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THE PRICE IS WRONG - October 1996

This article is one I've had nagging around in my head for a long time now. It was there on Sonic Twosday, it was there when Commodore went bust, it was there when the angels and cherubs brought the Playstation straight down from Heaven on a silver platter and it's still there now. Except that now, someone's conveniently done all my research for me ("Entertainment War", CTW 9.9.96). So indulge my over-mannered and needlessly confrontational style and listen just this once, because I promise I'm never going to bring this subject up again. After all, if no-one's going to pay any attention when even the likes of Virgin post multi-million pound losses, then quite frankly you all deserve to burn in Hell anyway for your stupidity, and I'm buggered if I'm going to waste any more of my time on the matter. So let's get on.

Last week, like pretty much every week, I went to the cinema. There are three here in Bath, with a total of seven screens, and there's usually something watchable on. Last week, having exhausted most of the other options, I went to see Multiplicity, a heartwarming comic family tale starring Michael Keaton as four different cloned versions of himself. There were a few nice touches of wit, and the odd well-constructed set piece but, by and large, it was rubbish. As you might well expect.

So you might also expect, if you know me, that I'd have come out of the cinema ranting and raving, shouting the odds and demanding that the director, producer and cast all be taken out and ritually burnt. But, as so often, you'd be wrong. Leaving, chatting pleasantly to my companion, I remarked lightly on a few of the better moments before concluding that, yes, as expected the film had been pretty poor, but that it certainly beat sitting at home watching Bruce Forsyth's Price Is Right, and that we should perhaps adjourn to a nearby pub for a refreshing orange juice.

But why, you might wonder, might I, Stuart Campbell, act in such a manner, having gone to such lengths over the past few years to portray myself as the ice-hearted scourge of mediocrity, the cold-blooded coder killer, the sinister shadowy parasite cloaked in the craven disguise of consumer protection? Well, as ever, the clue was in the question. Have you guessed what it is yet? I'll put you out of your misery (well, a boy can dream) - the answer lies in the hands of the divine Brucey. The price was right.

How many of you registered a little shiver of surprise and disquiet when "Entertainment War" spilled the beans on the pitiful state of the interactive entertainment market compared to other leisure pursuits? (And just in case you missed the original, I've scattered a few little soundbites from it around the page). Warning signs hadn't exactly been short on the ground for the last couple of years, but the bizarre secrecy surrounding videogame sales figures left a few onlookers genuinely taken aback when it was revealed that the best-selling game of 1995, given every possible advantage (great reviews, a big-name licence, a well-known publisher, being about football) still couldn't manage to shift a quarter as many copies in a year as the last Spice Girls single did in a week. And the best-selling CD game, the mighty Command & Conquer, did barely even a quarter of that (a pathetic 36,000).

So why should this be? The next-generation consoles are down around the same price level as the Mega Drive and SNES were back in the boom days of the early 1990s, and they're supposedly bringing a whole new market of older, more affluent gamers with them. Meanwhile, the unstoppable global march of the nightmare from Satan's own bowels that is the PC continues apace, with an estimated 17 trillion or so machines installed worldwide and more copies of Windows 95 in existence than there are people. From kids to teens to Generation Xers to wrinklies, everyone's playing games. So how come no-one actually appears to be buying any? Well, here's a question: you're in this business - when was the last time you bought one?

I love videogames. And while I shouldn't have to point that out in a videogames trade paper, it in fact puts me in a pretty small minority. But that's another article. The issue is that as a consumer with a moderately high disposable income, I go to the movies at least once a week. I buy videos at least once or twice a month. I buy two or three albums and five or six singles a week, more or less at random. I think the last videogame I bought was Super Mario World. Fifty quid? You've got to be joking, mate.

And in case I'm outliving your attention span, here comes the point of this article. It's a point of view held by pretty much everyone in the known world except those in charge of software publishers (no, really - go and ask some of them), and I'll say it nice and loud so they can focus on it through their hospitality hangovers:

VIDEOGAMES ARE REALLY SHITTY VALUE FOR MONEY.

