While browsing the shelves of the gaming section in your local store, you notice the varying prices in video games with the games behind the glass ranging anywhere from $40 to $100.
The price of video games gets even more confusing when the same game is offered in silver, gold, and platinum edition all at different price points, leading you to wonder.
Why are video games so expensive?
Why Are Video Games So Expensive? (Top 10 Reasons)
The primary reason video games are expensive is budget.
The budget includes the cost of research and development, the cost of running a company, retaining talented employees for game development, marketing and distribution, royalties, and game maintenance.
Video game prices can also be affected by external factors such as what price the consumer will accept and the landscape of the used video game market.
When a video game is first conceptualized and approved for development, it is usually given a budget, which includes all the costs that it will take to get the product to market.
This includes physical resources, labor resources, and any other resources the video game may require.
When assessing the budget of a video game, the developer will estimate the potential and probable sales of the game, correlate that to the projected cost of delivering the game to market, and decide on an appropriate price to balance cost and profit.
Currently, the average price of a newly released video game is $60 and game developers use this cost as a starting point to figure out where the budget will be allocated and how much of a budget the projected sales can handle at this price point.
2. Research And Development
Research and development, or R&D, is the process of taking an idea for a video game and bringing it to fruition.
The cost of R&D has skyrocketed since the initial surge in home video game consoles such as Nintendo and PlayStation.
In 1996, the average R&D cost was less than $1 million while today, the cost can easily reach $10-, $20-, or even $30 million.
One significant factor in the increase in the cost of R&D is the massive capabilities the modern gaming consoles offer.
With consoles able to handle 128 bits and allow for top-of-the-line graphics rendering, the process of developing and coding video games for these types of systems is much more intensive.
3. Company Overhead
Company overhead affects the cost of video games in today’s market as well.
This includes the cost of renting the building in which the game is developed as well as the cost of powering the building and the cost of insurance.
Overhead also includes less tangible costs such as the cost of protecting intellectual property and getting patents.
The cost of lawyers and financial advisors must also be added to the bill.
All of these overhead costs must be accounted for in the price of the products which are finally sold to the end customer.
4. Cost Of Employment
Video games are highly technical to develop and require a talented pool of coders and other technically skilled employees.
The average cost of a mid-level coder is around $120,000 per year.
Add to this sum the fact that a team of coders is required as well as a team of developers, managers, quality control experts, and numerous others to bring a product to final release, and the cost of employment becomes a significant factor in the cost of video games.
5. Marketing And Distribution
When a video game development company feels that they have developed a winning video game, the video game must be marketed to the masses to spread the word and the excitement about the new game.
The marketing budget can be massive with commercial spots reaching as high as $1 million for a single 30-second commercial.
In addition, the product needs to be distributed to the retailers who will sell the final product to the customer.
This cost includes the price of shipping, storing, and distribution of the final product.
When a video game employs the use of a famous actor or a specific product, there are typically royalties, which will need to be paid to the entity providing their voice, likeness, or product to the video game company.
Once again, the cost of paying the royalties gets bundled into the end price of the video game.
The final budget consideration affecting the cost of a video game is maintenance.
All reputable video game companies provide user support of some type to customers facing challenges with the functionality of the game.
Also, if any bugs or glitches are found after release, a development team will work to issue a patch for the game.
This continues support costs money.
Another factor is adding updates to the game.
With some updates, the end-user is required to pay a nominal fee to access certain portions of the update, but most updates are provided for free to the user to encourage the user to continue to play the game or to encourage new users to purchase the game.
8. Value Per Dollar
When looking at the price of video games, video game manufacturers will argue that, if looked at through a non-biased lens, the cost of a video game is actually quite reasonable, even cheap if you really investigate it.
The amount of game and all the technology behind the game you receive equates to a high value-per-dollar ratio.
For example, take all the budget considerations laid out in the previous section.
With the massive budgets required to develop and release a game, a manufacturer could find reasons to significantly increase the amount they charge per video game.
