out on a limb and guess you haven’t thought this through very much. Yes, marketing is one place a lot of money could be saved (in a lot of market sectors, not just games). E3 displays are costly and reach very few eyes; TV spots are ridiculously expensive and unlikely to reach the target demographic; etc. However, there are a lot more areas of cost and possible savings, some of which could save millions in production costs. Shamus’ specialization is in graphics, and it’s an obvious shiny for someone who doesn’t know games to force on his underlings in spite of the cost on hopes of getting more sales, so that gets the majority of the attention in this article, but if you think it’s wrong or misleading just because that’s not the only place companies are spending unnecessarily (on a site that regularly points out other ways the games industry lets profits slip through their collective fingers, and in which no individual article surpasses a few thousand words), then I don’t quite understand where you’re coming from.

      That would be like me claiming that your criticism of games marketing is misleading because they could save money on hiring cheaper voice actors and getting them to pre-record their lines. (Star power is not correlated with sales in the entertainment industry, once related factors are accounted for, and while studio time is expensive, many voice actors have recording set ups at home.) I don’t think that, by the way; my criticism of your comment is based mainly on the implication that because you are right that must mean Shamus is wrong when you yourself point out that this is a multifaceted issue.

      • Flashia says:

        I never said that Shamus was totally wrong; it’s just that I’m pointing out other issues or factors that he might be overlooking. As for the marketing part, I did say that it was the best way, not the only way. I am fully aware that dialing down the graphics a notch ought to put a not insignificant dent on the budget, for instance.

        I’ll also state that I’m not entirely new, though I’m not a long-timer reader, either. Refer to my post above for more details.

        I will admit, though, that my initial post was pretty rapidly written, as not only was I on mobile (*Shock and horror*), I was riding high from Shamus’ seemingly consistent speculation-posed-as-fact thing that was seriously rubbing me the wrong way at the time.

        • Methermeneus says:

          Sorry, it took me so long to write what I did that, even though I’m way down here now, all I had to reply to was your first post, so I didn’t see where you said you weren’t new here. Considering I did that on mobile, myself, I’m just going to ignore that excuse, but I will say that you did imply that you thought Shamus was wrong, and that you didn’t know that he’d previously explained where a lot of the ideas expressed here came from. If you didn’t mean to come across that way, well, there’s a reason I try to write the same way on mobile as at my desktop: if I take the time to make sure I say what I mean, then there’s less misunderstanding. (Unless it makes me miss half a dozen posts that go up in the meantime -_-;). Also, I think the fact that you criticized something Shamus said in only the second comment on the post may have let you in for more criticism than you deserve, so I’ll just mention again that your point about spending marketing dollars more wisely is a good one that few people ever seem to mention.

    • Silfir says:

      Shamus has written before about EA and his belief that the people making business decisions there when it comes to games genuinely don’t understand games.

      He linked this article above: A Lack of Vision and Leadership, which opens with links to even more articles on the subject, and specifically rebuts the “appeal to authority” – that someone who is in charge must know what they’re doing because they’re in charge.

      If he presents as fact that Andrew Wilson (or EA leadership in general) doesn’t understand games, it’s because he doesn’t want to retreat old ground more than necessary.

      • Jeff says:

        The fact that the Wikipedia article tries so hard to make Andrew Wilson sound like a gamer, but only manages to mention FIFA alongside surfing, golfing, and Brazilian Jiu Jitsu, makes it sound very much like he’s not.

      • Flashia says:

        On that note, here’s an increasingly pet peeve of mine that needs to be said: Shamus’ insistence on pushing blame uphill is getting a bit overbearing, namely that it’s being presented as if it’s the most logical course, even if the entire truth suggests otherwise. I understand that he is kind of biased from the Dot Com Bubble days, but you’d think that the upper management is always to blame from what he’s said.

        • Daemian Lucifer says:

          Um,that IS the most logical way.That is why the people on top get the biggest bucks.They are being rewarded for the success,so why should they not be blamed for the failure as well?The worst thing that has evolved in our society is that we credit the people on top by giving them huge HUGE bonuses,but if (when) shit hits the fan,they are absolved.

        • Syal says:

          What level of management would you blame?

        • Ysen says:

          The people at the top are ultimately responsible for the performance of the company, or at least treated as such. They take credit for good performance, and get paid an incredibly high salary because of their (supposedly) large effect on the company’s bottom line. The flipside of that is if the company doesn’t perform as well as it could, they may come in for criticism.

          There’s also the point that upper management has the power to hire and fire, as well as to set company policy and procedure. If problems are consistently being caused by a lower level of employees, isn’t that itself evidence of poor management? Shouldn’t the people in charge act to reduce those problems, e.g. by providing training, hiring better staff, or changing policies which lead to poor performance?

          • Liessa says:

            Yes, exactly this. No one is suggesting that Andrew Wilson is personally responsible for every bad decision taken in his company – but even if all the bad decisions are actually being taken by middle management somewhere, he’s still partially responsible for not getting rid of those people and replacing them with someone more competent. That’s the thing about being at the top: the buck stops with you. Otherwise, what’s the point of all that power and those seven-figure salaries?

        • guy says:

          Everything is upper management’s fault, because if someone lower down is screwing up upper management can fire them.

    • Daemian Lucifer says:

      For certain, movie tickets have gone up over the years last I checked, so why didn’t game prices do so?

      Except they have.Only instead of the increase in the initial price,the extra price for games comes from all the secondary stuff that Shamus has outlined.So much so that,as ea has publicly stated even,micro transactions are overshadowing the initial sales.If every movie were to suddenly stop 10 minutes before the end,and you had to buy a new ticket to see that ending in the other room,or if the picture was fuzzy unless you shilled $5 for unfuzzifying glasses,the ticket prices now would be the same as they were 10 years ago.But trying that shit for movies is not gonna fly,yet with games everyone is fine with it.

      • Awetugi says:

        if the picture was fuzzy unless you shilled $5 for unfuzzifying glasses

        You mean 3D glasses? They basically do that.

        • Daemian Lucifer says:

          Depends on the 3d used.Chromadepth is not fuzzy at all.Also,the movie is the same with or without 3d.

          • I’ve experienced two different kinds of 3D – one where the glasses were just flimsy plastic frames with polaroid films as “lenses” and another where the frames were much bulkier and heavier because they contained some kind of mechanism to sync the lenses to the display. The former are meh-but-bearable, the latter were frankly appalling – especially if you were unlucky enough to be handed a pair with nearly-dead batteries, as my mum was once. And both pushed up the cost of seeing the base film. 3D is totally second-stage monetisation of the film industry.

            • Boobah says:

              3D is less second-stage monetization than concessions. Especially considering that, like EA’s FIFA series, the second-stage is where most of the profit is.

              As mentioned below, the surcharge for a premium screen (3D, IMAX, whatever) is charged up front; it’s more the equivalent of justifying the cost of a new AAA game because it has the most realistic fur animations ever. Only you can’t, as a rule, buy a cheaper version of the game with boring old 2017 fur.

        • Erik says:

          Yet one more reason I don’t watch 3D movies if I can avoid them.

          (The main reasons have to do with my eye issues – 3D adds almost nothing for me.)

        • guy says:

          They stick that in the ticket price.

      • evileeyore says:

        “But trying that shit for movies is not gonna fly,yet with games everyone is fine with it.”

        There are reasons I haven’t purchased many new games in the last decade. This nonsense is one of them.

  4. Infinitron says:

    You make a point here that I think might be misleading. It’s probably not graphical fidelity per se that’s increased the cost of developing games. It’s mainly the sheer detail, variety and richness of content that’s expected. Not the fact that you’re using the latest whiz-bang engine with high-res faces and lighting algorithms, but the fact that you need to animate more stuff, voice more stuff, polish more stuff.

    • Echo Tango says:

      You can however, spend effort and money in other areas. AAA games have enormous budgets for graphics, voice acting, etc, but are often plagued by poor writing, story, characters, and world. Taking some of the budget away from the shiny things would not only open up more budget for the neglected areas, but put less limits on them. Half of the reason the writing etc are harmed, is that the high fidelity in graphics, voice acting, etc, all make it more costly to revise other areas of the game.

    • default_ex says:

      This is a good point and addresses one thing that really annoyed the hell out of me about artist when I was working on team settings. Artist tend to make models so detailed that us programmers have to spend absurd amounts of time creating tools that strip out detail. It’s also not uncommon for the source textures to be way bigger than anything current or next gen hardware can handle. I remember an artist on one of the teams I joined for awhile complaining that he couldn’t create canvases in his tool of choice that were larger than 16k x 16k at 32 bit color. His computer literally didn’t have the memory capacity to do anything more than a few layers at that size and bumping higher just made his tools unstable. I spent most of that night, the following day and a week after studying texture optimization in anticipation of the unholy mess he was about to unleash on our repository. Thankfully he compromised to 8k x 8k which I could run an optimizer in our build chain at a little extra processing time cost but our shipping target maximum resolution was around 2k for a select few textures with the bulk of them 512 or 1024.

      When we have to make art asset optimization tools, that’s time spent developing tools to reduce graphics fidelity. Such tools are baked into most SDKs now and a bunch of the more popular ones even exist as plugin form for the artist tools of choice. Still that’s costing processing time that could have been spent making more artwork. All because the assets are made way higher detail than any hardware could hope to present to us at an acceptable frame rate.

      I like your argument though because it illustrated an area of graphics fidelity that really does cost to go bigger. Sure we can write algorithms for things like grassy fields and exploding walls but it still takes artist to create the wind patterns and tweak the explosive effects.

      • Echo Tango says:

        The fact that your artist compromised with you highlights a key point: artists and programmers need to be communicating with each other, and at least have a basic understanding of each other’s limitations. An artist who doesn’t have a ballpark estimate of maximum texture size is missing useful info; Likewise, the programmer must be aware of roughly the limits of an artist’s technical knowledge, so the pipelines built can be used by the artists.

      • Blake says:

        ” Artist tend to make models so detailed that us programmers have to spend absurd amounts of time creating tools that strip out detail.”

        Those artists sound awful to work with and need to learn more about game dev. I know artists producing assets like that would not last long where I work (studio of about 40 people). We have tools to automatically crunch textures where needed, but the artists much prefer to produce textures the correct size (obviously they have large source textures they use but do all their required photoshop magic to make smaller textures that still look good).
        Only time we’ve had models with too many poly’s has been when a new console generation comes out and we’re all still figuring out what is reasonable for new hardware.

    • ElementalAlchemist says:

      It’s both. Not only does every console generation (the primary driver of AAA graphical fidelity levels) bring with it more horsepower and thus a new high bar in graphics to attain, but now every second bloody game also needs to be open world. So not only do your models need more polys, your textures more pixels, your shaders more oomph, etc., you now have to multiply that effort exponentially to fill all that extra space you created by going the open world route. Couple that with AAA’s demand for annual franchise instalments and all of a sudden you’ve massively increased your costs because now you need two, three, four times the pool of slaves to pump out Shootmans 2K19: The Shootening in time for Xmas and start work on the following year’s sequel. That’s why you see the likes of Ubisoft and Activision employing multiple studios for a single franchise (leading to credit rolls that can last the better part of an hour).

      • Blake says:

        “but now every second bloody game also needs to be open world.”
        Except they don’t, that’s a choice the devs and publishers make that carries with it a cost.
        If they’ve chosen to go with the open world route it’s because they think the extra cost will bring in extra profit. Also lots of open world games are just full of similar simple stuff to produce (as in mostly new art assets with very little coder time) which makes the costs more predictable as there are less new problems to solve, it’s just producing content.

        • ElementalAlchemist says:

          Except they don’t

          That’s my point. The open world thing is exactly the same as the point Shamus made about graphics. It’s a cost the industry has placed upon itself, and then proceeds to piss and moan about games being expensive to make. But nobody asked for all these open world games.

          • Mephane says:

            But nobody asked for all these open world games.

            I’d be careful with that claim. For me, open world is a big plus for almost any game. The classical linear game where you proceed from one area through the one narrow predefined path (or at best a choice of a few ones) – I find that boring and arbitrarily limiting, and any game like that needs something really compelling for me to play it (e.g. Portal 1 and 2).

            And I am certainly not the only one. Just to name a few examples of very successful and popular open world games and game series: Elder Scrolls, Fallout, Minecraft, Just Cause, GTA (heck, even the very first one in top-down 2D had an open world already), Saints Row, World Of Warcraft, Mount&Blade, Terraria.

            • Daimbert says:

              Of course, on the flip side there are a number of people who find the typical open-world game boring because there’s no focus on what you need to do and so often no real reason to move from area to area, and the stories end up being subordinated to avoid giving the “linear” impression. And these are still popular, as games like Persona 5 demonstrate.

              So maybe things aren’t that clear-cut, and we can add some open world elements without having to make the game open world, which will allow some cost savings.

  5. Peem says:

    As a nonAmerican, can someone clarify if this $60 price mark includes sales tax? I remember games costing €60 all the way through the ps2 and ps3 eras (save a slight bump at the launch of the ps3. Now, all new AAA games on PlayStation and Xbox cost €75.

    Whenever a piece of consumer electronics is launched, € and $ prices are usually matched numerically, despite a >1.2 exchange rate. Unless those prices don’t include sales tax on your end (they do on ours), I would usually find it hard to empathise with the outrage that is seen online (not that I include you in that, I agree with most of your sentiments, having not bought an AAA game in who knows how long).

    • Shamus says:

      In the US, sales tax is levied by individual states. So if you live in Tennessee you’ll pay an astounding 9% tax. Where I live the tax is 6%. If you live in New Hampshire or Oregon, there’s no tax at all.

      The thing is, those taxes only apply to companies operating within that state. When I drive to Target, I pay the tax. If I buy from GoG, or Steam, there is no tax.

      • Matt van Riel says:

        lol, you think 9% is astounding? Try living in the UK or Europe, where VAT is ALWAYS 20% no matter what. And THAT’S an increase from the 17.5% it used to be back in 2008 and before. Because of course VAT NEVER goes down, only ever up.

        There are a few protected classes of item that have a lower rate (~5%), notably books and tampons, but that’s about it.

        About the only advantage is that the VAT cost is always included in the price of items so you don’t need to calculate what you’ll pay. But that’s hardly much of a consolation when you’re having a full fifth of everything you spend stolen by government for little more reason than ‘because we can’.

        • TheJungerLudendorff says:

          Yeah, it’s not like governments have expenses or anything.

          Political-financial sniping aside, the 20% tax is only levied on luxery goods. Like video games, elecronics, cars, that sort of thing.

          Basic living goods get ~5%, like food, clothes, cleaning and hygiene supplies and so on.

          • Echo Tango says:

            In Canada (I’m in Saskatchewan, but I *think* it’s roughly similar elsewhere), it’s 6% plus another 6% for unessential things. (not food, children’s clothing, etc)

            • Joe Informatico says:

              In Canada, there’s both a provincial sales tax, which ranges from 0% in Alberta and the Territories to 10% in the Maritimes, and a federal Goods and Services Tax (GST), which is currently 5%. The GST is not applied to essentials like groceries, (IIRC) textbooks, rent, etc.

              To further confuse things, in Ontario and the Maritimes, the provincial and federal sales taxes are combined into a single Harmonized Sales Tax (HST), but the GST portion isn’t charged on those essentials. There’s a whole bunch of confusing reasons why this was done that’s not worth getting into here. But as far as I know, barring special promotions or exceptions (Save the Tax events, etc.), throughout Canada and the US, when you see a listed retail price anywhere, it’s the price before any sales taxes are applied.

          • Liessa says:

            I don’t dispute that governments need the money, but it’s not actually true that the 20% rate is only charged on ‘luxury goods’. 20% is the standard rate of VAT in the UK, chargeable on almost everything apart from basic necessities – this includes things like stationery and tools, which you may not buy every day, but most people would hardly consider as ‘luxuries’. Very basic everyday purchases such as food are usually rated at 0% or 5%, but even here there are a LOT of exceptions – the rules around VAT are so complicated, the tax specialists at my accountancy firm spend half their lives just trying to keep up with them.

            For example, a few years ago there was a dispute between the government and a bakery chain called Greggs over whether VAT should be charged on their takeaway sales. The general rule is that takeaway food is zero-rated for VAT if it’s served cold, but not if it’s served hot. The issue (as I understand it) is that Greggs bake their products fresh, then leave them to cool on the display stands; whether the customer gets hot or cold food depends almost entirely on when they turn up. To most people this seems like a hilarious ‘angels on the head of a pin’ debate, but to Greggs and the government, it’s a question of millions of pounds in revenue.

            OTOH, the good thing about having a consistent sales tax is that shops and online stores are required to include it upfront in their pricing. I was quite shocked when I once visited the USA on a school trip, and discovered that the things I was buying in shops actually cost more than it said on the price label.

        • Daemian Lucifer says:

          Yup,stolen.Because you get nothing in return for that.Nope.Nothing at all.

        • Decius says:

          That seems high. What’s the income tax rate, for individuals and businesses?

          • Bubble181 says:

            While this strays pretty close to politics, I’ll try to answer neutrally.

            I’m in Belgium. The average income tax is 54% (going to about 60% for single men with a higher-than-average income). VAT is 21% for most things, with only “basics” being 6%…But “electricity”, “running water”, “any type of bread except standard brown”, “meat”,… are all considered “luxuries” – the definition is…a bit of a stretch.

