“Gamers Aren’t Overcharged; They’re Undercharged,” Says Wall Street Analyst

Megalith

Megalith

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According to KeyBanc Capital Markets analyst Evan Wingren, gamers are overreacting to EA's “Star Wars” controversy, and that publishers should actually be raising prices: "If you take a step back and look at the data, an hour of video game content is still one of the cheapest forms of entertainment," he writes. "Quantitative analysis shows that video game publishers are actually charging gamers at a relatively inexpensive rate and should probably raise prices."

The analyst estimated cost per hour for a typical "Star Wars Battlefront II" player. He said if a gamer spent $60 for the game, an additional $20 per month for loot micro-transaction boxes and played around 2.5 hours a day for one year, it comes out to roughly 40 cents per hour of entertainment. This compares to an estimated 60 cents to 65 cents per hour for pay television, 80 cents per hour for a movie rental and more than $3 per hour for a movie watched in a theater.
 
Megalith said:
According to KeyBanc Capital Markets analyst Evan Wingren, gamers are overreacting to EA's “Star Wars” controversy, and that publishers should actually be raising prices: "If you take a step back and look at the data, an hour of video game content is still one of the cheapest forms of entertainment," the firm's analyst writes. "Quantitative analysis shows that video game publishers are actually charging gamers at a relatively inexpensive rate and should probably raise prices."

The analyst estimated cost per hour for a typical "Star Wars Battlefront II" player. He said if a gamer spent $60 for the game, an additional $20 per month for loot micro-transaction boxes and played around 2.5 hours a day for one year, it comes out to roughly 40 cents per hour of entertainment. This compares to an estimated 60 cents to 65 cents per hour for pay television, 80 cents per hour for a movie rental and more than $3 per hour for a movie watched in a theater.
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I've always thought this was the case actually. From the time I was a kid to a young bachelor, it seemed like a much less expensive hobby than anything else. Cars, motorcycles--try buying a BOAT.

The one thing he's forgetting is the Big Bang of Content happened about 7 years ago and we have been exponentially expanding since then. I can get free games easily, many of good quality, or I can watch a shit ton of content on Netflix.
 
So games that were 60 dollars when there was no DLC were too cheap.

Um no. No they weren't.

They just didn't have gameplay based on grinding.
 
Big problem with this is the assumption you'll get 900+ hours of enjoyment out of a game. I've only managed that on two or three games in my steam library, far more games end up with 30-60 hours total play, and even a few with total play time under 20 hours.
 
Sure his argument with price per hour almost had validity. The key point is where he states 2.5 hours per day for a year. Sure when I was a kid, not married, no friends, didn't have to work 40-60 hours a week, I had that kind of time. At this point in my life I consider it lucky if I get 3-4 hours in a week let alone a day or two. So based on that-suddenly my costs increase by nearly 4x because of his flawed assumptions for the rest of us. He conveniently also avoids the issue that originally when you payed for a game, you truly owned it. At this point your'e basically buying a service with ongoing fees to enjoy the full product which you truly don't own. He also doesn't point out the issue where buying season passes doesn't guarantee a dev will continue to publish DLC for even a full year let alone more(MEA anyone?). I didn't see any detailed mention of the gambling nature of the extra money spent w/o guarantees of return either. What a tool!
 
beemanit said:
Imagine that EA was your ISP. You pay $60 dollars for "internet access" however they then start charging additional fees to access amazon, another fee to access google, another fee to access other favorite websites.
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more realistically you would buy an access box pass "think lootbox" for $1 with the chance that inside it will be a link to google/amazon/another site. If the contents of the box just has another link to the homeshopping network, no problem, keep buying until the link you want is in the box.

A grey market would develop where you could buy and sell links, it's a grand idea.
 
These DLCs are getting closer and closer to arcade game costs.

Oh, you want to play? pay $1 to play
Oh, you died? pay $1 to continue
Oh, you finished a level? pay $1 to continue
Oh, you want to save your character? pay $5 to continue
Oh, you want to open your boxes? pay $5 to continue
Oh, you ran out of inventory space? pay $10 to continue
Oh, you ran into our artificial level cap? pay $10 to unlock
etc.
 
beemanit said:
Imagine that EA was your ISP. You pay $60 dollars for "internet access" however they then start charging additional fees to access amazon, another fee to access google, another fee to access other favorite websites.
Click to expand...

Going a bit off topic here, now you're referring to net neutrality. Get use to it, your FCC is trying to remove it. ;)
 
douche bag is more than welcome to have his opinion, just like I'm more than welcome to go back to pirating games like I did in college.

