Games are an expensive hobby, which anyone who has a “gotta catch ‘em all” approach to the hardware and software can attest to. For early adopters, it’s a bigger issue as it will likely mean hundreds of dollars paid above what the hardware will cost a little less than a year down the line, and software will often fall into bargain bins if given enough time on the shelf. While this isn’t a change from years past, with game consoles being a significant purchase as far back as the Atari, the gap between the games and the consoles themselves price point has become more of an issue. The relationship between game publishers and the manufacturers have changed, the same as publishers and retailers, in that the economics of how to best balance their pricing structures to return the most money is changing as consumer habits do. Digital distribution, while not driving down mass market game costs, has done a lot for independent game distribution and the overall concept of game distribution for larger publishers, who have begun to move major titles onto online store platforms in a hope to rekindle sales.

In regards to console prices, publishers have often been weary of putting a lot of stock into a console that has not hit the market as strongly as others, especially those that tend towards a higher price point. This was true for the original Xbox and it is true now for the PS3, with Activision-Blizzard’s head honcho Robert “Bobby” Kotick suggesting that console manufacturers need to lower their prices in order to take best advantage of the market. It is a good point, in that if you lower the price of the hardware it will likely drive more sales and therefore draw in sales of the software, something that Kotick has a vested interest in. With a stressed point on the difference between a $199 and $299 console when money is already tight, Kotick does not believe that the consoles right now are at a mass-market price where they are now. This is a message that has been hammered throughout the gaming press when directed at Sony for their PS3 pricing, and the rumours are abound that a cut is on the horizon.

There are some discrepancies in Kotick’s points, however, the most notable of which is that the Nintendo Wii has been a run-off success in almost every manner at a price point that is well above the $199 “mass market” price that he suggests. Microsoft did have a big leap when they moved their Xbox 360 Arcade model into that price range, but the higher prices for the Nintendo product have not been a barrier that has stopped hungry shoppers from eating up almost every console that lands on shelves, and that goes for the higher priced software titles like Wii Fit, as well. This point seems more directed at Sony because of their resilience to the concept of a price cut, as it does not fall in line with their “10 year plan”. With sales not showing any signs of growth through the last few months, including the important holiday season, it seems to reason that Sony will have to make some move, as their major software titles that are expected to draw in more hardware sales are not coming until very late into 2009, and early 2010.

The other issue here that Kotick omits is the growing price of software on the markets, and how its relation to game consoles has become. The price of Guitar Hero: World Tour for the Xbox 360 can be almost the exact same price, if not a bit less, than the console itself at its current suggested price point. Games like Call of Duty 4: Modern Warfare have also not dropped in price since their launch, something that Activision touted as a major success during their last investor conference call and not a big push to hit a market “sweet spot” when it is priced on par with or above the average retail game. Besides Nintendo, it is reasonably well circulated that video game console manufacturers sell at a slight to significant loss in order to better penetrate the market, and put a lot of development into major first party franchises in order to build on that market share and re-coup most of that cost. While each platform owner will gain from third party software success, it seems that many publishers are starting a war on two fronts. With some developers talking about the future of consoles being a singular platform, and publishers pushing the concepts of digital distribution, they seem to be at a war with the other businesses that support the industry.

While I’m not fully aware of the average cost per unit for a standard videogame – especially not for any triple-A title considering the huge development and marketing costs associated with the creation and distribution of the game – it seems unfair to expect console manufacturers to continue to cut deeper into their own pockets in order to line the pockets for groups that have not shown much flexibility in their own pricing schemes. While many game publishers have shown a progressive approach to their retail offerings, or even digital offerings, there seems to be a level of acceptance around a certain price point at any given time that most don’t seek to challenge. The console manufacturer often does set the precedent for this with their own offerings and suggested pricing, but it is up to the publishers to experiment with their own methods in order to hit that “mass market”. Surely if Guitar Hero was priced lower it may encourage hardware sales as a result, something that a strong product can often do, so the pendulum swings both ways. The onus can not always be placed on the supporting pillars for the product – retail and hardware – and given the daunting dollar figures that surround many major titles, and the percentage of cost compared to the hardware many of them are, I doubt consumers are ready to pay the same price for 2 or 3 games as they would for the hardware that plays them.