            Add on community tax, social security surcharge, regional taxes and of course things like ownership taxes, car taxes, etc etc and it’s fair to say that *easily* over 70% of a pay check in Belgium goes to the government – employer’s taxes not counted (that’s another 33% on top of your gross income, but you never see it).

            Of course, we do get back a lot more than people in low-tax countries like the USA in some ways. Whether or not it’s worth it, I’ll leave up to individual choice.

        • Abnaxis says:

          Companies CAN include sales taxes in their prices, but most don’t because of consumer behavior in the US. You wind up either having a higher price on your sticker than your competitors and everyone flocks to them, or you makes less money off the sale.

        • Tse says:

          In Bulgaria the VAT is 20% on everything, no exceptions.

        • Blake says:

          “There are a few protected classes of item that have a lower rate (~5%), notably books and tampons, but that’s about it.”

          Australia chiming in, 10% GST on most sales outside of the essentials.
          Tampons and pads are taxed, condoms are not. As recently as June last year there was a proposal to remove the tax from sanitary products, both major parties voted it down 33-15.

      • shoeboxjeddy says:

        Shamus, that’s actually changing. In Illinois and many other states, those online retailers have agreed to charge the state’s tax on goods. So I get charged tax from Amazon, the same as at the bookstore.

        • Nentuaby says:

          In California, there’s no question of “agreement,” we just passed a law. If your customer is in CA, you pay CA sales tax.

          (The funny bit is, and this makes a lot of conservative heads explode, this law immediately caused a number of large businesses to move *in* to our state. There just wasn’t any reason to keep all their facilities in tax haven states anymore.)

          • Shamus says:

            That strikes me as being incredibly obnoxious.

            If I live in California and I drive to NV to buy toothpaste, is the retailer supposed to pay CA sales tax because that’s where I’m from? Think of the weight this places on a small business. Now I’m supposed to submit tax forms to every state that I get customers from?

            This actually inverts the purpose of sales taxes. It’s no longer a tax on goods, it’s a tax on people. You’re making a business pay for the privilege of trading with your citizens.

            Shit man, just raise my income tax. Don’t create massive complex system that requires everyone in every state to comply with the tax laws of every other state. Just trying to picture how this would scale as other states reciprocate is terrifying.

            EDIT: Sorry for the quasi-politics. The government has decided I’m a “businessman” and I am regulated and taxed as if that was true, so I personally feel the weight of every bullshit form of every pissant agency that thinks they need to be involved in my microscopic operation. The money isn’t NEARLY as painful as the time, hassle, stress, and confusion of compliance. There’s even a cottage industry of fake-out collection agencies that prey on people like me. I think one of them took me for a couple hundred a few years ago. Another one scared the hell out of me last month. They send you a scary warning about an unpaid tax gone to collection and hope you’ll be a “good citizen” and fork over the money without asking any questions.

            So yeah. This stuff gets personal for me. I’ll let the Democrats and Republicans argue about how high taxes should be and what the money should be spent on, but the moment you ask me to get elbow deep in forms (for places I don’t even live!!) I go completely nuts and want to move to the wilderness with some crazy militia and spend all day shooting guns. (Or whatever it is those guys do.) KEEP IT SIMPLE.

            • evilmrhenry says:

              “If I live in California and I drive to NV to buy toothpaste, is the retailer supposed to pay CA sales tax because that’s where I’m from?”
              No. You are supposed to calculate the appropriate tax, and submit it as a “use tax” along with the proper form. (Nobody actually does this unless they’re buying a car or something, and the government usually doesn’t care.)

              I used to work for a company that manages sales taxes for online businesses. However complicated you think it is, it’s more complicated than that. When you sell to a customer, the city, county and state can all impose taxes, plus they could be in a special taxing area. Each of those could charge different rates on different products, so you need to be checking that as well. (And don’t forget to keep an eye out for tax holidays.) Zip codes aren’t high-resolution enough for this, so you need to be using geolocation based on address. Once you’re figured out how much you owe to the various governmental levels, you still need to fill out forms.

              (Of course, states, cities and counties need money. The amount of online sales is directly impacting their budgets, so they’re pursuing that money for understandable reasons.)

            • Echo Tango says:

              A similarly frustrating system is up here in Canada. Customers get charged by the government if they buy something online from out of the country.[1] Also, it’s not directly from the government, but a third-party company acting on their behalf, so it looks sketchy when you first get the letter. Also, it only gets applied to some purchases, seemingly based on price, whether or not it’s technology, or if the dice have rolled snake-eyes. SO MUCH FUN!

              [1] Sometimes, some companies will include this cost in the price to you, so you don’t have this hassle later.

              • Steve C says:

                What are you referring to? Environmental Handling Fees?

                • Echo Tango says:

                  No, it’s called…let me Google this…Duty. When you have to fill out the import form on an airplane, it’s the same thing (as far as I know; there might be two slightly different things here), and relatively straightforward. i.e. You’re importing some expensive wine, so you pay the fee, because you’re not buying local – there’s a small harm to the local economy there. Online, especially where there’s only a few (big or niche) companies selling Thing X, is more annoying. (Especially because, why doesn’t the government just get the money from the company – they have to deal with shipping costs and calculations anyways!)

                  P.S.
                  Home sick, so more annoyed than usual, by Canadian taxes and fees. ^^;

            • Mistwraithe says:

              Wait!!!

              What if, yeah, what if, you just had the same sales tax rate across the whole country? OMG. Have you thought of it? How simple would that be!?!

              Exaggerated horror aside, I am continually surprised that the USA hasn’t collapsed under the weight of its administrative bureaucracy, there is so much inefficiency from how fragmented all the systems are between each of the states.

              I guess the saving grace is that the big states, like California, New York and Texas, are as big as major countries elsewhere so they can afford to each have the same amount of bureaucracy that whole countries do. I’m not sure how the smaller states survive though…

            • Ye gods. D:

              Well, that sure puts my recent tax hiccup into perspective.

            • default_ex says:

              Reasons of what you mention are why I like my state’s solution. You declare what you purchased, how much you were charged and the tax rate you were charged. You are either refunded the difference or pay the difference depending on whether the net difference was positive or negative. The system even has a generous allowance for how much you are allowed to spend in total before your subject to paying the difference. It has worked out really well. Most of the money the state was able to gain allowed for keeping the highways clear during winter months. This then re-opened shipping lanes which in turn brought in more money for the local and state governments. It had a spiraling effect that I was surprised by when reading about it in a state news article recently. All while solving the problem of what to do about sales tax for online orders in a way that doesn’t put the burden on anyone other than the person ordering stuff online.

              Sounds like more work for us to declare but it’s not really that much work unless your terrible about remembering your logins to double check what you ordered and how much you were charged.

          • Fade2Gray says:

            I wonder if that’s been tested legally yet. It seems like that would trip over the interstate commerce clause.

      • Abnaxis says:

        In Ohio you have to pay taxes on online sales. They won’t necessarily catch you if you don’t, though, unless you get audited.

        Thankfully, many selling sites take this into account when they charge you. When they first started this law, I had do the math myself by going through my Amazon buying history for fear of being audited.

      • Dan Efran says:

        When I drive to Target, I pay the tax. If I buy from GoG, or Steam, there is no tax.

        When you buy from an out-of-state company, they don’t charge you the sales tax. But in Pennsylvania at least, you the consumer are still expected to pay it, directly to the state, as “Use Tax”. Even when traveling physically to another state to buy things, PA expects you to remit Use Tax when you bring the stuff back to use here. Many, many people are unaware of this, though. I doubt they really get much Use Tax revenue except from businesses.

        • Droid says:

          Firstly, I don’t think they care about your couple dollars worth of use tax.
          Secondly, that kind of highly specific taxation for a certain action sounds … wrong, somehow. It’s not quite illegal, e.g. by being outright discriminatory, but it just sounds like “Hey, you’re doing X. We want money from you every time you do X. We don’t care whether we can actually prove you did it. We just want your money.”

          • Shoeboxjeddy says:

            You don’t understand governments if you think that’s illegal. The government CAN and WILL charge money for things it wouldn’t allow businesses to do. Use Taxes are very real and very legal.

          • Dan Efran says:

            Firstly, don’t be silly. It’s not just my couple of dollars one time, it’s a couple of dollars on every online game sale, and tens of dollars on appliances and stuff. It adds up to real money. Of course they care! They just can’t do much to enforce it.

            As to whether it’s “wrong” – I agree, it doesn’t seem right. Say I buy a game in another state while travelling, bring it home to Pennsylvania, and play it; but I don’t show it to anyone else. Literally nobody but me in the whole state knows I bought it; nobody knows I’m using it. Yet I owe Use Tax. It seems like an intrusive and greedy policy. I’m not a fan of it, particularly.

            But here’s how it makes sense. Say I run a game shop in PA. The state requires me to collect sales tax, but my shop happens to be near the state border. So half my would-be customers go elsewhere, evade the sales tax, and don’t pay the use tax because they don’t know about it. (Or because they tell themselves: surely the state doesn’t care about a few dollars!)

            So each customer pays a few bucks less; the state misses out on a few bucks of revenue per game, that they could have used to fix the roads or whatever…and my shop loses a bunch of customers completely, and maybe has to close.

            (Of course with online shopping, a brick-and-mortar store need not actually be near the state border to suffer from this. It’s just an illustration.)

            So the purpose of the Use Tax is to level the playing field for in-state retailers. They have to collect the sales tax, but that shouldn’t be a disincentive to do business with them. It actually makes pretty good sense from this perspective. The state doesn’t want to miss out on the tax revenue, but they also have an interest in promoting in-state businesses, or at least not penalizing them. (That’s the local economy, after all, and it keeps the money circulating nearby….)

            But yeah, on the face of it, taxing out-of-state transactions seems…not illegal, but…let’s say, “questionable”. (I’ll leave it at that – it would start to be “discussing politics” if I gave my own opinions on sales taxes. But it smells funny, for sure.)

            • Droid says:

              I had already looked up the topic on other sites before you posted this, so I already felt silly enough for posting my comment anyway.
              But your effort wasn’t for naught, it gave me some more insight, so thank you for that! Specifically that it disincentivizes funnelling all your business through tax havens is a big plus, I guess.

              I have to admit, though, that I have little experience with taxes in general, coming from a country where it is literally encouraged to send in your income report (that you get, already filled out, by your employer) as your full tax return, assuming that was your only source of income that year and you don’t want to file any tax deductions. If you’re employed by someone else, income tax is usually the only form of tax that is not yet handled by vendors (e.g. VAT), the local municipality or the regional authorities (e.g. taxes on real estate).

            • Abnaxis says:

              “Evening the playing field for local businesses” was the logic behind Ohio legislating that sales taxes have to be paid for any online purchases bought in the state as well, though there’s none of the “use tax” stuff going on. If I buy something online and ship it to my parents’ in Indiana, I don’t have to pay sales tax on it (though I do need to drive for an hour and a half one way).

              • Dan Efran says:

                though there’s none of the “use tax” stuff going on

                Are you sure? A quick google search for “Ohio use tax” easily finds this:

                “In transactions where sales tax was due but not collected by the vendor or seller, a use tax of equal amount is due from the customer.” – https://www.tax.ohio.gov/sales_and_use.aspx

                I don’t know if/how that relates to online shopping, but you might want to look into this issue a bit further.

                (Ugh, I’m starting to sound like a Use Tax advocate or something. Really it’s just that I pay it myself, so it bugs me when people claim it doesn’t exist, or isn’t “real” or important.)

                • Abnaxis says:

                  Huh. they call it a “Use Tax.” OK then.

                  I was paying attention when they added the Use Tax. From it’s inception, it is, and always has been, intended as a sales tax that applies to online purchases for the purpose of “[protecting] Ohio vendors from unfair competition from out-of-state sellers.” I’m guessing they added it as a “Use Tax” because…that made more sense, somehow? Easier to add a new tax than modify an old one?

                  Still, according to my tax guy the item in question has to be bought and shipped from my residence or I can get away with not paying Use Tax. Either because it’s legal, or it’s unenforceable otherwise. Hell, half the people I know don’t even list the things they SHOULD be paying tax on, because it’s up to the honor system if you aren’t auditted (though most big online vendors including Steam and Amazon charge tax automatically now)

      • Syal says:

        Cities and counties can also charge their own taxes. My state has no sales tax, but my county has 2.5% and the city has another 4% on top of it.

  6. Asdasd says:

    Is that the dude’s natural voice or does he apply some kind of post-processing helium-addict effect? I don’t want to be insensitive, but I’ve never been able to get through a whole EC video because I find it so distracting.

    • Droid says:

      Dan’s voice is pitch-shifted, yes. You can hear his natural voice in Extra Credits’ “Extra Frames” episodes.

    • Shamus says:

      Like Droid said, he’s pitch-shifted.

      This stylistic choice came about by accident. Their first video was actually part of a class project of some sort in college. You needed to make some sort of presentation of 5 minutes or less. (IIRC.) He was just slightly over the limit, so he sped up the narration to get under the limit. Most audio tools these days allow you to speed up the tempo without changing the pitch, but either that option wasn’t available or he didn’t know about it. (I’ve done this in the past. I enjoy fast-talking presentations because of the increased information density, so sometimes I increase the tempo by 5% or 10% in my videos.)

      In any case, it became part of the style of the show, even though they no longer need to do it for practical reasons.

      • Droid says:

        It’s one of those “cheap, but close enough” options that should have been superseded by the real thing a long time ago. Like mixing digital colours.

        Sure, it’s really easy to make a colour gradient (a line of pixels that starts at colour A and slowly turns into colour B the more you move along the line) by linear transformation, but the way colour is encoded digitally (on a quadratic scale instead of a linear one) makes those colours too dark, especially those in the middle of the gradient. But it’s easy and it’s actually close to the real thing to just use the encoded colours, so the hack survived its usefulness “because it’s cheaper to calculate” (the real transformation requires as much computing power as calculating a single 2D-distance for every pixel, instead of as much as one arithmetic mean).

        Similarly, speeding up audio by just “moving it closer together” is cheaper, but doing a single Fast Fourier Transform (and one inverse transform) isn’t exactly prohibitively expensive, either.

    • MichaelGC says:

      Aye, it sets my teeth on edge, too. I find it contributes to an air of horrendous condescension that I’ve rarely been able to breathe for long.

      Just a personal annoyance, though: I can see why others like their videos, and I acknowledge that they have interesting things to say – sparking off and/or feeding into debates such as this very one.

  7. Asdasd says:

    “They haven’t experimented with making a game with current gameplay, current marketing, but last-gen visuals.”

    I sure see plenty of experiments making a game with last-gen gameplay, current marketing and current visuals, though! Waka waka waka.

  8. M says:

    Prices in US and Canada do not usually include sales tax/VAT/GST/HST/etc.

    In Canada it’s charged at both federal and provincial levels.

    In the US it is per state (last time I checked there was no American federal sales tax).

    States and provinces charge different levels; in Canada GST/HST is required to be listed separately on the receipt.

  9. MichaelGC says:

    There are other ways to pad out, inflate, augment or otherwise maximise a word count but they also tend to be awfully and certainly decidedly deeply eminently exceedingly excessively extraordinarily extremely greatly highly noticeably particularly pretty profoundly remarkably surprisingly unsurprisingly terribly truly uncommonly unusually acutely amply considerably dearly emphatically extensively largely notably positively powerfully prodigiously substantially if not surpassingly conspicuous, discernible and clear as a bell.

  10. Matt van Riel says:

    “This sped up ordering, since someone could simply order a “Number 1” without having to list all of the items individually.”

    More like number 2, amirite? ;p

    On a more serious note, this is becoming more of an issue with some dumbass publishers such as Koei-Tecmo charging a ludicrous £50 for games now. Titles with the same basic fidelity as a PS2 era game, just slightly sharper and in a (mostly) modern resolution, that still manage to run like total ass on modern hardware. Then they only sell a few thousand copies on Steam and decide no one wants games like this, when in reality the ridiculous price point is the primary thing that’s likely to put people off.

    Square have the same sort of attitude to their games, overpricing them to hell and back, like the recent remaster of FF12 that went up at close to full retail price. Only reason I bought it was because the launch discount + my Humble discount let me knock £10 off, taking it down to the price it ‘should’ have been. Notice also how when it’s not one of THEIR precious games they price them properly? Star Ocean 4 was £15, which was pretty much perfect for a re-release/remaster like that.

    • Shamus says:

      Doing a re-release at $60 is nuts. Your core fans already own the game. So doing a port / reissue is mostly there to pick up new fans, right? If someone isn’t already in love with the series, then why would they pay $60 for an old title when they can pay the same and get something new and relevant? You’ve already made the game. Put it out there for cheap. Get newcomers to impulse-buy it. Some of those folks will become fans, and then (you hope) they’ll show up at launch for the hot new entries in the series.

      Who is going to pay launch-day prices for a 12 year old title? And if you DO expect new consumers to pay full price for a title that old, then you must be assuming that consumers don’t actually care about graphics, so why are you spending so much on the graphics for new titles?!?!

      • Ander says:

        The FFXII remaster enhanced graphics and tweaked gameplay slightly. I think this rather proves the point that publishers think graphics are most important; they believe that releasing what is largely the same game with more up-to-date graphics is enough to rake in the money.

        The upcoming FFVII remake will be different in this regard since it seems that they’ve completely redone the gameplay in addition to the graphics. If they keep the story essentially the same they might be a bit disappointed; Cloud’s style of brooding will not be as subversive these days.

