Kotick: Console price cuts 'in the works'

TOKEN on 10 May '11 said:

Ive been thinking about a ps3 for a while but cant bring myself to buy one at its over priced tech(need to release next time same as others) and lack of games and not enough exclusive 3rd party games.
Hopefully.

TheLastDodo on 10 May '11 said:

Good to hear if its true. I might pickup a 360 when the 720 or whatever it will be called is released.

freds1 on 10 May '11 said:

Same as the first two, but I've heard the same thing before, last year in fact (two or three times) and I'm still waiting. When it happens I will pick one up.

superman711 on 10 May '11 said:

i agree with the guy that wrote the article.the motion stuff will hold us off for a while atleast my move will. as for the hard to develop on ps3 goes thats bulls**t. look at portal 2 for example they had ppl from nuaghty dog come in and perfect every thing that the could.but this is wat i see. the industry and society as a whole is trying to bring every thing together and that is a bad thing. cause it will be a domino effect when it fails. example pns fails, as well as quirocity, as well as soe, and our informating gets stolen. people forgot about we the poeple, not we the i. oh and by the way our votes dont count.

Megatrons_Fury on 10 May '11 said:

Ummmm

You can easily pick up a ps3 for 199.99 in multiple places so the price thing is almost irrelevant. Also to say the ps3 has not enough exclusives is very naive.

A price drop would be great of course and i totally welcome it however i believe 200 - 250 is fine for a console price wise, it's the games at 40 rrp thats a joke.

Films have casts and crew of hundreds into thousands take years of writing, planning filming and post production yet a cinema ticket is less than a tenner and the dvd / blu ray if bought online etc can be around 15 pound yet games with a cast and crew of tens into hundreds costs 40-45 or 35 ish online....... This makes no sense at all

Add to that the fact that the games industry has by all accounts over taken music and film as the number 1 pastime of this country and in fact most of the world and it begins to look a little mad.

Games have been far too expensive for far too many years almost everyone i know personally very seldom buys new games at the full RRP they wait sometimes less than a month and pick them up for 25 or less from places like zavvi etc. The very fact that second hand games now make up around 25% of the Uk market shows my points to be totally accurate, there would be no need for a second hand section in your local GAME etc if the brand new copy was in my humble opinion fairly priced.

If games were sold at say 19.99 - 24.99 from the off think how much more instant revenue would be generated from day one, most companies that make games need a quick return so this would be a much better solution than holding back finished stuff and releasing as DLC a month after the games release to get their extra revenue.

If the world of games is going digital as i think is obvious to all that it will within a 5-10 year timeframe then maybe this will happen and personally i think it should as there will be no manufacturing costs or shop percentage take and one less chance for the VAT man to take his lump but when the traditional shop purchase has gone publishers can then do whatever the hell they want and will probably still charge 40 for the game.

Price cuts on consoles are never a bad thing so im happy to hear it will be happening as that will give shops a much needed surge of new custom which helps local and national economies but i really do believe the bigger picture here should be the focus on software pricing.

Having Mr Kottick welcome price cuts whilst authorising more and more games releases with 2-3 download packs at 9.99 a time really annoys me and so his opinion just seems pointless and two-faced.

wrightandrewjame on 10 May '11 said:

@Megatrons_Fury

It's not that simple to just reduce the price though. Let's take a game with an RRP of £39.99:

£8 went on VAT (20 per cent)
£9.25 (24 per cent) went to the shop
£12 (30 per cent) to the publisher .

The rest goes on what's called cost of goods: the nuts and bolts of videogame publishing.
80 pence (two per cent) goes on distribution
£1.75 (four to five per cent) on marketing
£8 (20 per cent) licence fee goes to the platform holder (Microsoft, Nintendo or Sony).

Costs are paid for by the game's publisher. If a third-party is behind the game, approximately £3 goes to the developer, or 25 per cent of the publisher's revenue after deductibles, although developers are often paid in a series of advances as they meet milestones.

Who should swallow the shortfall to reduce the price of your game? If the publisher does then the amount the developers get goes down too. If the shop does (which they tend to) then they risk not making a profit. The platform holders take a big chunk, but they need it to recoup losses on selling you the console. That leaves the Tax man. Not going to happen.

