Why Video Games Are Too Expensive

VOICE OVER: Ty Richardson WRITTEN BY: Caitlin Johnson
Video games are getting more and more costly, both to produce and to buy! Today, we're looking at why video games are too expensive. Along with the release of the Xbox Series X/S and PlayStation 5 in 2020, came the revelation that the price of video games was going to increase to $70.
Script written by Caitlin Johnson

Why Video Games Are Too Expensive

Welcome to MojoPlays! Today, we’re looking at why video games are too expensive. Is your hobby leaving you short on change?

Along with the release of the Xbox Series X/S and PlayStation 5 in 2020, came the revelation that the price of video games was going to increase to $70. The trend began with 2K Games and has now spread to become a new industry standard for triple-A titles going forward. The main reason given by video game publishers and news outlets for this price hike is inflation; video games haven’t risen from $60 in fifteen years, and in that time, they’ve gotten bigger, better, and most importantly, costlier. But the inflation argument doesn’t really hold water. While it’s true that video games are getting much more expensive to make in general – and particularly the triple-A blockbusters that now boast this higher price tag – something else has been growing, too: the number of players.

In early 2021 there were an estimated 2.8 billion gamers in the world, which is more than a third of the planet’s entire population. It’s true that when adjusted for inflation a brand-new game today for a PS5 will cost far less than a brand-new game for the NES cost in the 1980s, but the market was far smaller. Only 62 million NES consoles were ever sold, and while this is a lot, it’s a long way off 2.8 billion. Video games are now a billion-dollar industry, with games at the $60 price point making their entire budget many times over. In 2020, the entire “Call of Duty” franchise broke $3 billion in total revenue following the release of “Cold War”. “Call of Duty” is one of the most lucrative video game franchises in existence, and one of the first to adopt the $70 price tag. If “Call of Duty” was already making hundreds of millions of dollars each year, generating vast profits, why has Activision decided to bump up the price? Do those profits not already cover the growing development costs of triple-A?

Well, the money decidedly is not going to the developers themselves hard at work making a new “Call of Duty” each year, despite this being the implication when publishers talk about “ballooning development costs”. In fact, the developers at Activision-Blizzard in particular made headlines in 2020 for being so underpaid they had to skip meals to afford rent. They anonymously shared their salary information to work out just how much they were being undervalued, all while the company’s CEO, Bobby Kotick, found his name on numerous lists of the most overpaid CEOs in the world and took home a $200 million bonus in 2021. “Red Dead Redemption II” had a development budget of between $170 million and $240 million, meaning that in one year Kotick took home roughly the entire development budget of one of the most expensive games ever made – while Activision also laid off employees yet again despite record growth. So, yes, video games are getting more expensive to make because of a push toward photorealism and big open worlds from triple-A publishers and developers, but the developers at the biggest, most lucrative companies aren’t seeing a fair share of the profits – and nor is the development budget itself.

But it’s fair enough to say lots of the most expensive triple-A games from the likes of Rockstar and Activision-Blizzard are worth those $70 and more; “Red Dead Redemption II”, for instance, is outstanding. But what about all those triple-A games that decidedly are not worth $70, and weren’t even worth $60 on last-generation hardware? The industry has a glut of incredibly expensive flops like “Marvel’s Avengers” from Square Enix and “Anthem” from EA. Triple-A was a term that once assured a level of quality from the companies producing these games, and many early triple-A games, like “Final Fantasy VII”, have gone on to be some of the most popular and critically acclaimed titles ever made. But today the term is almost meaningless; many of these so-called “triple-A” games are disasters. It seems like it’s actually a lot rarer today for a triple-A game to leave a big impression compared to an indie one. Indies like “Hades” or “Disco Elysium” are enjoying a surge of popularity and acclaim, while the likes of “Assassin’s Creed” and “Call of Duty” will repackage the exact same game year on year and then sell it to you again for a higher and higher price. Triple-A has even been described by the people who work in it – like Ubisoft’s Alex Hutchinson – as an unsustainable and toxic business model. All “triple-A” means now is that a game costs a ludicrous amount of money to make and will be expensive when it hits shelves; until it comes out, you have no idea if it will be worth your hard-earned cash.

And of course, the attempts of triple-A companies to convince you to spend your money don’t end when you buy the game from a store or digitally. Instead, many of these very same blockbuster games are full to bursting with post-launch monetization. Microtransactions are inescapable in this price range and completely unjustifiable. And again, these profits don’t go to the developers, they go to the pockets of games industry executives, and they don’t provide you with anything of real value, either; a new cosmetic might look cool, but it’s almost certainly not worth paying for.

But after all that, it’s still not true that every aspect of game development has been increasing in the last few decades. In fact, many parts of game development have gotten significantly cheaper, namely the manufacturing costs of physical games – so much so that you might find yourself getting charged more for a digital version of a game that has absolutely zero manufacturing cost than if you do buy a physical copy. In contrast, physical games in the 80s and 90s were significantly more expensive to make, necessitating high costs and with no alternative distribution chain.

But the growing digital market has no real competition if you’re locked into buying digitally; if you own a PS5 and want to buy a digital game, you have to buy that game from the PlayStation Store through Sony, which leaves Sony free to charge whatever it wants. With the push towards all-digital consoles, this problem is only going to get worse – people simply won’t be able to buy a physical game at all. For a given Sony exclusive, Sony might own not only the console you use, the game, and the development studio, but also the digital storefront itself. Vertical integration like this has been a big problem in the past; Hollywood studios once owned not only the movies and the stars but also the theaters themselves, and the problem was so severe the system was broken up by the United States Supreme Court. Suffice it to say, Sony is increasing its prices to $70 simply because it can, and people don’t have any other choice than to pay up when they want to play the next blockbuster Sony exclusive. And no matter how good Sony exclusives generally are, this practice is still bad for consumers.

Ultimately, games are so expensive because video game publishers decide that’s how much they should cost, regardless of how much evidence there is that the developers themselves aren’t being paid fairly; the games aren’t anywhere near as expensive to make as they seem compared with their profits; and that many triple-A games are only worth a fraction of their retail price. And that’s why video games are too expensive.