        • ElementalAlchemist says:

          The FFVII remake is a great example of publishers having no clue about their consumers. I’m pretty sure none of the people clamouring for a remake for the past two decades asked for what Square have announced (cue Jenson GIF). They are spending (presumably) an ungodly amount of money on what is essentially a wholly different game that no longer serves the market segment it was purportedly made for. All they needed to do was improve the graphics (2012-level would have been more than sufficient), fix the music, and make it run properly on modern systems. Instead they’ve decided on something that amounts to pretty much FFVII in name only.

          I’m expecting the inevitable “performed below expectations” media statement after the initial release, followed by an announcement that the subsequent volumes (they have split it into 3 games – so I guess this is definitely not a $60 game but rather a $180 one) have been cancelled.

          • BlueHorus says:

            It may be over two years old, but this comic still seems pretty accurate. Sadly.

          • Ander says:

            They managed to release an entire FF XIII trilogy. Don’t doubt their ability to push out all 3 games.

          • Echo Tango says:

            If they were just doing this for people who liked the original, then just making it run on modern systems would be sufficient. Would also serve to show what a game from that era was actually like, for people who didn’t experience it first-hand.

            • Dreadjaws says:

              Now see, the issue is that Squeenix is clearly trying to hit both targets and in the process it’s half-assing it for both sides. Fans of the old game just want to experience the same with updated visuals and audio while non fans want to see what the fuzz is all about but refuse to play the game on account of its dated visuals.

              So, basically, both sides want the same thing. The problem is that Squeenix is figuring that current gamers will find the old gameplay outdated which, admittedly, is probably true, so they’re changing it to more current standards, in the process getting rid of much of what made the game so popular in the first place. So, what’s left of the game? The story and characters, which old fans will appreciate but newcomers are going to find hard to swallow. As the “Seinfeld is unfunny” trope shows, people are likely to be unimpressed by something that has been aped and improved hundreds of times all over the years.

              So, the gameplay will displease old fans and the story will fail to attract newcomers. Sadly, chances are that there was no other way it would happen. Remaking the game for older fans alone might not have attracted enough sales to justify it, considering the much higher development costs (not saying the game wouldn’t turn a profit, just not as much of a profit as a new game in the series that catered to a larger audience would).

          • StuHacking says:

            All I want is a mobile remake of FFVI using the same simple 3D graphics as the FFIV remake. Is that so much to ask? :-)

      • shoeboxjeddy says:

        I feel like the price complaints for FFXII were misguided. It’s a new version with pretty massively reworked game balance and graphics, running at a higher framerate, for a new audience (PC) that never got the game the first time. It is EXTREMELY common to release the game for full price under that description… but Square-Enix did a launch week sale anyway. So the people bitching about it didn’t take the time to actually pull up the store link and see that it was more like $40 and not $60.

        • Ander says:

          The only reason I didn’t already play it on release was the platform. I’m happy it’s on PC. That said, reworked game balance/systems is not a big enough sell for me to buy the game if I did already have it. Many games get balance patches pretty much weekly. If you play MOBAs, you might have to learn entirely new game systems every year or so. It doesn’t necessarily call for the price of a new game.

          • Shoeboxjeddy says:

            MOBAs are essentially a different market. Comparing mass market 60 hour RPGs to free to play evergreen esports games will come up with nothing useful. It’s like comparing the price of hamburgers to concert tickets.

            • MelTorefas says:

              I ate my concert tickets and did not enjoy them nearly as much as my hamburger. Concert tickets are inherently inferior to hamburgers.

            • Ander says:

              I’m not talking about the overall price of a MOBA vs the price of a 60 hr. RPG. I’m talking about the price to change up game systems. I appreciate the work put into the FFXII remake, really. But reworked game systems do not indicate the same work that goes into the game from scratch.

              They are different markets, but the game is still a game. Changing gameplay systems is a smaller task than building from scratch whether its a MOBA, MMO, or single-player RPG. I’m not talking about the cost to make the change; I’m talking about the price they charge for the change. I think that can be talked about. I only brought up MOBAs because that is one market in which gameplay changes are common.

              To the point of the column, if people pay for it at the price given then, cool. They get a game, the publisher gets money.

        • Blake says:

          I somewhat agree with this, in terms of content for cash it’s still a pretty good deal for a consumer who hasn’t played it before.

          Having played FFXII back on PS2 I look forward to playing it again, but not at that price point. I’m imagining in a few months it’ll drop right down and once it’s sub $20 I’ll pick up a copy.
          From the publisher perspective I think it makes sense to rerelease at full price to pick up new customers. A bunch of people will be happy to pay, and those that aren’t are probably happy enough to wait. It’s not like a new game that needs to make all the dollars in the launch window.

      • Matt Downie says:

        Maybe it’s so they can later sell it at 66% off and have it look like a bargain while still costing a fair amount of money?

      • Daimbert says:

        It depends on the game. Re-releases of games that you can’t really get anywhere anymore that you loved might well justify that price point. For example, I’d probably pay full price for Suikoden or Suikoden II, if they were sufficiently cleaned up and could be played on modern consoles/PCs (despite owning Suikoden for the PS2, and still having PS2s that play). I’d also be tempted to buy Persona 3 and 4 if they were remade, which are more recent games. It seems like the classic Final Fantasy games are good candidates for putting a lot of effort into remaking because they in general should generate enough interest to get people paying full price for them.

  11. Pete_Volmen says:

    I would love to watch an EC video in response to this article. It could be a great start to an interesting and worthwhile conversation. The only thing missing here is a point Shamus has made many times already; more money on engines/whatever doesn’t necessarily give better graphics, art style plays a massive part. EC have made the same point in the past, iirc, so this shouldn’t be an obstacle.

    • Echo Tango says:

      Pedantic note: the commonly accepted definitions would be that “graphics” refers to visual fidelity, but that what you describe here is “artistic fidelity”, “visual style”, or similar.

      • Pete_Volmen says:

        Fair enough, but they’re often conflated. Not only can they sometimes be tricky to distinguish, but many (most?) gamers aren’t even aware of the distinction.

        The general visitor to this here blog, I expect to realize the distinction, whether they know the labels or not. The average person on Youtube? Not so much.

  12. Daemian Lucifer says:

    We don’t know the answer, and neither do the big studios.

    Except that we do know the answer,and that answer is heck no .

    They haven’t experimented with making a game with current gameplay, current marketing, but last-gen visuals.

    Nintendo did.And they are dominating right now.

    • Echo Tango says:

      ^ this. Nintendo is often behind the times in visual fidelity, but make up for it with good gameplay, characters, worlds, and stories. (I mean, some of their stuff is kind of bad, but that’s from them following other peoples’ trends, instead of experimenting on their own. :)

      • Galacticplumber says:

        Actually both of those are amazingly successful games, both critically acclaimed and loved by a hilariously wide audience. You can cite things you don’t like about either, but you don’t get to call either of some of the most wildly successful stuff they’ve done in years bad for not conforming to your tastes.

        • Echo Tango says:

          The reason I call those games bad, is that they’re completely different from the earlier games in their core series, but named and marketed as core games. As a good example, Mario Kart is not a bad Mario game; It’s a good spinoff. The new Zelda however, changed the fundamental game of Zelda, and did so by copying many ideas from other successful games. So I guess I should have called Zelda good, but unoriginal.

          • Galacticplumber says:

            Technically breath of the wild is more similar to the original legend of zelda than every other game in the series is. Also link between worlds. This is what happens when a 3D zelda plays like the original mentality for the series instead of drenching everything in cutscenes and linearity.

          • Nessus says:

            “Unoriginal” seems a bit of a wash here. I mean, if it were more similar to previous Zelda games (or perceived as such), that would just make it equally unoriginal, just with different antecedents. It seems like a Zelda game with original mechanics would risk the same criticism for not being similar enough to previous Zelda games? If originality matters, then being different from previous Zelda games is good and desirable. If originality doesn’t matter, then it doesn’t matter if changes are original or derivative, so long as they effect the tone/feel of the game in a positive way.

            I guess I don’t understand how originality factors in here as anything but a bonus.

    • Dreadjaws says:

      This is correct. They’ve pretty much done this in almost every generation. Every time they failed it had something to do with some external problem unrelated to their console’s power. The Virtual Boy was a literal headache and the Wii-U suffered from terrible marketing, lack of titles and preposterous overseas pricing (you could easily get a current-gen console and a previous-gen one for the price of a Wii U where I live).

      Meanwhile, the Wii, Switch and portable consoles have crushed all their competitors. Granted, they let the Wii wither away (which is another reason for why the Wii U faltered), but they’re back with the Switch, which is selling like hotcakes despite still having some of the same issues the Wii U did, and they have complete domination on the portable console land.

      • Blake says:

        The WiiU being underpowered (compared to its contemporaries) didn’t come with any benefits, and the number of consoles sold made porting old games to it often not worth the cost.

        The Switch being underpowered puts it in a great place from the development side in terms of not having to compete with the most AAA of titles. Last gen titles can be ported easily enough, with customers that bought them previously having a reason to buy them again (the portability thing). It also means it works even better for exclusives because the lower market share is matched by the lower development costs.

        I’ve heard some people complain about the graphics on the Switch not matching the other consoles, but those complaints are always buy people who don’t own a Switch.
        Everyone I know that has bought a Switch (myself included) hasn’t been after the worlds fanciest graphics, and have been happy to pay full price for games that cost far less to make than modern AAA titles.

  13. Daemian Lucifer says:

    Jim Sterling also made another video about this,and he said something that I thought of at least 5 years ago:Multiplayer games should be free to play.

    Yes,you would lose the 60 schmeckle you get now from sales,but I honestly doubt thats where these games get the most money from.So on that front,youd lose a big fraction of profits,but not a significant one.Maybe 25%.HOWEVER,youd gain a much bigger player base,thus avoiding one of the biggest hurdles online games face:Empty matches.Also,youd be able to squeeze money from people who arent willing to pay 60 schmeckles,but are perfectly content to pay 5 schmeckles every day for a month.Not to mention that a huge swath of negative press generated by these games these days would go away for the simple reason that free stuff is always looked at more favorably.Even at the worst place for free stuff,the mobile market,you still have people saying good stuff about the worst games,like fallout shelter,simply because they are free.

    And this isnt something new,because a few aaa games have gone free to play after their initial wave of selling the game was a bust,like swtor.And as soon as they became free,they all got that renewed interest and that uptick in players.

    • Echo Tango says:

      Agreed. Any game with server upkeep should just be billed monthly / yearly. Up-front costs should be for games which are (mostly) done once released. It would make the costs simpler for the customer, and also not feel like the customer is being double-charged.

    • Blake says:

      The first free-to-play game I ever sank time and money into was League Of Legends, got onto it during the beta, loved the idea of the payment model, played it heaps, and when it launched I happily paid a bunch of money to unlock all the initial heroes. I kept playing for a while and even spent some money on premium skins just because I liked the game and wanted to give Riot some money for all the entertainment I got.
      League of Legends has gone on to be one of the biggest esports around on this money and presumably still brings in megabux.

      If Battlefront 2 had’ve matched that model, it would have launched for free, allowed grinding to unlock classes, had microtransactions to buy specific skins/classes (with the game rotating between which classes were free each week) and probably would have made everyone pretty happy. They could even keep the loot boxes for in-game rewards as long as the people spending real dollars got to choose what they were buying.
      The design could have been basically identical, but it would have gotten a lot of love instead of all of the hate.

    • Philadelphus says:

      Look at Team Fortress 2 and how it’s continued to make money for Valve after going free-to-play in 2011. I would never have bought it when it cost money because I’d never tried an online competitive multiplayer FPS and didn’t expect to like it, but after trying it for a few hours when it went free-to-play I’ve got well over a thousand hours in it now and have almost certainly spent quite a bit more money on it than the original asking price.

      (As another example, I once met a guy while playing Mann vs. Machine who had over 500 runs in the particular tour of duty we were playing. Since each tour of duty requires playing four missions, and each of those missions cost $0.99 to play, I’ll let you do the math…)

      Of course, all this hinges on Valve continuing to support, update, and improve their game over the past decade, which seems to me to run pretty counter to the usual AAA method of making these types of games. There’s no way they’d have this many loyal fans still playing if every two years a new “Team Fortress N+1” came out.

    • Mephane says:

      Anyone else read this entire comment in their head in Jim Sterling’s voice at the mere mention of his name? :D

    • LadyTL says:

      What’s funny about this is EA actually already has a single player property that already runs like this. Simpsons Tapped out is owned by EA. The game gives you multiple ways to earn the in game currency and even flat out gives you sometimes. They also make alot of money from people buying in game currency though because it’s for a new building or a funny character or good decoration even with a slight bit of price inflation from time to time. Yet they still did things like Dungeon Keeper and the usual DLC/micro transactions BS in their latest games despite having a fairly successful example of free to play in their stable.

    • Zak McKracken says:

      Not sure of that strategy. For my part, I got Guildwars 2 specifically because I knew it wouldn’t require me to keep paying to keep playing, as WoW did. You buy it, you have it.

      This goes doubly for regular (non-massive-online) games. Back in the day, everyone who had the game could just run the server on their own machine, even in a LAN. I’ll charitably assume that that’s not the game Jim means, but even the ones where the multiplayer servers are operated exclusively by the publisher (which I still only gurdgingly accept — why can’t I run my own?!), the costs of doing so are pretty small, so whether a player would prefer to pay for the game or for playing (per Minute? Per Month?) is probably down to player preference, and depends on how much someone plays. People with lots of time in the game will be okay to pay per month, but I, who maybe gets in an hour or two per week, would definitely not want to pay per month. That would be incredibly expensive per hour.

      Make it an option? Sounds good for a moment until you realize that will just confuse customers even more, so no company will be willing to do that. Anyway, WoW got away with making people pay per game _and_ per month, so naturally that’s what everyone is still trying to do.

      • Daemian Lucifer says:

        There are always exceptions to such rules,of course.Even now,there are completely free single player games,and even freemium single player games,as well as multiplayer games that have zero stuff being sold in them.

  14. Matt Downie says:

    “What if they can’t make their money back at $60? Then that game loses money and people stop making those sorts of games.”

    Or, more optimistically, enough people stop making those sorts of games that the market is no longer oversaturated. Then the people who do still make that sort of game are able to make a profit again.

    • Echo Tango says:

      Come ooooon, AAA games industry crash! Let’s burn it down! :D

    • Blake says:

      I pretty much expect this to be the way it goes.
      A few big mega blockbusters per year which have all the money spent on them and everyone is happy to pay for something that is so gosh darn pretty.
      With most games costing less, not needing every conceivable feature, therefore being able to focus on what they do well better, being able to experiment more as they’re lower risk financially, with the things most loved maybe going up to mega status for their next sequel.

      At least I hope that’s how it ends up, but currently all the big publishers still just see the years biggest sellers and assume if they could make 1000 of those in a year they’d make 1000X the profits.

  15. Alrenous says:

    $80,000 worth of gold gives you 6100 square feet of gold leaf. So, uh, how big is your house? Multiply the standard measurement by six so you have enough for walls and ceiling too…

    In theory DLC is a wonderful idea. It’s hard for games to be directly fungible the way a commodity is, which means it’s a guessing game to figure out what’s worth spending development time on. How much is a new dungeon worth to the consumer? A new enemy? A new playable character? Without at least ballpark numbers, studios are almost guaranteed to spend all their time developing things gamers don’t much care about. For example, spending twice as long to develop a game with 1% better graphics.

    DLC gives the studio a way to make it completely fungible. Offer Shoot Guy 12, and Shoot Guy 12 + new weapon, and see how big the market is for that weapon. Now we can divide through and work out if the development costs were worth it. Maybe Shoot guy 13 will have only three weapons but four whole new areas because the weapon demand just isn’t that high.

    Even splitting off core parts of the game could be beneficial, if they lowered the core price. If they split off the last third of the game into $20 DLC, and you get bored halfway through, that means you just saved $20. It would give the publisher direct feedback about how good their game is at holding interest. Not only that, demand curves are sloped such that the market for a $40 game is more than 50% larger than the market for a $60 game. Not only that but if the game is actually good a bunch of the gamers who thought they didn’t have $60 would find out that, in fact, they do. ProTip: I should not be better at business than MBAs, but here we are.

    The problem appears to be in consumer psychology. Even though, give or take some mental transaction costs, the gamer is better off in this situation, there would probably be a huge ‘controversy.’ Talking points like “$40 demo” and stuff like that. Digging a level deeper suggests companies initially bungled DLC so badly they deeply stigmatized it.

    Have to cast it as ‘episodes’ or something, then it seems to be fine. There doesn’t appear to be any reason a single-player AAA title couldn’t be broken up into episodes and released like a Netflix TV season. I wonder what the latest multiplayer CoD would look like if they split the single-player campaign off into DLC using honest dev-time proportional pricing.

    The studios of course want the highest price. But they’re going about it sans integrity. I bet you anything they haven’t split it into episodes because they see all the folk who don’t play all the way through and rub their hands about how great it was to scam them into buying a full-price game. This blinds them. Broken window fallacy. They don’t see all the gamers who would have bought half the game and played only that half, but passed.

    • Echo Tango says:

      Noteworthy that indies and medium sized studios are experimenting with exactly this type of game- and cost-split. Walking Dead episodes, for example.