Prices will keep going up, because the cost to make the games goes up. Inflation plays a part too. The amount for a launch PS1 is comparitable to that of a launch PS3 when inflation is taken into account. The way of the world it seems.

Megatrons_Fury on 10 May '11 said:

Hi

sorry to say this but NO game makes over 9 pound for a seller ie shop.

Take it from a man who has worked in this industry for many many many years and has owned his own store for 8 years.

I dont mean to be rude but every point you make is exactly what my entire post says, didgital distribution will allow for the price of games to come down, re-read what i said and it all makes perfect sense.

It probably wont happen whilst we are still in the box selling method because as you said nobody wants to take the shortfall but just becuase it won't happen doesnt mean it shouldnt happen, my point that games are too expensive is spot on, circumstances and the status quo effect mean that nothing will change right now but the opportunity will be there within a 5-10 year period.

Again sorry if this comes across as rude it absolutely is not my intention i just needed to clarfiy that everything you have said is exactly what i said in the first place.

Selling a software title for 39.99 rrp against a console (say the xbox 360 250 gig at 199.99) is just false economics, the game does not and would never cost 1/5th of the cost of developing a brand new console project from start to finish.

I have similar arguments over this with some of my friends who actually work in software design, some who even work for some of the bigger developers, ever since we split into the selling and making of games we have never agreed eye to eye with who has to back down first over the price of software and i suspect we never will. The weird thing here is that when we were at school together just playing games we all agreed they cost too much.....

How money makes people different eh? lol lol

boskersrevenge on 10 May '11 said:

I would like a PS3 pretty soon... a lower priced one sounds even better

fps_d0minat0r on 10 May '11 said:

"digital distribution will allow for the price of games to come down"

http://www.consolemonster.com/newspost. ... 0000007913

gmcb007 on 10 May '11 said:

Every time Bobby Kotick hears the words "price cuts" , he dies a bit inside.

fps_d0minat0r on 10 May '11 said:

Every time Bobby Kotick hears the words "price cuts" , he dies a bit inside.

not really, the more people with consoles, the more he can sell call of duty to.

wwinterj on 10 May '11 said:

I'm in the need of replaceing my Arcade 360 that has kicked the bucket so if this is true it might be worth waiting and buying a slim brand new. Having said that I'm thinking about getting a pre owned 360 for around £80. Depends how I feel as to if I'll wait or not.

ricflair on 10 May '11 said:

Those figures were from Eurogamer, I assume they did some research into the costings of it?

People always want things cheaper, if brand new games cost £25, people would still go and pay, say £15, for a trade in copy. Plus games often come down to £25 within a few weeks, yet the second hand trade of these titles still continues.

Most games will only sell to a fraction of the user base, even the games that have shifted huge numbers. Black Ops, which is an exception in terms of sales, has shifted 20m copies across the 100m 360s/PS3s sold. Even for a game that sells well, that figure will go from 20% to something like 5%, or for something like Bayonetta, which was one of my favourite games of recent times, less than 2%. Or for Vanquish, 0.6%!

I think the £50RRP is a lot for a game (and CoD seems even more expensive at £55 for seemingly a new set of clothes), but I haven't paid more than £35 for a new release for years. I don't have a real issue with the price of games as they stand. Big titles still sold a lot back in the 16bit days, development costs were smaller, the industry was arguably less competitive, second hand sales were relatively tiny and RRPs were much higher (in real terms).

Megatrons_Fury on 10 May '11 said:

@ fps_d0minat0r

See this is a classic example of a person who wants to be apparently funny and sarcastic rather than making any valid points or entering into a decent debate on the matter.

If you wanted to be really clever you should have quoted PSP prices that are on the psp store (when its working) some of those games are 32.99 when in stores they are about 15 quid in shops.

Again i dont mean or want to be rude but low brow sarcasm is a pet peeve of mine and something the internet has encouraged to its detriment.

What i clearly said was that digital distribution will allow for the price of software to come down, i did not say it will DEFINATELY mean chaper games because we all know a lot of publishers (activision im looking at you) are money grabbing scum who only care about what this months shareholders meeting determined.