There, I've said it. And now I'll justify it. The games business claims it wants to be a mass-market entertainment industry. The mass market, however, has made it quite clear that it won't pay more than 14.99, absolute top whack, to be entertained. And it took the awesome muscle of Disney even to drag it that far. (And even then, most shops still have to discount videos and CDs to 12.99 to sell them anyway). And that's the price videogames will have to be before ordinary people (or, indeed, crazy bonkers weirdo people) will consider buying them in the kind of numbers that constitute a mass market. Not 40. Not 30. Not even 19.99. Fifteen quid, mate, take it or leave it.

God know, the mass market's tried to tell us. Virgin slash the RRP of Screamer - it races to the top of the charts and stays there for months. Endless new AAA titles come out and get discounted by 15 and 20 on the day of release in order to sell, and the public lap 'em up. And what do we do? Do we pat the retailers on the back, say thanks very much, volume sales are what's needed to breathe some life into the market, and after all, it's only your own margin you're cutting? Uh-uh. We berate them with a venom unique to the issue, and angry publishers demand in these very pages that they're hung, drawn and quartered in public at the next ECTS. If the videogames business had been put in charge of the moon landings, we'd have spent the oxygen budget on beer and suffocated five minutes after the rocket left the launchpad.

Sega, Virgin, Mindscape and Acclaim lay off thousands of staff between them and lose millions of pounds. BMG sputter like a soggy firework. Warners jump in with both feet and then jump right back out again. Hello? HELLO? Is anyone paying attention here? The glory days aren't going to come back again by magic. The SNES and MD were a toy fad, in the same way that parents will scratch each other's eyes out to get the kiddies a Turtle one year and then discard it for a Power Ranger the next. The games business has locked itself into an ever-decreasing vicious circle (hey, just go with it, alright?), whereby it bleeds the market so dry with greed that the only way to jerk it back to life is with the boost of major new hardware, which in turn fuels the incompatibility nightmare so bemoaned by developers (how to develop new games when you have to spend a year converting the old ones across formats?) and cuts the lifespan of the machine (and with games now taking an average of two years to develop, that doesn't leave much room for error), which forces publishers to bleed the punters even more vigorously with hasty, formulaic, even more expensive games (watch the curve: Amiga/ST - 25; SNES/MD - 40; PS/Saturn - 50; N64 - 60+?), which the punters are even more reluctant to buy (don't take my word for it, check the numbers), and off we go again.

And the arguments for high prices are, pardon my French, a load of old bollocks as well. (We should all know this by now, deep down, but check the THERE IS NO ALTERNATIVE box if you don't believe me.) Although there are, I concede, some valid observations to be made. Jon Hare of Sensible Software, for example, points out that "Games development kit is outdated a lot quicker than the machines used in other leisure industries", which is at least partly true. But then again, high-spec computer kit gets cheaper faster than pretty much any other kind of hardware in the world as well. And last year's SGI is still vastly over-powered for any reasonable demands that could be made on it by today's coders.

Roger Bennet is also difficult to contradict when he points out that "Film makers get more chances to make their money back, with cinema release, video release, satellite release and sell-through release". But then again, games generally get three bites at the cherry (full-price, budget, compilation - and these days there's often a mid-price point between full-price and budget as well). And music CDs seem to manage alright with just a single outing, albeit with a long shelf-life.

(Actually, there's yet another article in here, to do with the potential shelf-life of games being dramatically extended if they didn't take up so much of the aforementioned shelf with ridiculous packaging, but that's another other story.)

And it's that simple. There are four inescapable facts to be gleaned from this entire argument. You might not like them. You might not agree with them. But they don't care if you do or not. They're true, just the same.