    • shoeboxjeddy says:

      Episodes are fine but they actually have to be framed and developed as such. The segment where the episode ends should actually have a climax for that particular episode. Taking individual levels and CALLING them episodes is kind of shit though, see Resident Evil Revelations 2, which was wildly more popular as just like… a full game experience. Something like Life is Strange, if I hate episode 3 and aren’t interested on seeing how episodes 4 and 5 play out, that’s a good value for the consumer. At least the experience of the third episode was complete and it’s only the overall story you leave incomplete.

    • Blake says:

      “There doesn’t appear to be any reason a single-player AAA title couldn’t be broken up into episodes and released like a Netflix TV season.”

      If it was done this way (I’m assuming you mean with all episodes released at once), then as a consumer I’d just want to know that the last episode is the last episode, and it won’t just be an ongoing thing with no satisfactory payoff. Either that or each episode would have to be really compelling and not just a segment of a larger game.

      Actually Hitman (2016) did a really good job of being episodic, I think it’s format lends itself really well to it. I haven’t played through the whole thing, but every once in a while I’ll jump in and play another episode because each episode/level is very much it’s own thing and the story really isn’t a big deal.

      So perhaps level-focused games can work as episodes, but I wouldn’t want more continuous story-based games broken up as I’d play through one part and want to play more, but by the time the next episode was out I’d have moved onto something else.

    • Syal says:

      It would give the publisher direct feedback about how good their game is at holding interest.

      They already do that with achievements. Sidequest achievements show which sidequests are popular, main story achievements show how far people get in the game before losing interest.

    • Olivier FAURE says:

      I’m told Ubisoft had some success at that strategy with Rainbow Six Siege; I think a key part is that the presentation of the different price tiers makes a good job of appearing “honest” and consumer-friendly, if only by giving relatively clear information up front about what is and isn’t included.

  16. John says:

    And now I’m wondering what a video game publisher’s cost curves look like. Development costs are fixed. Selling an additional copy of the game does not require the publisher to pay for more programming or more art. So what are the variable costs? In the old days, they would have been the costs of producing discs and packaging. Each additional sale requires a new disc and a new box, but there is little reason to believe that the next disc or the next box would be any more or less expensive to produce than the previous one. So it seems reasonable to me that the variable cost curve would have been something fairly close to an upward-sloping straight line and the marginal cost curve something fairly close to a flat straight line. I’m not sure what the variable costs of video game production are now. I presume that the game files reside on a server somewhere and that every sale requires an action on the server’s part but I don’t know enough about servers to say that a busy server is more expensive (perhaps because it uses more power) than an idle one. That said, it seems reasonable to believe that it costs less to serve some files than to make a boxed copy of a game. For the sake of argument, let’s assume that the modern marginal cost curve is a flat line somewhere below the the old marginal cost curve.

    Given these assumptions, what price should video game producers be charging? Assuming that demand has not changed, a reduction in marginal costs implies that a profit-maximizing publisher will now charge less (and consequently sell more copies) than before. (And if nominal prices have held constant at $60 over the years then the existence of inflation implies that this is arguably what is actually happening.) This statement is true whether a publisher’s fixed costs have increased, decreased, or remained constant. Fixed costs do not affect the optimal pricing strategy. The one complicating factor that this analysis ignores is the Steam cut. I think I’m going to have to draw some graphs to figure out how that comes into it. But this analysis is perfectly valid for games sold directly by the publisher or developer. So we can say that, all else being equal, EA games for example should cost less than they used to now that EA has moved from selling boxed copies to Origin.

  17. BlueBlazeSpear says:

    The other day, I saw a good friend of mine wearing a novelty T-shirt and while I don’t remember the exact wording, the premise was “I cost a lot of money, but I’m worth it.” And because I’m a nerd with the social acumen of an Idaho potato, I said to her “Uh – you don’t get to decide your value: That gets decided by the market.” She took it well, all things considered. Obviously, a well-adjusted person has a certain amount of self-worth, but the things we tell ourselves have to bear out in reality to some degree.

    I’m generally pretty ignorant about the ebbs and flows of the market, or about any general economic principle, so my assumptions are pretty basic. But in my preschool version of how this should work, any company that wants to be successful should have two goals: To make their products as cheaply as the market will allow, and charge the maximum amount for those products that the market will tolerate. From where I sit, many big game publishers understand the latter, but are baffled by the former.

    Video game publishing is a pretty unique monster in what it’s constantly trying to do with the next big, awesome thing. In most business models, you start out creating a widget that costs $5 to make and as time goes, technologies get better and methods get more streamlined and/or automated and before you know it, it’s only costing $1 to make the same widget, or in a lot of cases, a widget that’s better than the first version being made at $5. Video game makers seem to want to re-invent the widget every time out of the gate without regard to what people will pay. They seem to think “If people like our $5 widget, they’ll love our $20 widget,” despite the market not indicating that at all. I get that there’s a measure of innovation and artistry that goes into game making, but shouldn’t the input be just as dictated by the market as the output?

    By most standards, the costs of making games should be going down – not up. More games should be sharing pooled technological/artistic assets, the hardware end should be getting cheaper to produce, particularly with an increasing number of sales involved being completely digital. More and more of the process should be becoming streamlined and/or automated. Yet the costs are going up? If any considerable amount of these costs are graphical assets, do we even have to think in terms of “What if this just looked like a really good 2012 game?” Why not say, “Let’s do the best with what we’ve got and let the level of technology move at its natural pace”? If they’re the ones driving the innovation, aren’t they also the ones dictating how fast and costly it is? Again, I’m showing how clueless I am because I can only look to myself as an example. To me, as long as a game looks as good as its contemporaries and is an enjoyable experience, I won’t be hung up on whether or not it’s maximizing the horsepower of my newest graphics card. But then I probably live in the economics version of Candy Land.

    Now here’s where all of my naiveté comes to a head. It’s my suspicion that video game publishers tend to overkill with their costs of advertising. In my fairy tale, all you need to do is make a good game, put it in the hands of the big reviewers, then let the game sell itself. I’m currently enjoying the game Monster Hunter: World, a game that I didn’t know existed until I saw people reviewing betas of it. Did Capcom break the bank advertising it? If they did, I never saw it. I probably qualify as a casual gamer and I don’t see the vast majority of any advertising campaign. And I’m probably from the biggest chunk of video game purchasers. I can accept the premise that I’m the anomaly here, but who’s to know? Nobody’s testing the market to find out.

    • BlueHorus says:

      …I saw a good friend of mine wearing a novelty T-shirt and while I don’t remember the exact wording, the premise was “I cost a lot of money, but I’m worth it.” And because I’m a nerd with the social acumen of an Idaho potato, I said to her “Uh – you don’t get to decide your value: That gets decided by the market.”

      Did you ask her how much she paid for the shirt? Because she almost certainly paid too much for a sentiment that vapid.

    • Matt Downie says:

      Wait, is the t-shirt saying it costs a lot of money, or its wearer costs a lot of money?

    • Shoeboxjeddy says:

      Regarding your story, not only were you kind of being rude to your friend, you were also being incorrect. Of course a producer of a good gets to decide their value, that’s called setting the price. By buying expensive clothes and making a show of her high self esteem, your friend is actually increasing her perceived value on the market (in a really crude sense). She doesn’t have complete control over how other people view her in a social setting, but she has a good sense of what kinds of actions she can take to improve that view. Meanwhile, by being rude to your friend in a foolish way, you’re decreasing your value. You took a subject you only kind of understand and used it as a cudgel against your friend, who you already understood was kind of joking. You even have the self awareness to know this wasn’t exactly a genius move and did it anyway, despite the risk of hurting her feelings or lowering your standing with her.

      Going back to the topic, this is like when the social media for Mighty No. 9 said that the game was “better than nothing” during a poor demo showing of the game. Making a statement that foolish was WORSE than doing nothing and had a measurable negative effect on the game’s perceived quality on the market. The actual value of the product had changed, but the foolish messaging made it SEEM worse.

      • BlueHorus says:

        That’s a harsh view of BlueBlaze’s actions. It’s more like he and his friend inhabit different markets that value different things.

        But clothes are really interesting. Sometimes they’re cheap, because they were made in a sweatshop by cheap labour. Which is kinda like saying those chinese people who slaved over your shirt are worth less than a tailor in a developed country.

        And, some clothes are crazy expensive, because they have a brand name on them (or not!). Armarni. Nike. Abercrombie & Fitch. It’s still a shirt (same number of sleeves etc) but because of the name, people will go out of their way to pay enormous sums of money for it.

        If I saw someone wearing a shirt like BlueBlaze’s friend, it would put their value down – to me. (Not much; there’s a lot more to a person than a shirt). And it might put someone else’s estimation of her up – they might find it funny.
        The value of an item is whatever people think it is.

        So, what’s my point?
        I guess it’s that if your friend REALLY wants to appear worth a lot, she should wear Armarni.

      • BlueBlazeSpear says:

        To be fair to my friend, I’m sure there was some degree of tongue-in-cheek on her part as with Mighty No. 9’s “better than nothing.” And to be fair to me, my half-baked response was absolutely tongue-placed-firmly-in-cheek. My dry re-telling stripped a lot of the silliness out of the exchange, because what we were really talking about was the ridiculous idea of putting a monetary value on a human being. Of course she has a high intrinsic value as far as I’m concerned. I merely wished to use the exchange as an anecdote to illustrate “I have opinions about this particular subject” and “My opinions of it are probably the functional equivalent of nonsense.”

        I’m more than happy to examine any wrong-headedness on my part in regards to the economics of the video game industry, but I’m not so worried about a valuation of the friendship. I’m sure there’s plenty of other stuff I said up there that’s worthy of being dismantled and I’ll happily dissect that and, presumably, get a more informed, more nuanced opinion of the pricing infrastructure of the gaming industry based on better, more complete information. That sounds like good times.

        I do appreciate the idea of adding prestige to an evaluation for marketing purposes but that doesn’t always translate cleanly. I can build a widget and say it’s worth a million dollars, but people still have to be willing to pay that. Otherwise, it’s the monetary equivalent of being confined to a nutshell and proclaiming myself a king of an infinite space. I wonder, is there some prestige-marketing to be had in the video game realm? And would a reasonable number of people be willing to pay that price? In this case, I’d say that EA is technically correct in how it handles its FIFA games, but boy does that not translate well to other games.

        • Shoeboxjeddy says:

          The prestige argument is very important to marketing. Microsoft was afraid of pricing Halo 3: ODST at $40 (a value suggested earlier on in its development) because didn’t that just say that ODST was therefore a lower quality Halo game than normal? And if that’s so, why would MS release a lower quality Halo game as the newest one, isn’t it a prestige series? To avoid this, they added a second disc full of multiplayer DLC for a separate game (Halo 3) and priced it at $60. Would they have achieved more sales at $40? Or were they correct that devaluing the Halo “brand” was a risk? Hard to say. Later in the franchise, two phone Halo games were released which I would argue DID actually damage the brand to some degree, so they weren’t worried about nothing.

          Similarly, while Steve Jobs was alive, he REFUSED the idea of a cheaper model of iPhone because overpricing the things was part and parcel of their strategy to make unremarkable product seem like chic fashion statements for the cool consumer. The prestige of iPhone has CERTAINLY dropped since the company broke the illusion by offering iPhone c’s, where the “c” is known to mean “cheap.”

      • Philadelphus says:

        Of course a producer of a good gets to decide their value, that’s called setting the price.

        I don’t think it’s incorrect. The seller gets to decide their value, but I’d argue that that’s not actually the important value in such a scenario. The really important value is the value placed on said good by a prospective buyer because that decides whether or not a transaction will actually take place.

        I can set the price of the crummy ashtray I made in pottery class at $100 all I like, and it matters not one whit if $1 is all a sympathetic passerby is actually willing to give me for it.

        • Shoeboxjeddy says:

          But if you set the price at $100, you might cause someone to become curious and ask why the heck the thing is $100. Maybe it’s a… famous heirloom? Elvis’ ash tray? Not saying you’ll make the sale, but even a silly price can have a reason behind it.

          • Philadelphus says:

            Eh, my point was just about setting absurdly high prices on something that’s exactly what it seems at face value, namely an item of inherently low value to just about everyone. In that case it doesn’t matter what the seller values something it, if it’s too high no sale’s going to happen. But I suppose there’s a counter argument to be made that, while a transaction will not take place without at least one buyer considering the sale price low enough to be worth it to them (thus my view that the value to buyers is what really matters), the very possibility of a transaction will only happen if the seller rates something of low enough value to sell in the first place, making the seller’s valuation of an object ultimately the most important.

  18. Dreadjaws says:

    That EC video is very selective with the industry trends it picks for its argument. Leaving aside all that you mention about what people are willing to pay, they’re also ignoring:

    The rise of the digital market: I don’t think you need to be an industry expert to know digital games are cheaper to make; it’s pretty obvious. Yes, digital games need servers to be maintained, but physical games need manufacturing costs, distribution, transport, store cuts, etc. Then there are problems that digital games don’t have to deal with, such as used sales and shoplifting. On top of that, due to DRM or online capabilities many physical game STILL need servers to be maintained.

    The increased popularity of gaming: When the PS3 and X360 came out gaming was popular, but certainly not as it is today. When more people are using your product, your profits rise. And what helped make gaming so popular? The Wii, which was a cheap console with previous gen graphics, and casual gaming, which also relies on cheap and affordable products. Funny how that works out. That aside, localization is becoming more popular and games are reaching many new markets. Touching on the previous point, a decade ago, buying legal, original PC games in my country was something only reserved for the wealthy, due to import prices. Nowadays it’s a booming industry that’s affordable to everyone thanks to the rise of digital gaming.

    The fact that rising costs of making games is suspect: Sure, it’s true that more photorealistic graphics are more expensive, but it’s also true that developing tools become cheaper and easier to use with time. I’d argue that the more time passes on a console’s life cycle the cheaper to develop games become. Talking, of course, about games of the same scale. My point is that, say, Arkham Knight, being the exact same game, would have cost less to develop had it been made later in the consoles’ life and if the team had more experience with developing on those consoles with that engine. It’d have also led to less issues, which in turn would have led to more sales.

    So yeah, no wonder that video is getting so many negative responses. People are not just feeling entitled about these issues, they have a point.

  19. shoeboxjeddy says:

    Before I dive into commenting on anything else anyone has said, I want to say: you nailed it Shamus. Extra Credits forgot who their audience was and released a pure shill video with some slanted numbers and they fully deserve an audience backlash for doing so. Paid contractors for the video game industry should not be telling the consumers how LUCKY we are to be paying $60 for broken games with transparent money grubbing scams baked in. They shouldn’t ask us to feel sorry for the plight of an industry that is collectively abused by management but refuses to even CONSIDER unionizing because… they’re skilled labor and skilled labor can’t be abused (despite how obviously abused they OBVIOUSLY are?) An industry that says stuff like “we couldn’t come up with any cosmetic ideas because it would break canon” and then the fanbase breaks that argument over their knee like a toothpick within 5 minutes of it being uttered. An industry that releases a shitty game and then blames its next two games for not selling enough to make up the shortfall on the first one.

    What they SHOULD be doing is getting the community’s ideas across to the developers and helping them to develop games in a more directed, clever way. Not trying to convince us that multi-national corporations are actually running at a loss for our benefit… despite posting profits year after year.

    • Daimbert says:

      I’ve started using Extra Credits as a common source for posts on my blog because I disagree with them a lot more than I do other sources (like Shamus) and even going back through past videos it strikes me that they are far more developer oriented than gamer oriented, probably because James is focused on development. So a video focusing on the price challenges from the development side that misses the perspective of the customers is, sadly, entirely in keeping with what I know of them [grin].

      • Pete_Volmen says:

        That’s what confuses me about EC. It does seem to be pointed in the direction of devs over gamers, but on the other hand many of the things they mention are obvious as could be to anyone that’s thought how a game might be constructed. It’s well presented, and from time to time there’s some stuff that sparks a thought or two, so I still enjoy watching it, but most videos seem to function as the START of something rather than the complete package.

        • Nessus says:

          I feel like they have a lot of interesting insights when it comes to mechanics and other things internal to game design.

          When ever they venture out of that bubble though, they risk getting squiffy. I actually stopped watching them years ago because even though their actual game mechanics stuff was good, they’d tanked their credibility with me a few too many times. I think the last straw was the video they did on the used games market, where they basically started out the vid by saying something to the effect of “…But I think we can all agree that the developers deserve a cut of used game sales”. I peaced out of the vid right there, because with that statement up front, they’d basically demonstrated that everything they said afterword was going to be built on inherently cracked thinking, sort of like if a video about astronomy started with “I think we can all agree that the Sun orbits around the Earth”.

          This was already too close on the heels of an indecent where they said something kinda shockingly ignorant and then did a whole video doubling-down on it when it caused a kerfuffle (sorry if that seems coy: the subject crosses the religion/politics line), and it together it kinda ruined my ability to take them seriously.

          • Olivier FAURE says:

            Yeah. I had the same sentiment when they released a video on virtual card games which boiled down to “Collectible card games are cool because we can sell customer things they already have and they don’t mind as long as we’re not *too* predatory about it”.

            Yeah, sorry guys, but for me commercial ethics don’t include “trick the consumer into seeing more value in the same product”.