When you cut out all manufacturing materials physical distribution costs suppliers shares and a stores small profit then that instantly takes off a quite good chunk of a standard 39.99 game meaning chaper games can be easily had but again i just know publishers will still keep prices high and thats my exact point. A lot of people do not realise that the average new release game has the VAT man take a cut 3 times from its sale by publisher to distributor, distributor to store and then store to customer, that adds a huge amount to the overall retail shelf price.

Games cost too much, they have for so many years and up until now they have had good reasons for this, digital distribution totally rips all of those excuses away so i cannoot wait to see how they justify 40 quid games that you dont even get a box and a manual for. Microsofts and sonys full games on their networks are so over priced it should be illegal, i nearly had a heart attack when i saw BLACK OPS for 44.99.

And heres the funny thing, i hate digital distribution because im a collector and for many years have hoarded thousands of games for my collection, the introduction of this method kills my hobby and passion stone cold dead and i love reading manuals ( well i did until they became pointless safety & precuation panflets) so if games are still 40 quid when all this happens im gonna be very very upset and i suspect a lot of you will be too.

wrightandrewjame on 10 May '11 said:

@Megatrons_Fury

Nah I won't take offense. I was just going by the facts that I've been given in the past, and from what I found from a quick search on the web. Everything I found stated the store takes on average around 25% of the RRP (Nearly £10 of a £39.99 game). Maybe you undercharged people?

Obviously retailers don't charge the full amount, they swallow those losses to stay competitive. Though lowering the price won't help anything. The cost of video game production is very high and only about 1 in 8 break even, with 1 in 10 making a reasonable profit.

The current mindset does seem to be that we'll wait until the price comes down. Fair enough. When it gets to £25 or so, you buy it, because it's £15 off. What if you start at £25? Yeah more people might initially buy it, but is it enough to offset the £15 shortfall per sale you could have had, sacrificing a few sales? Probably not. You'll also still have the people that won't buy something at full price too. A lot of market research goes into price points and well £40 has stuck. It's been around for over a decade now. It's what people see as fair for the amount of entertainment you receive from it. £40 for 100 hour+ entertainment will win out over a £10 trip to the cinema for 2 hours (which probably will cost you more - I've worked in a cinema before and the whole plan is to get you to buy popcorn for £5, when it costs about 1p). Anyway I digress.

Your point about digital distribution is fair, but you're only cutting out the retailer (or giving more to the likes of Sony and Microsoft). The cost of production of the game is huge and the release of the full title is not the big money earner. It's simple things like Special Editions (low cost tat that they shove £5-£50+ extra on the RRP) and DLC (much lower production costs due to the initial outlay, a few extra skins for models cost next to nothing). It's all about high profit revenue streams. DLC is one of those. Love it or loathe it it's here to stay.

One point though that you probably didn't consider is that bandwidth costs money. So do the servers to hold the file and the people to maintain them. An overhead you lose from one side, you'll gain from another. Then you've got the risk of it all falling apart, like this PSN fiasco. That's a revenue stream severed and companies will feel it. Also VAT still applies for digital distrubution, so Mr. Taxman will always get his money.

There really is no easy fix, but prices are the way they are because they need them to be. It's in everyone's interests (mostly theirs though...).

Asinine on 10 May '11 said:

Those figures were from Eurogamer, I assume they did some research into the costings of it?

People always want things cheaper, if brand new games cost £25, people would still go and pay, say £15, for a trade in copy. Plus games often come down to £25 within a few weeks, yet the second hand trade of these titles still continues.

Most games will only sell to a fraction of the user base, even the games that have shifted huge numbers. Black Ops, which is an exception in terms of sales, has shifted 20m copies across the 100m 360s/PS3s sold. Even for a game that sells well, that figure will go from 20% to something like 5%, or for something like Bayonetta, which was one of my favourite games of recent times, less than 2%. Or for Vanquish, 0.6%!

I think the £50RRP is a lot for a game (and CoD seems even more expensive at £55 for seemingly a new set of clothes), but I haven't paid more than £35 for a new release for years. I don't have a real issue with the price of games as they stand. Big titles still sold a lot back in the 16bit days, development costs were smaller, the industry was arguably less competitive, second hand sales were relatively tiny and RRPs were much higher (in real terms).

