Alienating The Mainstream: The Price Of Gaming Continues To Increase

By Jordan Douglas on July 27, 2010, 12:58AM EDT

The rising cost of game production and its negative impact on the health of publishers has been a hot topic throughout the gaming industry for quite some time. To cope with this problem, many publishers and industry analysts have been speculating about new ways to extract money from the consumer. Third-parties have been toying with the idea of a subscription model for their online offerings, industry analysts continue to predict a rise in the price of retail products, new 'premium' services segment the market, the list goes on. While much of this remains speculation at this point, the fact is that gaming is already an incredibly expensive hobby. Publishers need to look for alternative ways to generate revenue, rather than continuing to pile charges on the player.

An example of potential price gouging is Bobby Kotick, a man whose comments continue to make waves throughout the industry. In this case, the Activision CEO <a href"">made headlines last month by saying: "I would have Call of Duty be an online subscription service tomorrow." Kotick lamented the dominance of Xbox Live and PlayStation Network in the console space, adding "that 60 per cent of [Microsoft's] subscribers are principally on Live because of Call Of Duty." In his eyes, Activision needs to pursue its own payment options because they don't "participate financially in that income stream." Microsoft's exclusive benefit from Xbox Live fees have caused Activision to hunger for a piece of that pie. At the very least, Kotick seems interested in pursuing options outside of Live, instead of immediately adding onto that charge.

The gaming industry's star analyst, Michael Patcher, seems to agree that Activision and other third-parties are inevitably going to charge their own service fees for online products. Pachter believes "purchasers just have to accept online multiplayer is going subscription," and that "publishers just can't afford to give [online] away for free." A situation in which each individual third-party publisher reaches into the consumer's pocket on top of existing fees is bound to push gamers to their limit, restricting the market to only the high income players. A new arrangement must be worked out between the platformer holders and publishers for any chance of success in this model.

On the subject of retail game prices, Patcher again expressed his belief that consumers are in for cost increase. In his mind, the 3DS presents Nintendo with an opportunity to raise retail game prices, based on its perceived value with some consumers. Patcher said: "We view the 3DS as a revolutionary device, and expect its launch to spur hardware and software sales... From a software perspective, we believe Nintendo will be able to increase DS software prices, from a blended average of around $25 today to over $29 next year." It seems consumers just can't catch a break. Raising the barrier to entry is most certainly a step in the wrong direction for an industry constantly looking to attract new audiences.

In the midst of all this talk of additional service charges and price hikes, it's strange to think that a new 'premium' service such as PlayStation Plus actually represents a step in the right direction. It's value for each individual consumer can be debated, but the fact remains that PlayStation Plus is a completely optional charge for consumers. Sony can benefit from an increased revenue stream from the minority of consumers who value a premium service, and the rest remain unaffected. Hopefully more companies will look to alternative sources of revenue, because simply throwing additional costs at consumers will only hinder the growth of the industry.

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