            I mean, I’m all for selling overpriced stuff to people who make bad consuming choices; if the consumer doesn’t learn to not buy overpriced garbage, it’s mostly their problem. But Extra Credits has this tendency to draw really arbitrary lines between “evil” and “good” mercantilism, mostly based on how blatant it is.

  20. Kylroy says:

    I think there’s a very simple reason that AAA games continue to chase top-level graphics: it’s what they’ve always done. And it’s the only thing that AAA games can do that indies/mobile/other will never be able to match. Businesses will try to make money the way they’ve always made money until they have been irrefutably, repeatedly shown that it no longer works.

    • Daemian Lucifer says:

      Indeed.Inertia is a pretty huge factor whenever we talk about a massive industry.

    • Paul Spooner says:

      I don’t think it’s so much a matter of tradition as of definition. If it didn’t have cutting edge presentation, it wouldn’t be a AAA game.
      Now, I agree there is a case to be made that big publishers should stop chasing graphical fidelity, and that the failure of many large game developers in other areas of game-making is problematic. But to say that AAA games should stop having cutting-edge graphics seems false simply by definition. It is false in the same way as saying sky-scrapers should stop trying to be so tall. Certainly we may not need so many tall buildings. But the ones we build to be sky-scrapers really must be tall. The towering edifice is rather the point!

      • Kylroy says:

        Right. As much as SW Battlefront II has been (rightly) pilloried for it’s P2W mechanics, it’s also a stellar example of something you can only get from a AAA company: big, expensive IP license with amazing, expensive graphics. If there’s any type of game that justifies the existence of AAA studios, this is it; I don’t think people would react positively if it looked the same as the original SW Battlefront.

        • Blake says:

          I’d say the problem then isn’t in the existence of AAA games, it’s in the quantity of them.
          Doubling the development cost of all the games out there isn’t going to cause double the spending of consumers, so if the average cost is rising too much it might be because there are too many games spending too much money.

          AAA blockbusters are fine, but if the market is oversaturated with them then they become a bad investment.

          • Paul Spooner says:

            Well said.
            Still though, a lot of AAA games still turn a profit. If we’ve crossed the point of diminishing returns, it’s probably only happened in the last few years.

            • Kylroy says:

              Folks don’t realize how *insanely* profitable videogames were in the 00s. At the height of the PS2’s dominance, it occupied a nontrivial but small amount of Sony’s overall cost…and over *half* of their overall profits. AAA games are probably pulling in a fraction of the profits they did a decade ago, but that’s still a good investment.

      • Boobah says:

        The towering edifice is rather the point!

        Err… no. The skyscraper is a solution to the problem “How do I put more office space in the same lot?” Turns out that each floor costs more money than the one previous, takes longer before the building is usable, and reduces the usable space of the floors below to support the upper floors (air pressure and other utilities, elevators/stairs, and of course, sheer mass.)

        So, there’s a ‘correct’ height to maximize the return on your skyscraper construction, and it usually isn’t ‘as high as I can build.’

        The analogy to AAA games seems pretty self-explanatory at this point even if it doesn’t support any kind of 1:1 mapping.

  21. carrandas says:

    Pricing always reminds me of this article: https://www.joelonsoftware.com/2004/12/15/camels-and-rubber-duckies/

    Some people can spend $100 on a game. Most $60 and. Some $30 and others $10. How do you get all of them to pay?

    Publishers figured it out. For those with $100, you create a CoD DELUXE box for $100 which is the regular game with a $5 plastic toy in it. For those with $30, you create a -50% sale half a year after the game comes out. Or they can get it through the grey, cd key market. For those with $10, you put it in a humble bundle after a year.

    • Asdasd says:

      That’s a fantastic article! I read it years ago but lost the link to it. Now it’s safely ensconced in the bottomless pit of my bookmarks. Thanks!

      I also take your point that it’s strange to see the argument that games need to be more expensive to keep publishers solvent, when they’re routinely making huge profits from a strategy that includes heavily discounting them several times a year.

    • baud says:

      I too though about this article. His writing on business is very good (chicken-egg problem, Ben&Gerry vs Amazon).

    • Echo Tango says:

      Alternately, do the Itch.io / Wikipedia model, and let people pay what they choose. It won’t maximize profits, and possibly won’t maximize customer satisfaction, but it will probably maximize satisfaction per dollar. :)

  22. Abnaxis says:

    This (Shamus) article gets SO MANY THINGS right.

    I’m coming from working at a company where I designed physical goods, and it is absolutely, positively true that price comes from MARKET RESEARCH, not from manufacturing and engineering. How it SHOULD work: sales etimate how much a product should make, pass that down to the development and manufacturing teams as a “goal” to shoot for cost-wise. If you hit that goal, that’s money in the bank. If you beat that goal, that’s EVEN MORE money in the bank.

    Let me give and example–my company sold widgets for construction. On of those widgets had an accessory you could attach to it in five minutes with a couple screws. Individually the widget was $200, and the accessory was $50. I did the work to set up manufacturing to sell widget and accessory pre-assembled, which costs something like $2 extra. The packaged product sold (more than the original two separately!) for $400. I beat the goal of added cost ($50) handed down by sales easily, so we made lots and lots of profit off it.

    Why? Because the sales guy was a genius and figured out how to make $150 more on our widget. That’s how sales works–you take what you’ve got and you try to make money with it. If people don’t want to pay that much for what you’re trying to sell, TO GODDAMN BAD.

    Except in AAA land, they have this absurd idea that they can just force people to pay more by any means necessary and ignore cost reduction. That’s not how consumers work.

    • Groboclown says:

      I’m glad you brought this up. There’s a really big difference between creating a tangible widget versus building intangible ones and zeros. The Extra Credits video was mainly discussing a “cost-based pricing” model, which is naive and never used by any sizable company.

      If you sell something that’s a commodity that has real stuff needed to make it (say, gasoline) with stiff competition, you’re going to generally charge based on what it costs to replace the stuff you’re selling. This is why gas stations charge based on the current price of oil, not based on how much it cost to bring in that initial tanker to fill up their station (there’s a lot of other factors there, but that’s a simple way to look at their base rate).

      For something like software, once you release it, there’s very little ongoing costs for the company – releasing bug fixes, support personnel, an e-store, and a few other incidentals. You’ve already sunk your money into making it. If you didn’t care about post-release support, you could sell your game for $1. The only way a cost-based approach works here is if you view it as charging people to make the next game.

      That’s why game publishers can get away with those 60% discount sales (even ignoring the DLC / loot box / post-purchase sales). According to the Extra Credits video, this model would mean that the full price people are paying for the discount people to buy the game.

      Instead, companies change based on what the market will bear. They segment the market with coupons, discount codes, holiday sales, late-release discounts, regional rates, and so on.

      • Bloodsquirrel says:

        If you sell something that’s a commodity that has real stuff needed to make it (say, gasoline) with stiff competition, you’re going to generally charge based on what it costs to replace the stuff you’re selling. This is why gas stations charge based on the current price of oil, not based on how much it cost to bring in that initial tanker to fill up their station (there’s a lot of other factors there, but that’s a simple way to look at their base rate).

        To expand on this: A commodity is a product which can be produced by many different parties where each unit produced is essentially interchangeable. One gallon of gasoline is basically the same as any other, so competitors can only really compete on price. Sure, Shell will try to convince you that their gas is better gas, but most people don’t pay much attention to that, and have long since figured out that it doesn’t matter. This means that competition will always force you toward production costs, because if you get to high above them a competitor will be able to come in and undercut you on price.

        Prices are still beholden to what people will pay; if gasoline cost $20 per gallon to produce, you’d sell a hell of a lot less gasoline as people rapidly found ways to do without. You still can’t sell gas at a price so high that it costs more than it’s worth to the consumer.

        For a product like a video game, however, the publisher has something of a monopoly. Only they can publish Shoot Guy 5, which is not interchangeable with Sports Guy 2018, allowing them to compete on qualities other than price. Production cost matters much less, because no matter how cheaply Shoot Guy 5 can be made, no competitor will be able to undercut them with that exact same product.

  23. BenD says:

    So hang on, let me loop back to the beginning.

    Does that mean you’re saying Starbucks is charging more because they can, but that higher price point means they can afford niceties like employee benefits, restaurant decor, and syrups that don’t taste like gasoline? (Okay, some of that is subjective, bear with me.)

    And McDonald’s is presenting the minimum viable market product, or something near it? (Side note: McDonald’s invested in espresso machines for some locations in September; the drinks cost $2 for a limited time.)

    These products are no more equivalent than AAA games and…uh, A games? (Not meaning to cast aspersions on how lower level publishers treat employees, or condone how the AAA ones do.) Whether either price is ‘correct’ is up for debate (that’s what EC is debating, I think?) but the fact that they aren’t equal is entirely justified. And I think you know that, because product disparity is at the core of the argument that games don’t need top-end graphics to be successful, and therefore the market should explore some variety in that area in search of a sustainable product somewhere — anywhere — within the acceptable market rates.

    I gotta go get some coffee.

    • Blake says:

      “Side note: McDonald’s invested in espresso machines for some locations in September; the drinks cost $2 for a limited time.”

      Wait, your McDonald’s don’t all have good coffee machines?
      *googles McCafe*

      Ah, McCafe started in Melbourne and by 2003 was the largest coffee chain in Australia. No wonder every McDonald’s I’ve seen in a long time has reasonable coffee.
      Also: for a fun time, I recommend reading up on Starbucks’s utter failure to crack into the Australian market. They came out in force, buying up 100 stores across the nation, made massive losses, and closed almost all of them. Fun times.

  24. lurkey says:

    I always thought those ridiculous 60$ prices only exist to scam the most impatient chumps. I mean, everyone without the addiction buy their games on those massive and frequent Steam/GOG sales, don’t we?

    • Droid says:

      I think it’s partly marketing (“this sure looks like a good game. WANT! NOW!”), partly everyone talking about the game right now, partly convenience (“I might forget about it later”) and the good old “because I can”. If you have 60$ lying around, you can’t think of anything better to spend it on, and don’t have any financial goals to meet other than “don’t throw away too much money too quickly”, it sure manages to leave your pockets more easily than if you had to eat bananas, milk and eggs for the last 10 days straight because that were the only things cheap enough to buy with the remainder of your monthly income.

      • Groboclown says:

        Part of it is also getting in on the ground floor for the multiplayer games. If you’ve been around for a long time, you will have a natural advantage over newer players (more loot boxes already unlocked, more experience, and so on), as well as being in the game while the servers are full. There’s no point waiting for a multiplayer game to be reduced down to the $5 bin when the servers are empty.

    • Mephane says:

      A significant portion of that price is effectively the price for being able to play now versus playing it in 1-2 years.

    • Redrock says:

      You know there are other platforms than PC, right? And console sales aren’t nearly as frequent or deep. Heck, Nintendo never discounts first-party games, as far as I know.

    • Bloodsquirrel says:

      There’s an official term for it. It’s called price discrimination.

      To some people, Shoot Guy 5 is easily worth $60, so marginal benefits (like getting it sooner so that you can talk to your friends about it) are enough to make it worth buying at $60 now instead of $30 later. To some people, Shoot Guy 5 is only worth $30, so those marginal benefits don’t matter much. This is the same reason why collector’s editions and some forms of DLC exist.

  25. Cybron says:

    I’ve never been able to understand why people think the major publishers would be willing to knowingly do anything that results in a decrease in income. A ten dollar, even a twenty dollar increase in initial price would not result in an end to the more obnoxious practices we all wish would go away, because it’s just leaving money on the table.

    It’s also curious to see the parts of the media which are usually most concerned about accessibility pushing for games to be made less accessible, financially speaking). It seems like a pretty privileged position to insist that a game which is carved up into DLC is worse than a complete game which is maybe outside of someone’s budget.

    • BlueBlazeSpear says:

      This is something worth repeating. What that EC video seems to be saying is that if we, as consumers, were to willingly take a $10 hit on our end, then video game publishers wouldn’t feel a need to try to squeeze us on the back end with dodgy nickel-and-dime monetary strategies.

      But that’s not what would happen at all. Instead, we’d be paying $70 up front and still be subject to things like EA’s “revenue tail.” We’ve officially reached a point where the revenue tail is wagging the dog.

      • Redrock says:

        I think the video was actually implying that the second-stage monetization came as a reaction to the inablility to raise the price above 60 dollars. But EC does muddle this point, so it’s not really clear.

        • Nessus says:

          I’d say these are functionally the same argument, though. The intent in bringing it up may be slightly different, but the info fits into the overall conversation/debate the same either way.

          I mean, if it’s just historical trivia about “how we got here”, then what’s it’s value? What are viewers supposed to do with this information, if not use it to help solve the problem it’s meant to explain? Either way, they’re tacitly saying the same thing: that people should simply be willing/happy to pay moar instead of seeing higher prices or extra monatization as a problem.

          Plus it’s subject to all the same criticisms/rebuttals, so it’s value is identically suspect either way.

          • BlueBlazeSpear says:

            This is the problem I was having here. They put all this time and effort and production into this video, but to what end? They throw all of these claims out there and I’m like “Okay, now what?” Because I can only draw two conclusions here: They’re either trying to propose a way forward (as flawed as I may think it is), or the whole thing was just an exercise in doomsaying – with them levelling a finger at all of us and proclaiming “This is all your fault!” Okay… thanks for the video?

        • Olivier FAURE says:

          I think an argument can be made that, if prices were higher and sales didn’t exist, the incentives would be somewhat different.

          EA would have less incentives to cut their content into DLCs, because they’d have to think “Wait, this might alienate X consumers, which would cost us X * 90$ of money.” The more editors expect people to spend on games, the less incentive they’d have to drive them away.

          But yeah, if you crunch the numbers, they’d probably put out only very slightly fewer DLCs in that scenario.

  26. Steve C says:

    I like Extra Credits and watch all their videos. Typically they are good videos. I also have a degree in business and economics. Those two EC videos on game prices really made me cringe. They fundamentally don’t understand what they are talking about. Shamus gets it right.

    In addition there’s something else I haven’t seen mentioned putting negative pressure on what consumers are willing to pay for games: hardware costs. Moore’s Law was always true and the game industry could count on being true. That was until a few years ago when it stopped being true. Yet the gaming industry still acts as though it is true. That’s one side of hardware. Then there is the other end where prices of video cards are disproportionately high due to bitcoin mining.

    Those people buying AAA games for their uber-visuals aren’t replacing hardware as often as they used to. Bleeding edge hardware has less edge compared to years past. And yet it has a lot more bleed. That has to impact AAA developers hunting for those consumers riding that bleeding edge.

    • etheric42 says:

      I don’t have a degree in business in economics, so please correct me if I am missing something. I also am not a fan of EC when they leave their comfort zone (and I think economics it outside of their comfort zone), but I also think Shamus gets things wrong as well.

      For example, Starbucks coffee. It probably does cost nearly 5 times as much as McDonalds coffee when you account for labor. I’ve seen some estimates at $0.33 for the materials at Starbucks vs $0.065 for McDonalds. They spend a lot more on labor at Starbucks (which is often the highest cost for many industries), and the waste at Starbucks I’ve seen as high as 5 cups dumped for every 1 cup served (not sure where waste at McDonalds stands). Starbucks spends a lot of fixed costs on inputs like decor and design because they want customers to feel like they can spend $5 for coffee there. If the place looked trashy but the coffee was just as good they might have been able to sell it for $3 or $4… but if you were going someplace trashy you’d probably just go to McDonalds.

      And the concept the market dictates the price… to some extent that is true, if you are viewing it that way you could also say the market is dictating the cost, since if the market in an area only allowed for $3 coffees then Starbucks wouldn’t lower their prices, they would close their stores and cede the territory to a competitor with lower costs (unless it was some kind of prestige territory it was worth eating the loss for).

      Either way, comparing industries with high variable costs like foodservice or manufacturing with ones with high fixed costs like games leads to a lot of these bad comparisons. EA pays most of their costs before they ever see a dime and their costs don’t meaningfully change whether they sell one game or a million.

      I mean, if EA could make a game for a dollar (and I don’t mean a DVD, I mean develop the entire game), they absolutely WOULD sell it for less than $60 assuming their $60 games were not selling to 100% of the people who might ever possibly buy it at any price. If they could release Manshooter games annually and sell them for $10/copy at release, you could crush all of your Manshooter competitors who were still having to pay for developing their game. And when their competitors figured out how to develop their game for $1, they would start charging $5/copy to undercut EA. Sure, nobody charges $55 to undercut their $60 competitors, but that’s because it’s not enough of a difference and $60 is a prestige position that indicates they are a AAA game and their real pricing comes from their sales/coupons/etc. policies (I’ve been impressed by the number of games offering 33% PREORDER discounts lately).

      Also an interesting chart I found on the giantbomb forums allegedly from EGM issue 243:

      System (year) | Game cost in USD at system launch year |Adjusted for inflation as of December 2010
      NES (1986) | 29.99-49.99 | 59.79-99.65
      SNES (1991) | 49.99-59.99 | 80.17-96.21
      N64 (1996) | 49.99 | 69.60
      PS2 (2000) | 49.99 | 63.41
      Xbox 360 (2005) | 59.99 | 67.10
      https://www.giantbomb.com/forums/general-discussion-30/how-much-did-games-cost-back-in-the-day-487807/

      Interesting aside on coffee shop prices:
      http://coffeemakersusa.com/pricing-breakdown-cup-coffee/

      • Cerapa says:

        I mean, if EA could make a game for a dollar (and I don’t mean a DVD, I mean develop the entire game), they absolutely WOULD sell it for less than $60 assuming their $60 games were not selling to 100% of the people who might ever possibly buy it at any price.

