Forbes: Recession Affecting Consumer Spending, Thus Affecting Publisher Pricing Models

Note: Nope, not back yet.  This is just an accidental double-post from Kombo I didn’t want to go to waste.

Prices in games are a funny thing. As technology has progressed, there have been predictions of lower prices for software, such as with the move from cartridges to disc media, which is cheaper to produce. Or with in-game advertising potentially being used to see a lower price at retail.

But instead, prices have had a tendency to rise, or remain steady at best for quality titles. So, if cheaper media and paid ads haven’t succeeded, then is there anything that could cause a decrease in the price of games?

Well, there might be one thing, according to Forbes.

That was before the recession hit. With consumers increasingly worried about their cash flow, questions are starting to surface on how long publishers will be able to maintain the $60 price point.

Activision-Blizzard made the most notable move right before Christmas, lowering the price of “Call of Duty: World at War” from $59 to $49. While price cuts aren’t unheard of during the holidays, the latest “Call of Duty” was a strong seller for the company and the action perked the ears of analysts.

“While the move may be part of an annual promotion, we believe a $10 discount on one of the industry’s top holiday releases highlights the risk of lower software pricing moving into the new year,” wrote Colin Sebastian, senior vice president of equity research for Lazard Capital Markets, in a note to investors. — Forbes

Call of Duty isn’t the only product to receive a price cut from publisher Activision Blizzard; Guitar Hero World Tour also received a reduction in price, while competitors Electronic Arts and Ubisoft have also implemented broader price cuts, according to Sebastian.

Forbes notes that games will likely continue to be released at the $60 price tag to which we’ve all become accustomed, if not comfortable with. But the length of time a title may remain at that steeper tag may see a reduction as well, which may also affect revenues… especially if gamers begin to learn restraint and manage to keep themselves from attending so many midnight launches.

Forbes closes by noting that the higher-end consoles cost more to develop for, with prices being as much as ten dollars more for a title, and the loss of that buffer could impact profit margins, and then affecting game stocks and earnings per share.

Of course, odds are that the vast majority of gamers probably won’t care — oh, sure, they’ll be very vocal in their support of developers and publishers, but Resident Evil 5 for $50? I doubt very much that their support will be accompanies by protesting the price and searching for a higher retail tag.

With that said, should this course be the one followed in the industry, something will inevitably have to give. But what?

–LBD “Nytetrayn”

David Oxford

David Oxford, or “LBD ‘Nytetrayn’,” as he is sometimes also known, is a freelance writer of many varied interests who resides in Toronto, Ontario, Canada. If you’re interested in hiring him, please drop him a line at david.oxford (at) nyteworks.net.

For a full list of places to find him online, click here.