Another consideration for the high price that a video game developer could argue would be that the number of hours of potential playtime the customer receives more than makes up for the high prices of the video games.
For example, a customer may pay $15 to go to a two-hour movie, which averages about $7.50 per hour of enjoyment.
In contrast, a customer can pay $60 for a video game that offers 120 hours of playtime and only pay $0.50 per hour.
9. Market Acceptance
Another factor affecting the price of video games is market acceptance.
Simply put, the video game sales market has become accustomed to games in the $60 price range, and the consumer is more than willing to pay that price for the product.
If the customer base decided as a whole one day to reject that price and stop buying games at that price, the cost of video games would decrease.
This, however, is not the case, and a price point of $60 is considered normal and acceptable in the market.
While it may not jump out as a primary cause of expensive video games, resale does factor into the price of new video games.
With many retailers such as Game Stop, Best Buy, Walmart, eBay, and even Amazon offering resale video games, manufacturers make the argument that this resale of a game removes the potential sale of a new game.
The result is that fewer new games are being sold than if resale games were not available.
When fewer games are potentially sold, each game that is sold must make up for the loss of revenue on the games that were not purchased new and purchased from a reseller instead.
Is $60 Too Much To Pay For A Video Game?
No, $60 is not too much to pay for a video game.
When the cost of a video game is dissected compared to the number of resources put into the development, distribution, and maintenance of the game, as well the number of potential hours of play the game provides to the customer, $60 for a video game is actually quite reasonable.
Another thing to think about is how slowly the price of new video games has risen in the last few decades.
Video game prices are not following general inflation rules and have maintained at a steady cost of $60 on average since the 1990s.
Are Video Games Now $70?
Some video games are now being released at the $70 price point, but it is unlikely that this will become the industry standard anytime soon.
With the release of the PlayStation 5 and the Microsoft Xbox Series X, some AAA game manufacturers have begun to release their new games at a price point of $70 rather than the industry standard $60.
These AAA gaming companies cite the massive amount of money that goes into product development as the primary cause of the increase in price and point out the significant lack of price jump over the last few decades as a contributing factor of the price increase.
They’re basically saying that it is time for the price hike on AAA games.
Some games currently selling for $70 include NBA 2K21, Call of Duty: Black Ops Cold War, Demon’s Souls, Godfall, and MLB The Show 21.
Another cost that can be added to the price of video games is video game upgrades and special editions.
Some game developers use the standard base price of $60 as the price of the base game and will offer different editions for an additional cost.
For example, Assassin’s Creed: Valhalla was released as a standard edition for $60.
Then, the developer, Ubisoft, also released three other editions of the game: the Gold, the Ultimate, and the Limited-Edition Collector’s version.
In-game purchases are quickly becoming the most lucrative aspect of the video game industry.
After the initial purchase of the game, developers will offer special game modes or access, such as battle passes or additional characters and character upgrades, for an additional cost through the game itself.
This business model allows for the fast deployment of revenue-producing products without all the additional costs of developing a new game from the ground up.
Why Are Retro Video Games So Expensive?
The COVID 19 pandemic has changed not only the social and technological landscape of the country but the video game sales landscape as well.
Retro games, which are considered to be games released on consoles that predate PlayStation 4 and Xbox One, have made major jumps in price.
Pricecharting.com, a website dedicated to tracking the prices of all video games, cards, and comics from release to today, conducted a study that found that the average cost of a retro video game has increased 33% from the beginning of lockdown in March of 2020 to March of 2021, with Nintendo GameCube games taking the lead with a 70% average jump in price for games.
Possible causes of this massive increase in the desirability of retro games during the pandemic include the nostalgia factor, people stuck at home looking for new things to do, and people finding new ways to make money when traditional means are limited.
The nostalgia factor may be a result of the fact that the generation of children who grew up with retro gaming consoles are now adults with disposable income.