  1. Games are too expensive. I don't mean too expensive morally, I don't mean too expensive to justify, but too expensive to get people to buy them in any large numbers.
  2. The price of games is crippling innovation - with people buying so few games, they take very few risks, so publishers play safer and safer, so sales slip further downwards (how many driving games and beat-'em-ups do you need?), so games get more expensive to recoup the losses, etc etc.
  3. The industry is labouring under a major misapprehension in terms of its own value. The idea that the business is worth 500 million a year simply doesn't stand up to the slightest scrutiny.
  4. The size of the games market in unit terms will get smaller and smaller the longer prices stay at this level. Even Sony can't keep releasing new machines indefinitely.

And there it is. Argue all you like. Indeed, you may, having read this, want to launch a blistering retort, pointing out the great value of games and all the reasons why prices can't and won't ever be reduced. I'd love to hear it. But there's just one proviso - I only want letters from representatives of companies that made a moderate profit of at least, say, 2 million in the last financial year. Don't worry if it takes you a while - I won't be holding my breath.

 

FACTBITE No. 1

TOTAL NUMBER OF UNITS SOLD IN 1995 BY:

THE TOP 10 CD GAMES - 266,608

THE TOP 10 CD ALBUMS - 10.8 million

It's worth remembering that here, as with all the other entertainment businesses except games, these are generally ongoing figures. For example, the Oasis album, counted in these figures at 1.8 million, in fact recently passed the 3.3 million mark. Games, as Jon Hare points out, can generally expect a far shorter shelf life - how many copies of Discworld or Star Trek TNG: Final Unity do you think will have shifted this year?

 

FACTBITE No. 2

TOTAL NUMBER OF UNITS SOLD IN 1995 BY:

THE TOP 10 CARTRIDGE GAMES - 540,657

THE TOP 10 SELL-THROUGH VIDEOS - 16.3 million

The figures for rental videos are even more sobering - a whopping 31 million, more than 57 times the game total. And bear in mind also that the cartridge market is disappearing right down the toilet as we speak, N64 or no N64. (Oh, and nearly 50% of the cartridge sales are accounted for by three versions of a single game, FIFA 95, which makes things a little less rosy-looking for everyone else).

 

FACTBITE No. 3

TOTAL NUMBER OF UNITS SOLD IN 1995 BY:

GAMES (all formats) - 10.3 million

RECORDED MUSIC (albums, all formats) - 266.9 million

Frankly, given the stated other figures for best-selling games, I'm a bit doubtful about even the 10 million (even if we combine the CD and cartridge figures, it would require over 300 other games to have sold as well as the No.10 best seller, which, as students of the fall-off outside the top 10 will agree, seems a tad unlikely), but we'll give it the benefit of the considerable doubt for now.

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THE USUAL SUSPECTS

No.1 - PETER MOLYNEUX, Bullfrog

Peter - games come down to 14.99 or we're all screwed. Discuss.

"I don't think you're too far wrong here at all. I absolutely agree that games are overpriced at the moment - what happens it that every time there's a successful product at a high price, everyone thinks they can jump on the same bandwagon. What you end up with, of course, is a lot of publishers not making any money (costs went through the roof when everyone moved to the studio model, rather than using independent outside developers), and trying to recoup it by pushing prices up further in hope of the One Big Hit."

Which drives games further out of the reach of ordinary everyday buyers, presumably.

"I think many publishers operate under a major misconception, too, namely that there are dedicated game buyers out there who will pay out 50 - and let's face it, that's a month's disposable income for many people - reasonably often for a game. I personally think the market is actually fuelled by new hardware buyers, who buy a lot of games around the time they get their machine, and then tail off dramatically."

Which ties in with the theory expressed elsewhere on these pages that the current market desperately needs a new generation of hardware every couple of years to keep it afloat, of course.

"The problem is that prices won't come down as a result of a big meeting. It'll happen through market forces - with the poor old retailers continuing to bear the brunt of it, if they don't get sick of us by then - and it'll take 3 to 5 years."

By which time, of course, Playstation 2 will be out, RRPs will have sneaked up to 60, and we'll have to start all over again.

"The signs are there - the difference between budget sales and full-price is astounding, more and more people are prepared to wait for six months for the budget release. We're just going to see a lot of unfortunate, slow deaths in the meantime."

