Game prices drop too quickly

[Anayo]

It disturbs me that the video game prices drop so rapidly.

4-21-2011 Portal 2 came out for $50.
9-XX-2011 it was $30.
10-05-2011 I got it for $15 in a steam sale.

Maybe in my mind this concept is like buying a car brand new off the lot and losing money on the depreciation as soon as you drive away, just with a two digit price tag instead of a five digit one and waaay more people buying said cars. Algebra, I guess.

I'm at a point where I don't even seriously consider buying games brand new. It just doesn't make sense to me. I'm beginning to reach a point where I'm wonder why anyone else would, and how enough people manage to do so to support the gaming industry. Somehow they sell millions of units on items that lose half their value in half a year.

Some people would argue one is “supporting the developers” by buying a game brand new. I agree some people might do this, but not very many. I think a major boundary standing between developers making money and people just pirating games is convenience, not altruism. Video games aren't exempt from harsh capitalistic realities – those realities being that if I just wait a couple months my $50 can buy two or three games instead of one, which I'll enjoy just as much. Gaming doesn't move ahead a generation in six months.

This leads me to wonder what causes some games to stay valuable for longer. My question: in a year, what will this game be worth? In two? Three or more? Also, what causes the game to retain a high asking price, or to drop sharply?

In extreme cases, games get sold in limited quantities (like Panzer Dragoon Saga), and the value actually quadruples, but that's not exactly desirable cause that severely limits the number of people who get to experience the game.

I've noticed Pokemon games seemed to retain pretty high prices on eBay and in used game stores. I think this has to do with cult status of the game itself, but also a game design that revolves around tricking the player into 'investing' in their exploits inside the game, and the ability to transfer your accomplishments to the next generation version of the game. For instance you can import your Pokemon from the Gameboy Advance games into the Nintendo DS version. So the games never completely burn any bridges by planned obsolescence.

Mario games seem to stay expensive for longer than average. I remember New Super Mario Bros DS was hardly worth getting used for a year or two, cause it cost almost as much as a new copy. I think this has to do with the fact that it appeals so broadly to so many people (kids, grown-ups, guys, gals) so the demand stays high even though it's not exactly rare.

I think many games sell when several people want to play the multiplayer together, so it's not necessarily about the game itself, as some selfish experience, it's about enjoying it with others. I noticed this when Halo 3 came out. A bunch of guys at my school just didn't show up for class on Halo 3's launch day. Ticket sales in movie theaters went down cause lots of males with money were playing Halo 3 instead of watching Iron Man. Maybe they know it'll depreciate in value, but they don't want to miss out on playing it with their friends so they pay full price. I'm not personally above this. I paid almost full price for Pokemon Heart Gold when my best friend suggested we raise Pokemon teams over the summer to battle each other. The extra money was worth it for me to enjoy said game with my friend.

How quick would the price depreciation of video games have to become to prevent people from buying games on launch? For instance, if games showed the same price drop as Portal 2 in the span of six weeks instead of six months, would games be in danger? If games somehow stayed 'valuable' longer , would that constitute a step forward for games?

[Curlypaul]

I've already given up buying games at launch because I only have to wait a few months and the price will normally have dropped. Its not often a game comes out that I can't wait to play that much, after all I have a hefty backlog of great games that cost me 2 quid each

For me, the new car analogy doesnt quite fit as I rarely look at my collection in terms of how much its worth, rather I evaluate it on how many great games that I have. The analogy does hold in the value for money area though, and some consumers place a lot of value in being one of the first to own a new product.

[Hatta]

Games don't drop in price fast enough, and they start out at ridiculous prices to begin with. I don't care how long they keep the price up, I'm not paying $60 for a game. If they want my money, they have to drop the price, and they have to drop it fast enough that I still care about the game.

Torchlight 2 is coming out soon. At $20 a pop, I'm buying it on release day. I haven't done that in years.

[Zing]

There appear to be many people who wait for price drops before committing to buy a game. There are so many games to choose from, I don't see much reason to buy on day one.

You would hope that retailers and publishers have access to data that confirms early price drops are required. I suspect that these price drops are creating a feedback loop which, over time, is triggering even faster price drops and higher initial retail prices.

[Gnashvar]

My backlog of games is so large that I don't remember the last game bought at launch. I will be getting TLoZ: Skyward Sword at Launch. But that's special

[fvgazi]

You're complaining about dropping prices? I just picked up Portal 2 as well... $15 with add-on!!

They should all be cheaper to begin with. There are some games that practically never drop in price like CoD MW.

[Evildeadmanwalking77]

It's rare that I'll pay the $59.99 price tag for an Xbox 360 title unless it's something I absolultely want and can't wait to play, in this case Batman: Arkham City which I have preordered at Game Stop. For the most part though I usually wait for price to go down or snatch a used copy somewhere.

[s1mplehumar]

I still get the launch bug occasionally, but I've learned to restrain myself in recent years. I usually call bs when I see "LE" these days. I will confess I'm powerless against Sid Meier and 1st part Ninty releases at launch.

[prfsnl_gmr]

Dropping the price of a video game over time is how publishers price their goods "to market." That is, they adjust the price of their goods (i.e., video games) based on the amount different types of consumers will pay for it.

For example, people who are really excited about a new release like Portal 2 may be willing to pay $60 for it. Another group of people - who are less excited about it - may only be willing to pay $30 for it, and a third group of people - who are somewhat ambivalent about Portal 2 - may only be willing to pay $15 for it. Regardless of the size fo these demographics, however, a publisher will maximize its profits by charging each group of consumers the maximum amount that they are willing to pay. Accordingly, Valve will price Portal 2 $60 when it is released so that all the people who are willing to pay $60 for it will do so. A few months later - after everyone who was really execited about the game has purchased it - Valve will drop the price to $30 so that everyone who is only a little bit excited about Portal 2 will purchae it. Finally, a few months later, Valve will drop the price to $15 so that even people who are ambivalent about Portal 2 will pick it up. If Valve priced Portal 2 for $15 at the outset, then even people who are amibavalent about it would buy it at launch, but - at the same time - Valve would be leaving a lot of money on the table from the people that were willing pay $60 for the game.

Obviously, this is a simplified explanation, but it generally explains the speed at which some games drop in price. The concept of "pricing to market" is not new, and it is not confined to the video game industry. (It also explains why a book or other fungible good may cost $1 in Australia but $10 in the United States.) Moreover, videogame publishers have priced their goods to market since at least the 16-bit era. (Both Nintendo and Sega had "Greatest Hits" series for the SNES and Genesis. Sony continued and refined the tradition with its "Greatest Hits" series on the PS1 and PS2.) The rise of the "downloadable" game has simply made it easier for publishers to calculate the rate at which their games are selling, and it has significanlty reduced the marginal cost of distributing video games. (The decreasing marginal cost of producing a video game explains why SNES, Genesis, and N64 "Greatest Hits" did not drop below about $40, but PS1 and PS2 "Greatest Hits" titles were priced at $20 or less.) Accordingly - at least with respect to downloadable titles - we now see a more rapid and more significant decrease in the cost of vide games than we did even a few years ago.

[gtmtnbiker]

It disturbs me that the video game prices drop so rapidly.

Economics 101 - Supply and Demand