News: Game Companies Face Hard Economic Choices

[News Bot]

Hugh Pickens writes "The NY Times reports that the proliferation of free or low-cost games on the Web and for phones limits how high the major game publishers can set prices, so makers are sometimes unable to charge enough to cover the cost of producing titles. The cost of making a game for the previous generation of machines was about $10 million, not including marketing. The cost of a game for the latest consoles is over twice that — $25 million is typical, and it can be much more. Reggie Fils-Aime, chief marketing officer for Nintendo of America, says publishers of games for its Wii console need to sell one million units of a game to turn a profit, but the majority of games, analysts said, sell no more than 150,000 copies. Developers would like to raise prices to cover development costs, but Mike McGarvey, former chief executive of Eidos and now an executive with OnLive, says that consumers have been looking at console games and saying, 'This is too expensive and there are too many choices.' Since makers cannot charge enough or sell enough games to cover the cost of producing most titles, video game makers have to hope for a blockbuster. 'The model as it exists is dying,' says McGarvey." As we discussed recently, OnLive is trying to change that by moving a big portion of the hardware requirements to the cloud. Of course, many doubt that such a task can be accomplished in a way that doesn't severely degrade gameplay, but it now appears that Sony is working on something similar as well.

Read more of this story at Slashdot.

[ACEwoK]

..and the recording companies are going under because of the number of people sharing mp3's too

[thoreau]

I think the point of the article might be that the 'free' subscription model for games might be quickly becoming a dinosaur. You simply can't spend that amount of money on development and hope that donations and/or advertising allows you to break even.

It seems that micro-transactions will be the minimal way to play or maybe a low entry subscription fee ($5/month) with add-ons to enhance your character.

[seanjohn]

cant raise the prices more that are almost redicilious already. at least for 360 they are 60$ a game.. thats when you keep the old ones and complain to keep the servers up for the game

[Maduro]

Originally Posted by thoreau

I think the point of the article might be that the 'free' subscription model for games might be quickly becoming a dinosaur. You simply can't spend that amount of money on development and hope that donations and/or advertising allows you to break even.

It seems that micro-transactions will be the minimal way to play or maybe a low entry subscription fee ($5/month) with add-ons to enhance your character.

I support micro-transactions in general, as long as it doesn't cost more to hardcore game than it does now for regular subscription fees. For example, if it costs now $15 per month for everybody to play a particular game like WOW, LOTRO, Eve, whatever, then it should cost that amount per month to meet the needs of the more hardcore gamer. By that I mean the type that needs and uses all of their storage space, all of their character slots, the ability to move characters between servers, the ability to run a guild, full storage in their mailbox, etc. $15 a month for that.

For someone who logs in for 2 hours a night on Sat and Sun nights and just messes around killing a few things and doing a few quests with their buddy = $0. You could then tier it at $5 and $10 for added core functionality.

Of course, in most micro-transaction games there is some added bling that can be bought, such as green smoke instead of blue smoke for that spell or perphaps a little talking parrot that follows you around. Most of that stuff is not functional as much as it's... blingy.