For all those Xbox, PlayStation, Wii owners out there, have you ever thought about why your video games cost you so much these days? The average game costs about $60 when it is first released and can go to about twice that if it includes bonus material. But if you think about it, the actual game is just a plastic disk. It can’t be that difficult or costly to produce.
But you guessed it… individual games for consoles such as Xbox or Playstation actually have huge budgets. In 2014 Activision, a popular video game developer, announced that one of their new games had a budget of about half a billion. Activision’s games may be an outlier, but not by much. In 2013 the popular open-world game, Grand Theft Auto V was reported to have a budget of $265 million.
As The Economist points out in one of their articles, this sort of spending is very similar to the Hollywood movie industry. Publishers will spend millions on a single product and sell most copies of that video game in the first few months. After that period, similar to films, games will drop to as low as half the original price.
This is the reason that advertisement spending for most popular games has increased. Publishers want to build demand for the game before it is even placed on the shelves in Game Stop. This technique is very similar to the music industry as well. Most people will have heard that Adele’s new album is going to come out many months before it is released. Publishers invest in this type of advertisement as a way to ensure they get as much bang for their buck as they can.
The increase in cost of video games has led many people to ask the question I posed at the beginning of the post. Their next question is, why don’t I play a video game that doesn’t cost anything at all? Apps and app video games have become very popular in the last 5 years. It is possible that the increase in cost of video games is the reason for this switch; from Xbox to iPhone.