        Why though? Why lower your profits? If 60$ is the most profitable price with 10000000$ development cost, then it’s also the most profitable at 1$ development cost.

        • etheric42 says:

          Because of competitive advantage, expanding markets and the fact that they have no Palantir. They are assuming based on experience and market research that $60 on release (plus sales, collector’s editions, etc) maximizes profit in a world where they have high development costs and have to compete with other products. They could undercut their competitors but there is a chance they take a loss, so they compete with quality/brand and only undercut at the margins through sales/preorder discounts.

          If they could have just as AAA a game as their competitor, guarantee a profit no matter how much is sold and release on the same day as their competitor, they could sell more by driving a stake into their competitor’s heart and cannibalizing their purchase base. Then they ride high as long as they can until their competitor develops their game-production AI and retaliates. Furthermore, being able to reliably create a profit on $10 AAA games expands the market so future games enjoy larger customer bases than would be possible if they had to take a huge loss on $10 games and would be uncertain how many more titles they could stand to release at that loss while waiting for the market to expand.

    • Dormin111 says:

      This! It’s hard to even respond to these videos because they are just fundamentally ignorant of Econ 101. Honestly, it damages their credibility a bit in my eyes. I have to wonder how much else of what they’ve written is this same “just-so story” speculation.

      • Steve C says:

        Well to be fair to Extra Credits, they get their info from industry insiders. It would not surprise me that Extra Credits is repeating what they’ve been told by people who work as real AAA game developers. It is still fundamentally wrong. Just it could well be parroted fundamentally wrong.

    • Mephane says:

      Those people buying AAA games for their uber-visuals aren’t replacing hardware as often as they used to. Bleeding edge hardware has less edge compared to years past. And yet it has a lot more bleed.

      This is so true. It used to be that I could barely afford a mid range video card that would run new games only on medium settings, and would soon struggle with newer releases. But for years now I just go with whatever is NVidia’s current xx80 model or ATI’s equivalent, skipping an entire generation usually, and I can play anything new at max settings just fine.

  27. CloverMan says:

    I can’t shake the feeling that shareholder influence is the real reason for all this money gouging, and not the rising production costs.

    There is well documented history of investors pushing companies to self-destructive behaviour in pursuit of short term profits, or blocking necessary changes to minimise risk, and it was with Blockbuster).

    Publicly traded companies are dissuaded from pursuing stable profits in lieu of aggressive land grabs, and mamy if not most of them are a disaster waiting to happen, as major shareholders have no real interest in the company, and see them only as a single line in their massive portfolios.

  28. DavidJCobb says:

    Or to put it more directly: What if you dialed back the graphics to 2012 levels? Let’s assume for the sake of argument that this would only make the game cost twice what it did in 2005. How much would that drop in “realism” harm sales?

    I think you said you were planning on playing NieR: Automata, Shamus? I wonder if it would qualify as an example…

    Character models, textures, and animations are top-notch, but environments are much lower-fidelity. Environment textures are low-resolution and sometimes entirely blurry, and some environments reuse assets heavily, but they still look stunning and creative because the design is so good. Environments are appealing because of the their distinct themes and their layouts — the openness and closedness of spaces, the placement of foliage, the way light and shadow is set up.

    One of the first areas you visit reuses almost all of its assets, and blatantly. It’s also one of the most beautiful places I’ve seen in games.

    But then, the animations, story, and music were also vital, and I’m sure those still cost a fortune…

    • Christopher says:

      In one of the many interviews he gave after Nier Automata’s launch, Yoko Taro said this:

      I think what’s happening at the moment in the Western video game industry is that there’s very much this polarization into the big triple-A games and also the indies, and there’s very little in the middle to fill that space. What’s happening is Japan is you’ve got a lot of games that maybe aim for triple-A but don’t quite make it there, and they actually come into that gap. So when these then go to Europe and America, they’re actually filling in that gap and they fit in really well in that niche market, and I think that’s why we’re seeing a lot of success with Japanese games at the moment.

      Nier Automata was certainly a success, with Kamiya of Platinum Games specifically tweeting that it saved the company from financial difficulties. I do think some of the biggest 60 buck sellers need great graphics to appeal to the widest, most casual mainstream audience. The games that go for realism, in particular. But that doesn’t mean there’s no room for Yakuza, Nier or Gravity Rush. Persona 5 was a great success, one of the most popular games of last year, and that game is literally a port of a Playstation 3 game. The Nintendo Switch isn’t even approaching the abilities of a base Playstation 4, and it’s been no hindrance to its success at all.

      I’m not sure if you can get away with charging 60 bucks for every game that doesn’t have graphical fidelity out the ass. PUBG is a huge success, for instance, but that game did not charge that much money. And personally, I buy games like Shamus does anyway. Unless I need to play your game right away, I’ll just wait for a sale. But I think there’s plenty of games out there that look technically worse than something like Assassin’s Creed or whatever and still sell more than enough to make up for their development cost, and they make the argument that you don’t actually need those cutting edge graphics.

      They’re just going after them because they hope that by pouring money into the graphics they can sell proportionally more copies.

      • The Rocketeer says:

        I may be mistaken (and I can’t immediately check, because instead of linking the actual interview you instead copied and pasted the example link to Darth Vader’s Wikipedia page), but I think that quote is from an interview with Game Informer a few months back. That was a great interview, and I think it’s interesting that a creator known for making serious mindfuck games like Drakengard and NieR is so reliably unpretentious and down-to-Earth in interviews.

        In particular, I was tickled that he says he doesn’t really worry about grand themes in his games as much as he is about just making something that works on an immediate emotional level, because the greater part of my love for NieR: Automata stemmed from how brilliantly its themes were woven into every part of the entire game. (Though, it can’t be discounted how those themes only work because the game expertly builds up and pays off a robust emotional core.)

        Although, both of the above can be at least partially explained by his practice of writing while completely shitfaced and then editing while sober, a practice he’s always been totally open about. Doesn’t explain the Emil mask, but there it is.

        I also support his periodic endeavors to destroy the world. Now, I’m not the kind of guy that necessarily wants the world destroyed, or who would support just anyone’s plan to destroy it, but I’m at least willing to see where he’s going with things.

    • burningdragoon says:

      One interesting thing with NieR Automata, at least as far me-centric anecedotes go, is the original NieR and Final Fantasy XIII came out very close to each other much like NieR:A and FFXV. Both times the FFs were visually astounding and mostly a mess everywhere else, and both NieR were graphically far less impressive (and also kind of mess in other areas). In the end the NieRs had a huge impact on me, and the FFs were… FFs so I played them and I guess they were alright.

  29. evileeyore says:

    “I think developers are chasing after better graphics because it’s the one thing guys like Andrew Wilson can understand. Wilson can’t tell if the new Shoot Guy game “feels good” to play. He can’t tell if the balance is right, or if the pacing is a bit off. But he can look at the game and see that the cinematics are “more cinematic” and the visuals are “more realistic”. Andrew can’t intuit just how much it would ruin a multiplayer game to have pay-to-gamble-to-win mechanics in place, but he can tell that these new screenshots look better than the screenshots from two years ago.”

    The scene: A room, well lit. A middle-aged CEO, immaculate in his power executive suit, sits reading a blog post on a screen. A slow tear trickles down his cheek.

    He turns from the screen and picks up a controller, going back to playing the latest Shoot-Guy: Remastered Highest Fidelity. A few coughing sobs escape his lips…

    Andrew Wilson: No one understands how much I love Shoot–Guy in high-def! -sob-

  30. Paul Spooner says:

    I haven’t read any of the comments yet. Just wanted to say how much I love this article. This kind of thinking works its way into all kinds of fields too, it’s not just video-games. People get the idea that only “the best” is good enough, and then needlessly bankrupt themselves. Silliness.

  31. I like cosmetic swag the most (particularly clothes). It doesn’t really change anybody’s experience of the game, but people like to deck their character/car/mech/whatever out.

    Obsidian recently did a survey of Deadfire backers and the responses on what kind of DLC people liked was interesting. You might want to look that up if you haven’t already.

  32. Rack says:

    Did you catch the follow-up video EC made on this topic? It seems strange you didn’t mention it at all. Any chance of a followup article?

    https://www.youtube.com/watch?v=ypZZTIOR__Q&

    • Daemian Lucifer says:

      Ah,the one where they say no one is going to know about your call of duty sequel unless you spend at least half of your budget on market.Suuuuuuureeeeeee.

      And thats not even go into various “saving costs” practically all of the big developers employ,like the “Health care and insurance?Lets just fire the team before we need to pay those”,or the “You want extra money for additional hours?Well your contract says youll work crunch for the same amount.Get back to work,slave!”.Or the cost of a major celebrity actor compared to a regular voice actor.Etc,etc.

      But the funniest part of that video is that he says “we like our sweet graphics” at the moment when he shows breath of the wild,a game that runs on switch,a game that does not demand half of the hardware the rest of the games shown.And this is used as an argument how MOAR PIXULZ is something demanded by the audience.

      • Rack says:

        Yeah, that’s the one. I think the art team might have been trying to subvert them by showing a picture of Breath of the Wild when he said that. Where I think they most went wrong is taking the problems Mass Effect Andromeda had as a sign players absolutrly demand perfect graphics. Whereas I’d read it as a sign of the problems you can get into when trying to get graphics up to that level. Bayonetta didn’t get nearly as much derision for not animating cutscenes at all.

    • Daimbert says:

      I commented on the first one in a post on my blog, and hope to comment on the second one, because I’ve worked in a company that had about 200 people working on a software product, and can tell you that if you have to have those 200 people working on a product for two years without seeing any revenue from that product it’s not sustainable and you’re toast.

    • Nessus says:

      Thing is IMO, most of the stuff they talk about is stuff any business has to contend with, so using it as an excuse for why they think they’re exempt from normal business/economic models comes across as special pleading.

      There’s also A LOT of stuff in there that absolutely COULD be cut, but they don’t explain why they assume it can’t. Use Blender instead of Maya. Use Godot instead of Unity/Unreal. The world is OVERFLOWING with good actors looking for their big break, and anyone can knock up a pro-sounding voice recording setup for a couple hundred quid (if amateur podcasters can do it, pros have no excuse). We have this thing now called “the internet”, which means all kinds of contractors can work off-site or even from home, and it makes no difference as long as they’re delivering to the project cloud folders on time, so you don’t actually NEED offices for anything other than a showroom.

      “Oh but those things would make us less ‘pro.” Who TF cares. You’re in business to make money, act like it. If it works just as well for less overhead, USE IT.

      I feel like, ironically, the AAA game industry is actually behind the time, technologically. They aren’t leveraging all the new, more efficient ways of doing things that modern tech makes possible, because they’re stuck in this old pre-internet business culture.

      Seriously though: real talk time: why does a tech-oriented media business need offices anymore, when literally everything they do can be done over the internet. There’s no reason why the guy who does textures has to be in the same country as the guy who does the models, much less the same room.

      • Blackbird71 says:

        I work in the tech industry (definitely not in games development), and my company does employ a lot of technology that gives remote options like you describe. These tools do add a lot of convenience and flexibility to our work, and yes it is even possible for most employees to do most or all of their work from home, through remote server connections, IM/audio/video chat tools, etc.

        However, with the exception of occasional days where it’s necessary to be away, I and nearly all of my colleagues still come into the office nearly every day. Why? A big part of it is that in the end, there are many interactions throughout the day where it is just easier/simpler/more efficient to work together face to face, in real space. Somehow, I don’t think that’s ever going to change.

  33. Mervyn Bickerdyke says:

    Yes, Call of Duty et al. need those cutting edge graphics. If it would be OK to have it with 2014 graphic detail, people would stick with the 2014 version of it! If you want to sell an “improved” version every year, you have to improve something. And the money dumped on bling is something you actually CAN improve while being sure to keep the fanbase because you’re not messing with anything that might turn out to be vital.

    • Matt Downie says:

      It probably varies a lot by game genre. If you’re trying to make a multiplayer shooter, you need either something innovative (for example, the last-man-standing, shrinking-battlefield format was pretty innovative at the time) or you need better graphical polish than whatever came before. Otherwise, people will just keep playing the last multiplayer shooter.

      With, say, an open-world RPG, I’d be happy if the next Elder Scrolls game had the same graphical quality as Skyrim, as long as it had a new map to explore, new quests, and some improved gameplay mechanics. I wonder if most people feel like that?

      • LadyTL says:

        I would think a fair enough amount of people do given the extended lifespan of many RPGs are with mods. I mean I am playing Fallout 3/New Vegas again with mods which while they pretty the graphics up alot from release day are not as pretty as say a new PS4 game. But I have some new quests and some new items because of Tale of Two Wasteland and other mods so it feels refreshed. I am also super stoked if Skywind or Skyblivion or New Vegas in Fallout 4 ever got finished for the exact same reason. They aren’t going to be AAA pretty but the changes are enough to make it feel new again.

      • Redrock says:

        Many people wouldn’t be happy. Reviewers wouldn’t be happy. Games are constantly praised and criticized because of their graphics, be it professional reviews or Steam reviews. Graphics matter in marketing. All that affects sales. Can’t get away from that. People can be shallow that way, especially when it comes to entertainment.

        • Blake says:

          I think you overestimate how many people would care.
          If something came out today looking merely as good as a 2013 game like The Last Of Us, I don’t think the visuals would have much impact on total sales.

          Also: heaps of games stylize their graphics which not only makes them stand out from the competition, but looks great forever as it’s not aiming for photorealism.
          Even 2002 Gamecube games like The Wind Waker can still look fantastic today just because they spent their art budget well.

          • Redrock says:

            I don’t think so, no. Every game can’t have stylized graphics. And i can see the quotes from the reviews. “The gameplay is on point, but the graphics are very 2012, which is unforgivable for a 60 dollar game in 2018”, or some such bullshit. People care about that stuff. Now, you might argue that they’ve been trained to care about it, Clockwork Orange style, but by that point that’s moot, unfortunately.

            • Daemian Lucifer says:

              Ive already seen quotes like this for fallout 3.And yet that one sold like crazy.So yes,a few people care vehemently about stuff like that,but not enough to even put a dent in the sales of a game.

          • Shoeboxjeddy says:

            “Merely as good as the Last of Us” is a bad example. Naughty Dog is always on the cutting edge of graphics, I don’t think The Last of Us’ graphics would come cheaply even now. You need to pick an actual mid range graphics game to make this argument.

  34. Jay says:

    There’s a book called The Innovator’s Dilemma that explains why companies do this. Imagine you were the boss at EA, and you had just read Shamus’s post. You’re considering whether or not to give 2012-era graphics a try:

    1) 2012 era graphics needed fewer people; that’s why they were cheaper. That strategy requires a big round of layoffs. Your employees will hate you, and some of your best talent will jump ship.

    2)You’d send a strong signal that you no longer regarded videogames as a growth industry. The markets would quickly pick up on that, and share prices industrywide would tank. The Board would be furious. You’d probably lose your job. Everyone else in the industry would hate you, so good luck getting a new job.

    EA’s boss isn’t going to do that. The book’s thesis is that there are strong institutional reasons why a company has to keep moving from simpler, cheaper products to more complex, more expensive products. Eventually companies are forced to make products that have expensive features that customer’s don’t care about; this provides an opportunity for some scrappy group of nobodies to enter the market with a cheaper product that’s good enough. GOTO 10

    • Dreadjaws says:

      “2012 era graphics needed fewer people; that’s why they were cheaper. That strategy requires a big round of layoffs.”

      Maybe I’m missing something here, but that doesn’t make any sense. Why would you lay people off when you can simply put the rest to work in another game? In fact, this also turns around and helps the second point. You can easily explain that you regard videogames as a growth industry so much that now you’ll make twice or more as many games as you used to.

      You could in fact create a marketing campaign that promotes this strategy as consumer-friendly. “See, we listened to you, guys. There’ll be more bang for your buck from now on.”

      • Ninety-Three says:

        Because artists and programmers are not interchangeable. If you cut art back to 2012 levels, you need half as many artist-hours to get the game done but the same number of programmer hours, you can’t just put the artists onto a new project without hiring an entire game’s worth of new programmers to make a game around their art (and “just hire 300 new coders and put them all onto a new project” is neither an easy nor wise thing to do).

        • Daimbert says:

          This presumes that the extra people needed are artists to produce the assets instead of graphics programmers to put those graphics into the game. Chances are both are needed, especially since a lot of the increase is just due to the capabilities of the system that have to be programmed for.

        • LadyTL says:

          Except InExile does exactly that. They have their writers and concept artists work on the start of a project along with some designers and when that project moves to the more heavy coding and graphics stages instead of laying off those writers like alot of major companies do to “save” money, they start them on the next project. As far as I can tell from what they tell backers that is how all their games since Wasteland 2 have been made and they are doing fine.

          • Ninety-Three says:

            You’re missing the point. Say my studio currently employs 300 art people and 600 code people, and a game requires 900 art-years plus 1800 code-years of work. I produce one game every three years, and everything’s good. If I cut art back to 2012 levels, my games now take a quarter as many art-years as code-years. I’m producing twice as many art-years as I need, and if I move the artists onto a new project I’m just going to build up a buffer of art that increases faster than I can use it. Unless I can find a way to cut the amount of coding required too, I have to either hire a ton more coders (hard), or fire some artists (easy).

