Video Game Product Managers Struggle With Pricing

How much to charge and how to charge for it are video game questions
How much to charge and how to charge for it are video game questions
Image Credit: Thomas Hawk

Can anyone besides me remember back in the day when you wanted to play a video game and you’d stuff your pockets with quarters and head on down to the video parlor? Those days are now long gone and you can play great games almost anywhere without spending a penny. However, although you might not pay to play anymore, getting that game into your house can end up costing you a pretty penny. Just exactly how are video game product managers going about pricing their products?

How Much Should A Video Game Cost?

The global videogame industry has evolved, adding incredible 3-D graphics and previously impossible social interactions. Video games have become more and more expensive as the game product managers used their product development definition to come up with new ways to extract money from you. Sony Corp’s PlayStation 5 and Microsoft Corp’s Xbox Series X are slated to arrive by the holidays, bringing faster download speeds, enhanced graphics and other types of upgrades. That has prompted some product managers to charge even more than the typical US$60 for new titles that have been optimized for those machines. Gamers need to realize that it doesn’t cost anything to play the likes of “Fortnite,” but you could easily go broke on digital perks such as character costumes and dance moves.

From the free-to-play and subscriptions to season passes and upfront fees, grasping the true cost of interactive entertainment has never been more challenging. More and more customers are asking themselves why are some games so expensive? Every fall, the industry’s top publishers typically introduce their biggest games for consoles and computers, complete with glitzy marketing campaigns. These games cost a premium because developers invest increasingly large amounts of money to make them—tens of millions of dollars—and it shows.

While $60 had been the going rate for blockbuster games, product managers at Activision Blizzard Inc. and Take-Two Interactive Software Inc. recently announced $10 boosts for the newest installments of their hit franchises Call of Duty and NBA 2K, respectively—but only for editions compatible with the newest consoles. Versions for earlier consoles will still cost $60. If they can pull this off, it may end up looking good on their product manager resume. This brings up the question that gamers have to ask themselves: what if I don’t want to pay that much? Then they will have to wait a bit, as publishers often lower prices for their fall releases come Black Friday or soon after. It’s also likely the new consoles will come bundled with some big-budget games at a combined discount, as in the past.

Shopping For The Best Video Game Prices

Not all games are becoming more expensive. One outlier coming up is Electronic Arts Inc.’s next holiday release, “Star Wars: Squadrons.” It’s a piloting game for current-generation consoles and PCs that will cost just $40. The reason for the lower price is because the game isn’t as beefy as titles EA normally puts out around this time, hence the discount. Also, EA isn’t planning to release a version optimized for the new consoles, though Sony and Microsoft have said their machines will run many previous-generation games.

What gamers need to keep in mind is that what you pay at the cash register might be just the beginning, as many games sell digital add-ons. It can be tempting to occasionally buy a funky outfit for, say, 99 cents, but that can add up over time. This, of course, leads to the question are free-to-play games really free? Yes, it is possible to play some games for years on end without paying a cent—and not just the kind on your smartphone or tablet. These games are increasingly showing up on consoles and PCs, too, and include hits such as “Fortnite” and “Apex Legends.” They generate revenue in most cases by selling digital perks, showing ads or both. Some reward players for watching video ads by giving them in-game items that would otherwise cost money.

The logic behind the free-to-play model for product managers is that people are more likely to try a game if they don’t have to pay. And while only a fraction of players make in-game purchases, those who do open their wallets tend to spend enough to make free games profitable. It can be easy to justify purchasing those add-ons when a game is free to play. An alternative approach are season passes and subscriptions. In some cases, a more affordable way to acquire digital goods—aside from earning them at no cost through gameplay—is to purchase what’s called a season pass. These are packages of items that cost less in bulk. In many cases, they also include exclusives you can’t get otherwise. As their name implies, they are usually available for a limited time. You can also save on your gaming habit by subscribing to a service like Apple Arcade, EA Play and Xbox Game Pass. These work like Netflix by offering access to a large number of games in a variety of genres for a recurring fee as low as $5 a month. Some subscription services let you buy in-game items.

What All Of This Means For You

The market for video games is very large and continues to grow. Video game product managers are looking at their product manager job description to find ways to boost the revenue that they can generate based on each game that is released. In order to make this happen, they are having to get creative in how they get more money out of their end customers.

A modern video game will typically cost roughly US$60. However with the arrival of new game playing consoles, product managers are considering boosting their prices in order to charge more for games that have been optimized for the new hardware. Video games are costing more and more money to develop and so their prices have been going up in order to recoup their development costs. Customers who are willing to wait can often see the initial high costs of new games go down over time. Some games that have not been optimized for the new platforms will not cost that much. Free-to-play games are often not free: in game purchases can quickly add up. An alternative to these payment methods are season passes and subscription models. For a one-time payment, customers get access to games for a period of time.

There is no doubt about the popularity of modern video games. Many hours have been lost as players have immersed themselves in countless titles. However, how much to charge for the experience of playing these games is what is confronting video game product managers. They realize that they can maximize their revenue when a game first comes out; however, they end up having to discount their games over time. New subscription models may provide product managers with a way to normalize their revenues over time. Pricing for videos games is a game in of itself and we’ll have to see who wins this round.

– Dr. Jim Anderson Blue Elephant Consulting –
Your Source For Real World Product Management Skills™

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What We’ll Be Talking About Next Time

Product managers who are responsible for selling alcohol are in a bit of a bind these days. For some reason, perhaps because of everyone’s health kick, sales of alcohol have been declining over the past few years. Today’s millennials are just not buying as much beer, wine, and hard liquor as their parents once did. This news is sad for alcohol product managers. However, there is some good news for them. It turns out that some of the fastest growing alcohol drinks in the U.S. are called “alcopops”. The product development definition for these drinks defines a strong, sugary alcoholic soda that is targeted towards younger drinkers. Could these be the products that alcohol product managers need to save their market?