 

 

THE USUAL SUSPECTS

No. 2 - ROGER BENNET (General Secretary, ELSPA)

Roger, why does the UK games industry find this blindingly obvious consumer issue so difficult to understand?

"I think, rather than the price of software, the real issue we ought to be concentrating on is increasing the public's awareness of the excellence and value of the software currently being produced, especially from the UK, which is far in advance of anything seen in years gone past."

I think the public are only too well aware of the level of excellence and value of today's software. I think that's our main problem.

"There's some truth in the over-pricing argument, but there's no magic number that determines the mass market. The question does have to be asked, however - does it really cost that much to produce a game? At the moment, we seem to be stuck in a downward spiral of price-raising - no-one seems able to grasp the nettle of lowering prices, certainly not in a market where everyone else is going to stick to the higher prices and leave the lower-priced games with a perceived-value problem. That said, I don't know why everyone gets so upset about discounting - I really can't see myself what difference it makes to publishers if retailers cut their own margins. I'm a lot more concerned about software bundling and magazine covermounts, which I think are a destructive force in the business - we're giving far too much away for free."

Most of this is probably true, but the fact of the matter is that there IS a magic number that determines the mass market, and it's 15 quid. The rest of the leisure market knows this full well - that's why Tesco have set 15 as the ceiling on their new games departments in superstores, for example. It's disturbing that only the games industry seems unable to realise this.

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THERE IS NO ALTERNATIVE

"But games are more expensive to develop, what with SGI workstations and everything" - yeah, and how much do you reckon a 32-track recording studio costs to build? How much does even a moderately-budgeted movie cost to make? The only time game development costs get even close is when they try, in fact, to make bloody movies (and I really do hope Wing Commander IV lost a packet, or we're all in deep trouble). This argument, perhaps more than any other, shows how much we're still kidding ourselves about being a grown-up business. To anyone else, 500,000 is peanuts.

"But we're charging what the market will bear." - but, as the figures have conclusively proved, the market isn't bearing it at all. The market is going down to the Barras and buying pirate copies for a tenner, or just ignoring you altogether. Wake UP.

"But sales have just gone up by 20% in the last year." - well of course they have. The year gone past marked the biggest event in new hardware launches since the Mega Drive, and things would be very odd indeed if that didn't spark a sales upturn (especially in the intermediate period, when the old formats still have some worthwhile sales in them). The Saturn and (especially) Playstation gave the games market its biggest boost for years, and when you chuck Windows 95 (the single thing which did most to convince millions of ordinary punters that you could use a PC for playing games, regardless of the minor actual difference it made to that pursuit) into the equation, a 20% rise starts to actually look like a pretty pathetic result.

"But it's not fair to compare games with movies and CDs - lots more people have VCRs and CD players than PCs." - true, but the percentages are just as frightening. About 80% of homes have a VCR. A highly conservative estimate would say 20% have a PC or a games machine. But the top sell-through video last year didn't sell 4 times as many copies as the top CD game - it sold 93 times as many. The public are trying to tell us something.

"But Durlacher say the videogame market is worth 500 million a year." - well, even if it is, which I very seriously doubt (see FACTBITE No. 3), that's a fat lot of use if three-quarters of it goes straight to Electronic Arts and everyone else has to fight over the rest.

"But we've tried putting out games at mid-price RRPs and they flopped." - because as long as you persist in trying to put games out at 45 and above (whether anyone buys them or not), the perceived value to the consumer of slightly cheaper games will remain too low. The difference, purchasing-wise, between 40 and 30 is pretty slight (although Quake, universally discounted to 29.99, did a lot better than other full-price games at the same time, it's still sold less than 30,000 to date, according to ELSPA), and if they're only going to buy a couple of games a year, they're as likely to go the extra few quid for the higher perceived value of a big title. Any reduction has to be uniform or the public will just get confused, and a confused customer isn't a big spending customer. As Confucius so memorably said.