        • Echo Tango says:

          You could put the extra artists onto a spinoff title using the same engine, too.

          • Or have your artists learn enough scripting to use completed assets and set them to creating mods and other cool stuff.

            They can also do things like:

            Write tie-in novels.
            Create tie-in GRAPHIC novels.
            Bling up your website.
            Make tie-in videos.
            Go to conferences and talk up your company.

            As long as you can get your creatives to do something that’s of break even or net value to you, there’s NO REASON to fire them and EVERY reason to KEEP THEM AROUND AND HAPPY. Creatives aren’t like machines–they aren’t interchangeable. A lot of them will have numerous skill subsets that can be put to use on things other than “game assets”.

      • Jay says:

        EA already has a bunch of smaller studios doing smaller projects. Those markets are even more saturated than the AAA market, because they’re easier to enter. Besides, when your cost structure requires FIFA-scale money, Bejewelled-scale money just isn’t enough.

    • Daemian Lucifer says:

      There are two things wrong with those assumptions.First,that you would scale the graphics back,instead of keep the same graphics from 2012 until now(or current graphics until 2024).Second,is that having older graphics would mean having the same amount of content.Basically,having to spend less on graphics you could either get your employees to make a bigger game,or make a game faster,or make multiple games,all of which would be more profitable for you.

      Also,ea is ALREADY laying off a bunch of people,constantly closing down studios they buy,having tons of negative press about it,and yet people are still working for them and investors are still happy with them.

      • Jay says:

        The basic idea was to make games that were less expensive to produce, so one way or another man-hours per game have to go down. Making a game that’s just as expensive for different reasons doesn’t help.

        If you really want to understand how it works, read the book.

      • BlueBlazeSpear says:

        The argument is probably not best framed as “Why don’t we just use 2012 graphics?” It could better be framed as “Instead of letting innovation dictate cost, why don’t we let cost dictate innovation?” Of course consumers will always want the biggest, newest thing, but they also only want to pay peanuts for it. Since the market manages the consumer’s cost expectations, why doesn’t it manage innovation expectations in the same way? The game makers are ultimately the engines of innovation here and it seems silly for them to be constantly trying to outpace the impossible standards of the client base. It seems more reasonable to shoot for the best possible product for the most reasonable bottom line. As with most things, I’m sure it’s more complicated than that, but these are just the thoughts of a layman.

    • Bloodsquirrel says:

      2012 era graphics needed fewer people; that’s why they were cheaper. That strategy requires a big round of layoffs. Your employees will hate you, and some of your best talent will jump ship.

      This is the same kind of flawed logic that has had people predicting that automation would cause massive unemployment, a prediction that has been repeatedly failing to come true since the steam engine was invented. In reality, anything that increases the productivity of a single employee (such as a business practice with requires fewer people to make a game) increases the incentive to hire more people, since each person now has the potential to make you more profit, and you can employ them in more and more marginal situations. If you have to dig ditches by hand, you’ll only dig the most important ditches. If you have a backhoe, you can afford to dig them wherever they might be slightly useful.

      Likewise, if you can produce a game with half the people, then you can make games for niches and markets which would have been too small to make a profit from before. This is, in fact, exactly what we’ve seen with the indie boom: When the cost of entry fell, we started seeing the kind of niche games that never would have been made for the AAA market.

      • Jay says:

        Indie studios can do that. Huge corporate behemoths can’t.

        It’s like trying to dig a swimming pools with a mining excavator. You can do it, but you can’t do it all that well (your tool is too big for the jobs) and there’s not enough demand in the local market to justify the amount of capital you’d be using. Big companies need big jobs, and when big enough jobs aren’t available they lose market share to smaller companies that can survive on those sorts of jobs.

  35. droid says:

    Does linking to an article that uses a DnD analogy justify the name Twenty Sided for this year?

  36. “I’d rather 50,000 people paid me $1 each for my book rather than just one guy paying me $100,000 for the book”

    Except in the case of EA (and Ubisoft if you watch Jim Sterling’s latest video), they’d rather sell a book at $1 then have readers pay $12 per year in perpetuity (or even more per week for lootboxes).

    Weird thing is that both EA and Ubisoft et.al. are making more profit than ever before, but it’s “not enough” they want more. Investors/Shareholders are greedy by nature so are “the suits”.

    Making games are no longer about the developers making what they want to make and gamers enjoying what is made. It’s all about that profit, that sweet sweet molah.

    • Redrock says:

      Was there a point in time when making games was about charity? I might have missed that.

      • Daemian Lucifer says:

        Not overall,but there are cases of games made and released for free simply because someone wanted to make them and did not care for the money.Heck,even amongst paid games,there are cases where it was a passion project and not just a product to sell money.Minecraft may be the best recent example of a game like that.

      • Not charity and not for free. Obviously a game should make enough profit to secure funds/budget towards the next game. That way only the initial investment for the first game is needed and paid back over time. After a certain point that investment is fully paid off and you are looking at a pure return as a investor.

        You need that extra profit so you have a budget to handle declines in players, or to take risks on something new. Or other unknown situations. I’m also a fan of companies that pay a percentage of the profit as a bonus to it’s employees.

        This is the point when anyone with a few moral fibers would be satisfied. Making enough money and profit to keep the wheel turning so you can continue to do the stuff you love to do as your permanent employment…

        …and on the other side of the fence you got the Tripple AAAh publishers.

  37. acronix says:

    Steam added Argentinian currency to their accepted payment methods, and because of how terrible our economy is a lot of the prices are basically slashed in half or more. Some of the bigger publishers manually move the price up to be closer to what it should be if it was in dollars.
    Except for Grand Theft Auto 5, the top 30 games played on Steam down here are all free-to-play or under 30 dollars. I know most of the Argentinian gamers I know aren’t willing to pay more than that.

  38. Andrei says:

    Hey Shamus. Been reading your blog for a long time, but never commented until now.
    I think you are a really smart guy and I think you make a great case about publishers over-investing in graphics to their own detriment when they hurt their bottom-line and to our detriment when we get good-looking shit that has little substance.

    Just one little idea for you to think about, seeing how you regularly complain that the big guys take stupid decisions: have you ever considered that maybe they are just fucking stupid and like it that way, because they do not actually care about their companies or the industry, seeing how they get paid eitherway?
    Maybe the smart guys that should take this kind of decisions write blogs on the web or get obsessed with their little low-impact pet projects, while the stupid people play THE BOSS, chase hookers and do coke. Maybe anything that goes mainstream is corrupted by fucking idiots.

    I know what I say is wrong, but maybe just a little bit right.

    I wish you all the best and hope I’ll get something new from you to read for more years to come.

    PS : sorry for bad english; not a native speaker and too lazy to check for mistakes

    • Daemian Lucifer says:

      Even not caring for the industry,theres a distinction between smart and dumb companies.While the rest of the gaming industry was milking tons of money with their lootboxes,rarely getting any stink raised against it,ea went in so hard that they got a bunch of countries to start implementing laws that would constitute them as gambling,thus hurting everyone.Thats a pretty dumb and short sighted move no matter your goal.

    • Mephane says:

      To quote Douglas Adams:

      It is a well-known fact that those people who must want to rule people are, ipso facto, those least suited to do it.

      • Daemian Lucifer says:

        Wasnt there a law in one of the ancient greek city states that the ruler was chosen from the people,and it usually was someone who did not want the job in the first place?Choosing rulers based on skill rather than want would be the smart thing to do.Sadly,humans arent collectively very smart.

        • Daimbert says:

          Of course, it’s also not a good idea to force someone to do a job that they don’t want to do, especially if it’s an important one. How hard are they going to try, and how are you going to force them to do a good job?

        • Redrock says:

          Eh, that’s the thing about democracy. Democracy isn’t really about efficiency. Democracy is about ensuring there’s a constant transition of power. You bet too much on skill, you get Caesar eventually, who was very skilled. Also, a person may not want power initially, but grow to like it a bit too much. I know for a fact, for example, that Putin didn’t really want power and was pretty much forced into becoming the president, because he had skill. And we all know how that turned out. But that’s veering from history and into politics theory, so I should probably leave it at that.

  39. Drathnoxis says:

    “Yes, I’m aware this behavior is one of the reasons I get a reputation of being overly negative and nitpicky.” You aren’t overly negative and nitpicky. You are the right amount of negative and nitpicky! Don’t ever change, this was a great article!

  40. Ivan says:

    “If I gave them the option of charging me $60 or $100, I’m sure they’d pick $160 because that’s how they roll.”

    Nice analogy, but here’s a better one: “If I gave them the option of charging me $60 or $50, I’m sure they’d pick $110 because that’s how they roll. And they’d probably put in a lackluster wave-based single-player mode as well.”

  41. Redrock says:

    Obviously they would charge sixty dollars, because that’s what consumers are willing to pay.

    My point exactly, has always been. Also, I think EC mentioned that more than a few times. The thing is, it would seem that if the audience was willing to pay, say, 70 dollars, maybe we wouldn’t have seen quite so many predatory second-ctage monetization practices. Maybe not. As it stands, we have a situation where the consumer is suposedly unwilling to pay 70 dollars for a game, but more than willing to spend way, way more via microtransactions, lootboxes, etc. Because, well, if people weren’t buying those, publishers wouldn’t keep adding them to games, now would they?

    • Shamus says:

      Here’s where I think (part of) the problem lies:

      Yes, adding lootboxes makes a lot of money from a small number of people. But it also ruins the game for some other group of people. It’s easy to measure the first, but how do you measure the second? Sales of Battlefront are WAY down. How much of that is due to people avoiding the game because they hate lootboxes? How much is due to bad press and backlash? (That is, people who wouldn’t care about lootboxes but avoided the game because it was getting terrible reviews.) How much is due to general Star Wars fatigue? (Assuming such a thing exists.) How much is due to people simply giving Battlefront a pass because they’re really into PUBG or Overwatch right now?

      So “income from lootboxes” is way up, but “income from sales” is down. If publishers take credit for the former and blame the latter on forces beyond their control, then they will continue to push this stuff even if it’s hurting them.

      Maybe a bunch of lootbox-driven games are all going to be fighting over the same small group of spendthrift whales while they neglect the wider market of people who just want to shoot some Stormtroopers or stab some Orcs. This would make these games even MORE risky. One of them will make a fortune and the others will tank.

      My concern is that the leadership doesn’t understand the consumer well enough to see their way through this. They just see that income spike from lootboxes and chase after it like conditioned lab rats.

      • Redrock says:

        But it boils down to numbers, doesn’t it? If the overall numbers start to go down, they’ll look for a new way. If not, well, we’re stuck with microtransactions. I’m also not convinced that Battlefront 2 really represents a trend here and shows that people in general are getting fed up with lootboxes. I sure hope that’s the case, but I somehow doubt it. My concern that this whole thing is very much like hte film industry – we fail to understand that all of us – the critics, the bloggers, the redditors, the people who hang around in the comments, – are still just a vocal minority. The fact that lootboxes suck is as apparent as the fact that Transformers and Fifty Shades suck. At the end of the day, those things make a lot of money, enough to soundproof the walls against all the screaming and gnashing of teeth.

        Also, we really need some coherent breakdown of how lootbox revenue is structured and how the spending is distributed among users. This industry really nedds some transparency more than anything.

        EDIT: It should still be noted, that even with all the controversy, Battlefront 2 is still in the top 10 of best selling games of 2017. Just to give some perspective.

      • Asdasd says:

        So Idea Factory are a small-to-medium sized Japanese developer/publisher outfit. They’ve made their reputation (in the West at least) out of two things: fan-service and soul-crushingly opaque RPG mechanics.

        In what I guess was an attempt to diversify a bit, they localised and released an otome game called Hakuoki for Western markets. Otome games are visual novels aimed more at people who are attracted to pretty anime boys than pretty anime girls. It was a pretty significant critical and commercial success.

        What you might expect Idea Factory would take from this was that there was a market for otome games in the West and look to bring over some of the other popular Japanese titles. What they instead took away was that there was an appetite for this particular otome game, with the effect that they’ve re-released it with varying levels of expanded content some three times, with the third rehash even splitting the game into two episodes.

        (To be fair, that pales in comparison to the twenty(!) or so releases under the Hakuoki name in Japan.)

        Maybe IF are very happy with the returns on this strategy. After all, with each re-release they get to re-use the bulk of the translation from the prior games, saving what I guess are considerable costs. They also have an established brand to market instead of needing to raise awareness of a new IP. But to an outsider this looks like over-interpretation of the sales data: a missed opportunity to grow a breakout game into a fully-fledged genre, in favour of maximally exploiting its popularity for short-sighted, short-term gain.

        • Redrock says:

          That’s a really interesting example. But i think it kinda supports my main argument – we really need more data on game sales and budgets. Most of our current attempts at analysis are severely flawed, even when compared to, say, the film industry, which isn’t all that transparent either. We don’t know what kinda of data publishers have, what kind of research they commission, nothing. In the end, a lot of it boild down to our emotional evaluation of the publishers – do we think they are evil or just plain stupid?

      • Ramsus says:

        I’m pretty sure ” Star Wars fatigue” is not a thing for a variety of reasons.

    • Daimbert says:

      Things are more complicated than that, because monetization schemes can be better or worse, and so look like great ideas or like a clear attempt to price gouge. I think the Star Wars case is a prime example of one that seemed like a clear attempt to jack up the price without actually doing so, and that’s why the reaction was so negative. Meanwhile, the similar mechanism in FIFA garnered little attention because it was seen as a cool, optional add-on. So that consumers don’t complain about it sometimes doesn’t mean that it’s a good way to subversively raise the price, because if that’s how they perceive it the reaction will be as bad and likely worse.

    • Blake says:

      “As it stands, we have a situation where the consumer is suposedly unwilling to pay 70 dollars for a game, but more than willing to spend way, way more via microtransactions, lootboxes, etc. Because, well, if people weren’t buying those, publishers wouldn’t keep adding them to games, now would they?”

      Except it’s not the average user spending lots on microtransactions, it’s a small number paying large sums. And games like Battlefront are wrecking their own core experience to try to force people to spend more.

      We are in a situation where people feel they have to pay extra in order to skip the gameplay.

      It’s like if cinemas realised they could add microtransactions and originally it was just a button you could press during the movie to get some cool swag.
      The publishers saw a bump in revenue and pushed it further, now you press the button and get random swag, maybe it’s a fancy custom made figurine, maybe it’s a sticker. Some people are fine, some are annoyed they can’t just pay for the figurine.
      Then they take it further, and add a grind onto the movies. Suddenly The Lord Of The Rings has an extra hour of Frodo walking with nothing much going on, but you can skip that dull hour by paying an extra dollar!
      Some people pay the extra dollar (justifying the ‘feature’ from the publisher perspective) while the public get annoyed to the point they give up on the movies altogether.

      So while some people might be paying for microtransactions, it doesn’t mean the publishers aren’t poisoning the well.

      • Redrock says:

        I mentioned it some time ago, but I’ll say it again – you’re forgetting that a lot of people genuinely enjoy the grind. MMOs, ARPGs, JRPGs, looter-shooters, online FPSs, open-world games, even the beloved Dark Souls or Monster Hunter are all very much about the grind. I’ve noticed that the mere presence of the option of microtransactions makes people recontextualize the same grind we’ve always had in many genres as a manipulative way to promote spending. If there’s no paid option to skip it, it’s somehow considered challenging and honest and demanding all of a sudden. Is the Arkham Knight’s endgame that hides the “real” ending really that much better than that of Shadow of War? I don’t really think so. But you can’t pay to skip the Riddler trophy bullshit, so that’s somehow better. Because your time on earth is somehow less valuable than money, I guess?

        • Matt Downie says:

          The problem is, if the market consists of two groups:
          (1) People who enjoy the grind
          (2) People who are willing to pay money to skip the grind
          …then it is in the interests of the company behind the game to increase the size of group 2. And the easiest way to do this is to make the grind less fun.

          • Redrock says:

            Well, “fun” is tricky to quantify. It would be really interesting to conduct a sort of blind test experiment to figure out whether the mere knowledge of an option to skip the grind for money makes it seem less fun. Kinda hard to actually isolate the suitable test subjects, though. Here’s the question I posed once before – if we take Dark Souls without changing a bit about balance and gameplay, and add the option to, say, purchase souls and better gear for actual money, would the Dark Souls game loop with it’s emphasis on death, difficulty and grinding be seen as a manipulative way to make people pay? Would people instantly call the much-praised difficulty of the series unfair? Can the mere presence or absence of microtransactions impact one’s perception of the same mechanics? I think it’s a valid question, but it’s one that’s tough to answer.

            • Galacticplumber says:

              In order to conduct that experiment with a new title, so that old data doesn’t unduly color results, you’ll have to contend with the fact that damn near nobody is willing to believe you haven’t altered the game balance to make the grind more annoying due to previous examples of such systems where that was very clearly the case. Also general distrust and cynicism built up by years of gradually ramping bullshit.

        • Shoeboxjeddy says:

          Collecting Riddler trophies is not a grind. That is ridiculous. It’s the same as finding moons in Mario Odyssey. Each one has its own little gameplay puzzle around it, and when you collect sets it unlocks things in the game (often a backstory audio diary or a model viewer or something like that). Someone complaining about the “grind” in Arkham is wishing there was LESS puzzles and races and such. Less of the FUN PART OF THE GAME. That is a stupid, stupid complaint. Compared to the end game of Shadow of War, which is “all the enemy orc numbers are now 20 levels higher than the previous mission, arbitrarily. Get orcs of at least that level to do the next mission.” While collecting orcs might be considered a fun part of the game, all of your current orcs in your army being arbitrarily declared as too weak for purpose is no one’s idea of fun.

