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Videogames are Doomed

Are Videogames Good Value?

Game Value Discussions about videogames often hinge on the relative value of the game – what it’s offering to the player and for how much. But when are games good value? What are the criteria for determining the value of a game?

One way of considering this is in comparison to other media. A movie, for instance, retails on DVD for about $15 (say) providing two hours of entertainment. This sets our baseline for judging game value (given that DVDs run in a similar environment to typical videogames) – about $4 per hour if you assume the DVD is watched twice. On this metric, console videogames may seem like great value – some might offer 100 hours of entertainment for $60, which is just $0.60 an hour. But this conclusion hides a hidden cost that needs to be taken into consideration: the purchase price of the console itself.

For a gamer hobbyist who buys and plays many different games, the cost of the hardware is actually not a very significant factor. If we call the cost of a power console like the Xbox 360 or PS3 $250 (while bearing in mind that early adopters paid more), this cost needs to be shared out with all the games played on it. But for a hobbyist, they are likely to play 20, 50 or even 100 games over the lifespan of that console – so the hidden platform cost is just $2.5 to $10 per game. A title offering a hundred hours might be pushed up to $0.70 per hour, but the value is still good.

Now look at what happens when we switch our attention to the mass market. A typical midcore gamer (who plays, say, FPS and driving games on a power console) will only purchase three or four games for their console over its entire lifestyle. This means that each game costs an extra $60-80. What’s more, such a gamer finishes very few of their games – a title that hobbyists might play for 100 hours might only see 10 to 20 hours of play for this typical mass market player. Now the boxed game is looking very expensive indeed at $120 total expenditure (including the hidden console cost) and a consequent $6-12 per hour of entertainment. This is a lot more expensive than DVD movies, hour for hour.

The same kind of value comparisons can be made in other contexts. Early arcade games, for instance, charged $0.25 for play that would last an unskilled player about 5-10 minutes, while an expert could last for 30 minutes or more. (In my arcade while I was growing up I had at least two arcade games – Nemesis and Rastan Saga – I could play for half an hour on one credit). So the unskilled player is netting $1.50 an hour, while the expert is getting $0.50 an hour. These actually look pretty good next to the $4 per hour estimate for a DVD, although you can see why those people invested in arcade revenue moved to the pump and play model (typified by the 1985 title Gauntlet) in order to get more coin drops. Once again, however, the gamer hobbyist gets better value for their games than anyone else – paying less than a dollar an hour.

What about social games, like those offered on Facebook by companies like Zynga? Well in principle these can be played for free so there is a sense in which these represent truly excellent value (you can’t beat free!). But of course, you can’t play at your own pace without paying for the privilege. Let’s consider a hypothetical title which charges $0.20 for an energy refill that is provides 15 minutes of play (I welcome any actual figures for social games that someone might have, but this will do as a rough estimate). The paid version of this game is $0.80 an hour. For the hobbyist, the probably looks like a con since they can get a much higher quality experience on their console for a very similar price. But for the mass market player, this is a bargain – the console game was offering them $6-12 per hour, after all. Social games, as would be expected, offer excellent value to mass market players – which is precisely why Nintendo is scared of them.

All of this discussion serves to demonstrate that the value proposition for any videogame is not something that can be determined independent of the player in question. Gamer hobbyists get their digital fun at excellent rates because they are bulk purchasers of this kind of entertainment, and enjoy the corresponding discount. Mass market players, however, get much better value for money out of social games than they do from the alternatives – even if they are paying to play – which is one of the many reasons that these kinds of games are becoming an ever-bigger player in the market for digital games.


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It's probably worth mentioning that for many traditional retail purchases, the value proposition is a little different when you consider the resale value of a particular game. So, I might spend $60 today on Game X, play it for 2 weeks, really enjoy it, and then sell my used copy for $40. Social games and digital downloads offer no such possibilities...

Jose: Yes, I've written a great deal about the importance of resale to the console market - and the lunacy of publishers trying to block it. The value proposition I present here is for that gamer hobbyist who has enough money coming in to have a games library. But as you suggest, a lot of gamers - particularly the young ones - can't afford a games library and have to liquidate their catalogue to keep playing the new games.

So it's a bit odd that publishers work so hard to block the sale of second hand/pre-owned games, because without this secondary market they wouldn't be able to sell as many units as they currently do! How they are unable to grasp this is beyond me.

All the best!

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