The ease of access, general low cost, and availability of games on Steam for example... is the main reason why I actually pay for my shit these days. Companies/devs/whoever is more than welcome to fuck that up with a stupid moves like micro transactions, or whatever dumb crap they try to sell on top of the game. Like many others, my steam back log could hold me over for years if needed
 
This "analyst" says that we should spend 900 hours and pay about $500 on a single game based on the price of cable TV...(he says that $300/year for battlefront II is too low!). What is he smoking? The reason cable costs are so high is that quasi-monopoly cable companies force you to pay hundreds for channels you don't need. A fairer comparison would be something like Netflix... The 40 cents/hour he quotes is already twice the cost of Netflix and he wants to make it 60 to match cable.

Thanks to Leichtman Research, we know that the average American pays $99.10 per month for cable TV. That means that subscribers are paying a whopping 61.4 centsper hour to watch cable TV -- more than three times as much as users pay per hour of Netflix!
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The whole point is that not everyone has 900 hours or $500 to spend on a single game but if you make a game pay to win the only people who will have fun are those who can spend insane amounts of time or even more money. The guy that thinks that games need to be more expensive than cable TV is insane.
 
Gaming was also huge when piracy was rampant. And many of the most popular games are either free to play or inexpensive (rocket league, dota, overwatch, heroes of the storm, counterstrike, ark (for a long time is was cheap), player unknown's battlegrounds, etc). Pretty sure steam sales also show the same results.... It's not that it can't cost more, there's definitely people who will pay more, but that's a subset. It's the same with the grinding, there are people who will do it, but there's also plenty of gamers (particularly people with jobs, families, etc) who have disposable income and aren't going to spend time grinding.
 
Seems nobody is seeing the forest for the trees here. The analyst raised his price target on EA, Activision, and Take-Two because lots of those same butt-hurt gamers on Reddit are going to continue buying games anyway. I think people like to think that Reddit represents reality, but it doesn't.

Those price targets are +9% (EA), +16% (ATVI), and +19% (TTWO), respectively, from their 52-week highs.
 
Megalith said:
According to KeyBanc Capital Markets analyst Evan Wingren, gamers are overreacting to EA's “Star Wars” controversy, and that publishers should actually be raising prices: "If you take a step back and look at the data, an hour of video game content is still one of the cheapest forms of entertainment," he writes. "Quantitative analysis shows that video game publishers are actually charging gamers at a relatively inexpensive rate and should probably raise prices."

The analyst estimated cost per hour for a typical "Star Wars Battlefront II" player. He said if a gamer spent $60 for the game, an additional $20 per month for loot micro-transaction boxes and played around 2.5 hours a day for one year, it comes out to roughly 40 cents per hour of entertainment. This compares to an estimated 60 cents to 65 cents per hour for pay television, 80 cents per hour for a movie rental and more than $3 per hour for a movie watched in a theater.
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Sure go ahead raise the price, I play very few games anymore anyways. That’ll just make me play no more games. Besides that, I’d just wait longer for them to go on sale and pay $5-$10 for them.
 
Looking at market data he's not wrong, even if it's going to be an unpopular opinion.

I was paying $70 for N64 games back in the 90s, which is equivalent to about $112 now. Even subtracting the costs of the more expensive media, games back then were more expensive than they are now, and the costs of building games has increased exponentially since. Sure, the market is larger now too, but it's also more fractured, and it takes a lot more sales to recoup development costs.

That all being said, I'd much rather pay $80 for a game that comes with all of the content, than pay $50-60 and be nickle and dimed with DLC and microtransactions. The current business model is broken.
 
So if we suppose he is correct, and publishers should charge more for games (I think this is an oversimplification, to be honest), it doesn't account for the calculated cost of unlocking all of the content in Battlefront II. They are trying to flip those calculations on their head, but that means EA is anticipating that you will spend the equivalent of two years of full time work playing their game. If we are being honest here, when was the last time anyone dumped that much time in a single game that wasn't World of Warcraft?
 
nightanole said:
Buy a 99 cent song on eyetunes, listen 10 times, 10 cents a play...

Also what adult has 2.5 hours of free time per day, for gaming, let alone a few hours, period.
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I mean I do...but I have pretty good time management skills. Two kids, wife, building a house and I can still make a couple hours of entertainment/relax time. Doesn't mean I do every single night, but I can easily. Perhaps you need to learn how to manage your time better?
 