          • Droid says:

            The problem here is not that people want there to be less Riddler trophies. As I understand it, the problem is that the trophies are part of some “true ending”, e.g. it’s not “The Main Story + 100 gimmick puzzles that you can do at your leisure”, it’s “A Chunk of the Main Story + 100 gimmick puzzles that people for whatever reason might not want to play, maybe because they do not like the precision movement outside of fights, maybe the puzzles are too easy, maybe the Riddler’s taunts are just annoying them + Rest of the Story After You’ve Completely Forgotten About the First Part” or “All the Main Story with the Bad Ending”.
            The problem is mainly that in a game about being a detective, a brawler and a hunter (or a tank, in the case of Arkham Knight), the game forces you to make a choice between investing a lot of time into the detective part alone (that you might not be that interested in) or having the story take a turn for the worse for not doing that. It might be fun for you, but that doesn’t mean it can’t be unnecessary grind for someone else.

            That said, I have not played the game myself, this is just what the previous games and Redrock’s comment told me.

          • Bloodsquirrel says:

            I submit that the riddler trophies are a grind by virtue of the diminishing interestingness of their puzzles/locations and the tendency for them to require you to tediously scour the map for some of them.

            They were at their best in the first game; few enough to be interesting to collect, to be guarded by interesting puzzles, and placed in smaller environments that required more astuteness in looking for hidden places and less mass coverage of ground.

            Scouring every inch of an enormous map is a grind, and it’s one of the reasons that I’ve become soured on collectibles as game environments have become larger and more detailed (since said detail increases the number of things I have to examine to determine whether they’re a gameplay object or part of the scenery).

            Also, having the ending locked behind 100% completion was one of the things that I hated about Arkham Knight, since I was frankly tired of driving around the map looking for stuff at that point. So it might very well be as bad as Shadow of War, but complaints about it were just harder to focus into a broader narrative about industry practices.

    • Dreadjaws says:

      Besides what everyone else said up there, please take notice of the fact that smaller, incremental expenses always look less than a larger one-time payment, even if the total sum of the former is larger than the latter. People are willing to spend more if it’s done in smaller doses. A person will back off at the prospect of buying a full series on Blu Ray at $80, but they will purchase each of the 5 seasons separately at $25 each.

      And note that it doesn’t have to be a consciuous process. Sometimes people will do it out of convenience (like in the series example I mentioned), but sometimes they just won’t realize just how much they’re actually spending.

      • …smaller, incremental expenses always look less than a larger one-time payment, even if the total sum of the former is larger than the latter.

        I need to remember to trot that out next time mum complains about the ‘lekky bill – we now live in a place where everything is electric, as compared to the old place which also required oil and gas to be purchased on a regular basis. My mum now spends an inordinate amount of time fretting over the size of the electricity bills even though it now covers ALL the things (and we managed to fix a couple of pretty stupid things that were causing it to be higher than it should).

        • Redrock says:

          Doesn’t a gas-operated stove cost less than an electric one in the long run, for example? Depends on the location, of course. I mean, if you overall spending actually went up, she may have a point.

          • It wasn’t quite that straightforward! In the old place (stone farmhouse), we had an oil-fired Aga that we used during the winter, sometimes supplemented by use of the gas cooker and an electric microwave/oven combo (because seriously, fuck Agas – unreliable bastard things) and then in the summer the Aga would be turned off and we’d just use the gas cooker and the microwave, but the heating/hot water still used oil. We also had water-heating solar panels, which helped reduce the amount of extra power needed to heat water.

            The kitchen appliances that were here when we moved in….. ugh – you’d probably be right about those costing more to run, they were dreadful. But we replaced them in shortish order with a new, supposedly efficient, oven and an induction hob. The main challenges with the new place are, I think, more to do with keeping the ruddy thing warm – it’s a 1980s bungalow that got extended at least a couple of times by previous inhabitants, is a weird, inefficient shape, and holds heat poorly, despite us shoving more loft insulation in. I suspect the floors, personally. The old storage heaters weren’t really cutting it and were devouring power – I took some readings and we were using something like 10x the amount of ‘lekky at night (on Economy 7, but still) that we were during the day – mostly due to the storage heaters, which we weren’t even really feeling the benefit of in practice (mum’s in her 70s and is constantly cold). So those have gone and we have electric radiators now (and no more Econ7) – supposedly a bit more efficient and at least they can be on when we(she) need(s) them. We also discovered that our new boiler had been wired up wrong by the fitters and was basically permanently on boost (thankfully my uncle is a very competent electrician and sorted that mess out). Water is a horror for chewing through power if you want to heat it, and this thing was constantly running at boiling point. So IMO it’s not a clean comparison yet because we’ve done a lot of things here already to try and improve things, but we might only just be starting to see the effects. It doesn’t help that mum is not terribly good at compiling or communicating actual costs (was the same with my sister’s wedding – what mum thinks it cost and what my bro-in-law tells me it actually cost are very different figures).

            There. I’m sure that was a riveting read for you! ;)

            • Redrock says:

              It actually was, thanks for sharing! As someone who’s lived in apartment buildings their whole life, I’m always fascinated by the nuances and challenges of owning an actual house. It sounds like a lot of work, but it’s also yours to tweak and change and adapt to your needs. I think it’s really cool that you have the option to actually optimize this stuff, even if it does seem like a big effort. I mean, in an apartment, your otpions are basically limited to remembering to turn off the tap when you brush your teeth, that kind of thing.

              • Oh cool, glad it was of interest! :)

                All my independent accommodation has been rental, too (I kind of miss my lil apartment in Germany). In some respects it does save some headaches, but it definitely limits what you can change to improve life. (I am also a devout turner-off of taps while brushing my teeth!) However, I now have a SERIOUS yen for my own space that I can influence as I wish. Not sure when it’s going to happen, given current personal circumstances, but it’s something to aim for.

      • Redrock says:

        People are willing to spend more if it’s done in smaller doses. A person will back off at the prospect of buying a full series on Blu Ray at $80, but they will purchase each of the 5 seasons separately at $25 each.

        Believe me, I’m well aware of that phenomenon. I also, at the risk of sounding unkind, consider those people idiots who shouldn’t be trusted with money. I honestly don’t think that it’s fair to blame sellers for irrational buying behavior. Sure, the craftier ones often try to take advantage of people’s stupidity, but at the end of the day no one is being robbed at gunpoint. People could really stand to think a bit more about their spending. I mean, I often buy useless stuff or end up paying more than I could have, but when that happens I blame myself and try to learn from that.

      • Syal says:

        And then there are people who will spend $5.00 to buy a 3-piece set of $1.00 goods.

    • Bloodsquirrel says:

      The thing is, it would seem that if the audience was willing to pay, say, 70 dollars, maybe we wouldn’t have seen quite so many predatory second-ctage monetization practices.

      Again, no, because companies aren’t engaging in second-stage monetization practices because they need to in order to make a profit, they’re engaging in them because they’re perceived as being a way to maximize profit, regardless of whether they’re making a profit at a $60 price point or not. EA would continue to put lootboxes in their games even if they could charge $70 for the box, because the psychological levers they pull don’t depend much on how much the gamer has already paid upfront.

      • Redrock says:

        True, but they seek to maximize overall profit and not just profit for separate games. Which means that if second-stage tactics really do have negative side effects by making some games tank more heavily tham others, they would be willing to ease off a bit provided they could increase first-stage revenue. Again, that’s assuming the publishers are rational entities and not actual villains hell bent on messing with gamers. You never really know.

        • Bloodsquirrel says:

          You’re still clinging to the assumption that price is determined by cost of production, not what the market will bear. If second-stage monetization has negative effects on sales that outweigh its benefits, then it’s worth dropping whether they’re making a profit at $60 or not. The only way that a $70 price point would decrease second-stage monetization would be if it also decreases gamers’ tolerance for second-stage monetization, and it’s by no means clear that it would given how lootboxes work.

          Part of the stickiness of the $60 price point is the vagueness on how much content you’re actually getting when you buy a game. The box might say 20 hours, but that might be if you dick around looking for collectibles, and most people can blow through it in 5. There’s no industry standard for how many companions you have in an RPG and how many conversations each provides. It’s really tough to say “Well, they raised the price of the next Mass Effect game to $70, but one of those companions would have been DLC if they hadn’t”,

          It’s why nobody believes EA when they say “Oh, we didn’t cut that out of the base game, it had it’s own separate budget”, That’s just an accounting trick. It says nothing about whether it would have been part of the base game if DLC didn’t exist or not.

  42. DungeonHamster says:

    I think the inflation argument also assumes that wages have risen to keep pace with it, which hasn’t necessarily been the case for a fair number of folks over the last couple of decades.

    • Redrock says:

      That’s not realy how inflation works. While there are a lot of factors that influence inflation a rise in spending and wages is a big one. In developed countries wages and inflation pretty much go hand in hand. You can see a slight increase or a slight decrease in real income one month or another, but there’s is no big decade-spanning rift between wage growth and inflation. That would be catastrophic. That would mean people going hungry and homeless, not debating the merits of paying a couple of bucks to unlock Vader in an online shooter.

  43. psychicprogrammer says:

    There is one other factor as well, sticky prices, basically there is an aversion by either consumers or producers to change the nominal price of the good, there is no rational reason for this but it happens.

  44. Jeff says:

    There is one other point you have missed in this discussion – Digital distribution. Companies no longer have to pay to create physical products. This has resulted in an enormous savings to them. In fact if you look at the major companies, they are not losing money on games – they are more profitable than ever if you look at their corporate balance sheets.

    The argument that that games need to cost more or that companies need to introduce secondary monetization is complete false.

  45. poiumty says:

    Counterpoint: if publishers wouldn’t keep pushing the envelope with regards to graphics technology, we would have never ended up where we are today.

    Sure, maybe 2012 seems “good enough” to you in terms of graphics nowadays. But maybe Thief 1 seemed good enough to you when it came out. What if we had stopped then? No 2012 graphics, that’s what.

    Sure, graphics improvements are getting smaller and smaller. And maybe there will come a time when nVidia will push for faster processing technologies instead of higher polygon count. But we’re clearly not there yet.

    • Galacticplumber says:

      Sure we would’ve, just slower and with other advancement in the place of slowed graphical advance. Perhaps larger play area, higher framerate averages, more complex AI and more AI actors in play at a time, the complete eradication of loading times, more complex stories, hell how about more games made, or a little of all that?

      • poiumty says:

        A lot of those things are processor-specific, not graphics-cards-specific. They are separate from graphics unless you’re assuming processor technology would evolve more if graphics stagnate.

        Complexity of stories is not a technology limitation. It’s largely cultural.

        And there’s plenty of games being made already. Too many, I would say.

        • Galacticplumber says:

          Demand for tech rises with the level of tasks that demand them. Graphics cards wouldn’t be as advanced without constant demand for graphical improvement. If advancement is deliberately avoided in one area it will inevitably lead to an increase in other areas.

          Further spending dramatically less funds on one thing means a much higher likelihood of more money being spent on other things like say, for example, hiring a goddamn writer more often.

  46. Old_Geek says:

    Here’s the point. I don’t know what games truly cost to produce, you don’t know what they cost to produce, Extra Credits doesn’t know. The companies won’t release the kind of cost and sales data we need to determine that. Maybe it is $80. if it is, put $80 on the cover. Or don’t make the game. or make a cheaper game. BUT

    Do not charge $60 then trick the consumer out of another $20. That is morally wrong. And I was very disappointed in Extra Credits for seeming to indicate that it was OK.

    • poiumty says:

      Some game companies release their budget, and some have outright stated that the game needs to sell X million copies to turn a profit. So for some cases, we do know.

      But you can’t just say “we’ve determined only 2 million people will buy this game, therefore we’re doubling the price to make up for the 4 million we need”. That is simply not how it works.

  47. General Karthos says:

    Well, I’m late to the party on this one. I have to say that I more or less agree with everything Shamus has said. I don’t use the retail market a lot. In fact, the last game I bought at a retail store was Fallout 4 when it first came out. I get all my other games through sales on Steam or GOG or in the Microsoft Store (for my XBox One; and if there’s any other way to get it for the same price, I’ll take that).

    I really wanted Civilization VI, but I wasn’t willing to pay $60.00 for the game or $75.00 for the deluxe edition. But when the game went on sale, and the Deluxe Edition was available for $52.99, I took it.

    I’m gonna go off on a bit of a tangent now.

    Many years ago, I got Crusader Kings II from Paradox Interactive, and since then I have been a fan of them to the extent that I was a fan of BioWare in the before times, before EA bought them.

    When Paradox Interactive brought out Stellaris, they brought out the regular edition and the deluxe edition and the SUPER deluxe edition. I got the SUPER Deluxe edition, not because the extra content was actually worth the extra $20.00 to me, or because it gave me three badges on their boards instead of one, or anything like that. I bought that edition because I like Paradox Interactive, I like their online community, I like the way the developers of the game look at the complaints of the fans (and they are many and varied) and make changes that are (often) based on what the fans are complaining about. I want to support them. This is also why I buy all the DLC for Crusader Kings II at full price, even if I’m not particularly enthused about what it is.

    Now, if they offered the game on sale (and I did initially get CK2 and the first two DLCs at 75% off) I wouldn’t refuse to take the sale price in order to support the company. I assume the sale is because they can afford to sell it at this price. But the fact is that this is how they got me. And I’ve paid more for their new DLC than I saved on the initial game by buying it at 75% off. Almost every time new DLC comes out it’s accompanied by a large sale on the original game, and every DLC except the modern one and the one before it. (The one before it usually is on sale, but not quite as discounted). They get new customers who then pay full price for new DLC.

    This is smart marketing.

    I should note that another reason I love Paradox is that their DLCs always add something significant, but are also accompanied by free patches that add quite a bit as well, just not the major features of the new DLC. Weather and seasons in Crusader Kings 2 was added as part of a patch, not as part of the DLC.The map expansion to India was free, but you had to pay for the DLC in order to play any of those Indian rulers.

    And when the new DLC “Apocalypse” comes out for Stellaris in about a week, (this Thursday) I’m gonna buy it at full price, because I want them to keep producing new content the way they currently are. If you hate DLC, that’s fine. But DLC is unavoidable at this point.

    So if DLC can’t be avoided (and as long as it continues to make money, it can’t be avoided), we should do everything we can to make it better. Including supporting companies that produce quality DLC instead of slapping a $5.00 price tag on new clothing for your character or something like that. (For some people, this will be worth $5.00, but for the majority of people, it’s grossly overcharging.)

    • Taellosse says:

      FWIW, the way you describe it (I’m not personally into the style of games Paradox makes, so I’m going by your reporting here), their DLC sounds like the modern equivalent of old-school expansion packs. Maybe back in the day they’d have made 3 or 4 of them into a single package and sold them together, for the sake of efficiency, but otherwise, basically the same idea. I don’t think many object to the notion of substantive new content that builds on the existing game experience as a separate purchase. The exception being when it’s clearly content carved out of the base game and slapped with it’s own price tag – “DLC” that gets offered alongside or very soon after the release of the base game. DLC isn’t automatically bad, I don’t think, it’s just gotten so often abused we forget what it was supposed to be for originally.

  48. Taellosse says:

    This veers dangerously close to a political comment, I suppose, but I think a factor that needs to be considered is the reality that, while inflation has risen relatively steadily over the last couple decades, the median wage has not. For the average consumer, they actually often have LESS money to spend on entertainment than they did in the past (Person A in 2006 has usually gotten wage increases through career advancement, but Person B who is 10 years younger and is 10 years earlier in their working life is being paid the same or less in salary as Person A was 10 years ago, while those dollars are worth less).

    The obvious counter is that other sources of entertainment have risen in cost during the same time – movie tickets cost at least 50% more than they did a decade ago, and that’s excluding the inflated prices for things like IMax or 3D, for example. But I think that’s where psychology comes into play – $12 is more than $7 for a movie ticket, but it’s not a LOT more. $4 won’t make or break the average person’s budget one way or the other. But $60 is already a pretty significant amount of money for most people – its not something many will spend on impulse, or casually. And boosting that by the same percentage means you’re looking at a price hike of $30, and that’s a pretty big difference – enough to have a very real impact on a budget for many.

  49. Droid says:

    Hey, Shamus! I don’t know if you heard, but THQ Nordic (or Nordic Games, for the old-time fans) has acquired Koch Media and with it Deep Silver, the publishers of Sacred, Risen, Saints Row (III and IV, afair), et al. In the past, their acquisitions mostly meant pretty good sequels and/or remasters.

    Any opinions or feelings about that? I know you wrote about Saints Row in the past, but have you played any of their other games? Risen at least is a solid RPG, even though its devs were a big influence on The Witcher 1 at the time, which you couldn’t really stomach (Risen is somewhat similar in focus and tone).
    So I’d really be interested in your opinion on Risen, as it is more polished than The Witcher 1, but obviously no The Witcher 3 or anything like that.

  50. Jabberwok says:

    Yes, thank you. Budgets are not going up in order to raise the price, they are going up to try and raise sales. Higher budget films cost the same amount for a ticket…

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