These adults may wish to relive a portion of their youth by returning to the video games they grew up with.
The younger generations who have been stuck at home by the lockdowns caused by the pandemic may seek out new methods of entertainment, such as retro gaming consoles.
The simplified gameplay of the retro consoles, for some younger users, represents a novel approach to technology that this generation, who has grown up surrounded by advanced technology, has not experienced before.
Finally, with a large portion of the population out of work due to the pandemic, people had to find new ways of generating income.
Platforms such as eBay allowed sellers to offer items such as retro games to buyers.
As the demand for retro games increased, resellers discovered that retro video game resale can be quite lucrative and began seeking out games to purchase and resell at a significant markup, leading to an increase in the price of retro games.
What Is The Most Expensive Video Game Ever Made?
The winner of the title of the most expensive video game ever made is currently being held by Destiny, a currently unreleased video game offered by developed by Bungi in conjunction with Activision.
Destiny was released in 2014 and had an estimated budget of $500 million, which is twice as much as the next most expensive video game ever made, Grand Theft Auto V at $265 million.
Following close behind Grand Theft Auto V are Call of Duty: Modern Warfare 2 at $200 million, Star Wars: The Old Republic also at $200 million, Final Fantasy IV at $145 million, and Max Payne 3 at $105 million.
What Is The Most Expensive Video Game Ever Sold?
The most expensive video game ever sold was a sealed copy of Super Mario Bros. which was bought by an anonymous investor on August 6, 2021, for the obscene price of $2 million.
Between 2020 and 2021, the title of the most expensive video game ever sold changed hands five times before landing on the current champion.
The price war began in July of 2020 when a copy of Super Mario Bros. with an intact cardboard hanger and rated 9.4 A+ on the Wata scale sold for $114,000.
This sale did not hold the title for long with Super Mario Bros. 3 stealing the spotlight and selling for $156,000 in November of 2020.
This particular Super Mario 3 sported a 9.2 A+ Wata rating as well as a very rare box on which Mario’s hand was obscured by the Bros. in the title text.
Super Mario 3 held the title for a respectable five months before being blown away by another copy of Super Mario Bros. in April of 2021 with a 9.6 A+ Wata rating and cardboard tabs.
This copy sold for a whopping $660,000.
The superiority of this Super Mario was short with a newcomer to the race, The Legend of Zelda, which sold for $870,000 on July 9, 2021.
This game was considered a supreme rarity by being a sealed pristine copy as well as being a variant of the game that was only released in 1987.
Zelda’s reign was extremely short, however, with Mario once again taking the top spot a mere three days later, on July 11, 2021.
This Mario game was Super Mario 64 and sold for a massive $1.56 million at auction.
Super Mario 64 was considered to be a groundbreaking game with its revolutionary polished 3D platform, well advanced for its time and still considered one of the pioneers in the 3D space.
Also, this game was in pristine condition, rating a 9.8++ by Wata, the video game rating company.
What Are AAA Games?
Triple-A or AAA is a designation within the gaming industry which indicates a high-budget and high-profile game that is usually released by a major player in the gaming industry.
AAA games are typically blockbuster franchise games that build off the popularity of other games within the franchise.
These games set the price standard and are typically released at the $60 price point.
Triple-A games also have the advantage of having a massive team to support the development and production of a game.
This support results in games that can offer massive game scale as well as state-of-the-art graphics and gameplay.
Examples of AAA games include Mass Effect, Call of Duty, Halo, Battlefield, FIFA, Madden NFL, World of Warcraft, and Star Wars: The Old Republic.
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Ltd, Arm. “What Are AAA Games?” Arm | The Architecture for the Digital World, https://www.arm.com/glossary/aaa-games. Accessed 11 Mar. 2022.
“Revealed!! Why Video Games Are So Expensive.” The Checkout Presented by Ben’s Bargains, 13 June 2013, https://bensbargains.com/thecheckout/bens-bytes/revealed-why-video-games-are-so-expensive/.
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