^^ This ^^

While I would love to pay less than £5 per game, I tend to shop around and/or wait until I pay ~£30 for a new copy, new games were between £20 and £35 on the Amiga which in real terms is more than the cost of games now, (can't remember what the speccy cost), SNES and Megadrive were around the £40 mark, Starfox if I remember rightly cost £75 on the SNES... generally, games are less now than they were when taking inflation into account. I don't have a problem with buying new, if I want it, I will put my cash into the hands of the developers as best as I can. I will not be buying second hand, if I can't afford new, I obviously either need to calm down my spending or need to get a better job.

meh2allfanboys on 10 May '11 said:

I hope so as despite trading my ps3 slim in last month i am buying another 1 in july y july u might ask because that's when uncharted 3 beta will be in full swing and i can only use the wifes when she aint using it . I just dont want any restrictions on how much time i spend on the beta/full game because its guna b even more epic than uncharted 2 which for me is the best game ever made

ricflair on 10 May '11 said:

A lot of people do not realise that the average new release game has the VAT man take a cut 3 times from its sale by publisher to distributor, distributor to store and then store to customer, that adds a huge amount to the overall retail shelf price.

Isn't the VAT charged claimed back at every stage in the chain, so ultimately only the end user pays it?

slothfull9 on 10 May '11 said:

Here's something more radical: how about Activision cut their prices?

fps_d0minat0r on 10 May '11 said:

@ fps_d0minat0r

See this is a classic example of a person who wants to be apparently funny and sarcastic rather than making any valid points or entering into a decent debate on the matter.

If you wanted to be really clever you should have quoted PSP prices that are on the psp store (when its working) some of those games are 32.99 when in stores they are about 15 quid in shops.

Again i dont mean or want to be rude but low brow sarcasm is a pet peeve of mine and something the internet has encouraged to its detriment.

What i clearly said was that digital distribution will allow for the price of software to come down, i did not say it will DEFINATELY mean chaper games because we all know a lot of publishers (activision im looking at you) are money grabbing scum who only care about what this months shareholders meeting determined.

When you cut out all manufacturing materials physical distribution costs suppliers shares and a stores small profit then that instantly takes off a quite good chunk of a standard 39.99 game meaning chaper games can be easily had but again i just know publishers will still keep prices high and thats my exact point. A lot of people do not realise that the average new release game has the VAT man take a cut 3 times from its sale by publisher to distributor, distributor to store and then store to customer, that adds a huge amount to the overall retail shelf price.

Games cost too much, they have for so many years and up until now they have had good reasons for this, digital distribution totally rips all of those excuses away so i cannoot wait to see how they justify 40 quid games that you dont even get a box and a manual for. Microsofts and sonys full games on their networks are so over priced it should be illegal, i nearly had a heart attack when i saw BLACK OPS for 44.99.

And heres the funny thing, i hate digital distribution because im a collector and for many years have hoarded thousands of games for my collection, the introduction of this method kills my hobby and passion stone cold dead and i love reading manuals ( well i did until they became pointless safety & precuation panflets) so if games are still 40 quid when all this happens im gonna be very very upset and i suspect a lot of you will be too.

why do you assume i was trying to be funny or sarcastic?...i dont see anything there to laugh about.
theres no point writing an essay if 1 link was enough to prove you wrong.

kimoak on 10 May '11 said:

Any plans for a price cut for yourself with your games and map packs then, Kotick? If it is good enough for the hardware, it's good enough for the software.

meh2allfanboys on 11 May '11 said:

“I'm in the need of replaceing my Arcade 360 that has kicked the bucket so if this is true it might be worth waiting and buying a slim brand new. Having said that I'm thinking about getting a pre owned 360 for around £80. Depends how I feel as to if I'll wait or not.”
When i went to get my new in the box 250gb 360 slim at Gamestation for the excellent price of just £150 (my ps3 120gb and ps move is actually what i paid) i saw a 20gb xbox 360 in the window for just £74.99 pre owned hope that helps ya m8