My issue with his numbers is that he comparing the wrong forms of entertainment. For instance a season pass of basketball, baseball and football. Going to an amusement park. Live theater, the opera. And thats not accounting the "MTX" associated to all those pastimes. Food, parking, hotels, merchandise, child support.
 
beemanit said:
Imagine that EA was your ISP. You pay $60 dollars for "internet access" however they then start charging additional fees to access amazon, another fee to access google, another fee to access other favorite websites.
Click to expand...

You do realize that's exactly what ISP's want to do, and what the FCC is about to allow them to do.
 
Remember that nearly all AAA games come with much more expensive "digital deluxe" or "collectors" editions that range from $70 to $140, and even these don't include all the DLC.

So don't believe what these publishers say. Meanwhile CD Project Red makes one of the greatest games on a tiny budget and no DRM or Micro transactions, and they raked in the cash for it.

So have fun defending the multi billion dollar publishers who cry poor.
 
collegeboy69us said:
...The ease of access, general low cost, and availability of games on Steam for example... is the main reason why I actually pay for my shit these days...
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Granted, I make a little more money at this point in my life, but the temptation to, and ease of, continuing to pirate is ONLY offset by that. Honestly, I'd rather do a little extra work and get everything for free, but they've found a good balance at this point with services like Steam. If the prices go up dramatically I would not be surprised to see the overall level of piracy go back up to pre-Steam levels. It seems like that's the way its going with streaming services these days, it costs more to subscribe to the multitude of streaming services than to simply buy every season of every show I watch on DVD when it comes out. These ass holes think they aren't getting a big enough piece of the pie, but the pie only gets smaller when entertainment gets too expensive, ESPECIALLY when its so easy to pirate digital content.
 
Rizen said:
Looking at market data he's not wrong, even if it's going to be an unpopular opinion.

I was paying $70 for N64 games back in the 90s, which is equivalent to about $112 now. Even subtracting the costs of the more expensive media, games back then were more expensive than they are now, and the costs of building games has increased exponentially since. Sure, the market is larger now too, but it's also more fractured, and it takes a lot more sales to recoup development costs.

That all being said, I'd much rather pay $80 for a game that comes with all of the content, than pay $50-60 and be nickle and dimed with DLC and microtransactions. The current business model is broken.
Click to expand...

The idea of financial people mixing in with the gaming crowd is a bad idea if EA does that it is a recipe for going bankrupt because in the end the formula that is already applied in markets as movies means massive losses based on thin air.
When the financial side comes to play in any discussion you are just waiting for people to validate their position to screw the customer , because it is financially viable .....

beemanit said:
Imagine that EA was your ISP. You pay $60 dollars for "internet access" however they then start charging additional fees to access amazon, another fee to access google, another fee to access other
favorite websites.
Click to expand...
Well you are going to see the day since the FCC is now in hands of one of the people which thinks that free market should rule American internet :)
 
His cherry-picked calculations say 2.5 hours every day for a year. Every. Day. So to hit his numbers you have to play each and every game you buy for 912.5 hours per year. These games aren't that good.
 
Why are the current games so expensive now a days.... Have you ever looked at the credits?

How many producers do you need?
How many assistant producers do you need?
How many assistant assistant producers do you need?

Then there is the ridiculous amount of money spent on re-recording those weapon sounds, they rerecorded the last time, they rerecorded them.....

See a patter here.......
 
Somebody need to go back to school and take an economics class since they obviously don't understand capitalism.

If you want your product to be successful, you do NOT price it based on some made up formula or what you think it is worth.
You price it based on what will bring you the best return on your investment.
 
I will most certainly be in the minority on this, but technically speaking he is correct, not that I want to pay more. If you lok back to the early days of consoles, after the crash, starting with the Nintendo Entertainment System games have traditionally cost anywhere between $40 and $70 a game, usually right around the $60 price point. That price point has stayed more or less the same for over 30 years. And that was around $60 for garbage games and outstanding classics of the various generations. Sometimes the prices went up for certain games, if I remember ChronoTrigger was $75 when it came out. If you add in inflation to the picture, a normal game today should be around the $90 to $100 price range, again that's for garbage games and things like GTA V. I don't line micro transactions and paid DLC anymore than the next person, but on the other hand price wise we have to admit, even if we REALLY don't want to, that games are pretty cheap all things considered. There are VERY few items that have held to the same price for a 30 year span. I am obviously excluding computers since that is a whole different thing.
 
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