Video Games — Microsoft and Sony Locked In a Pricing War

By Avi Ben Ezra Thursday, October 1, 2020

The gaming industry is betting that gamers will be willing to spend more money to buy their games as they’re waiting for the release of new Xbox and Playstation consoles. The two tech giants, Microsoft and Sony, are expected to start shipping their new consoles next month.

New Playstation 5 (PS5) and Xbox Series X are rapidly selling out as gamers are rushing to preorder them. Both Microsoft and Sony will sell their machines at around $500 and will also be releasing digital-only versions of the consoles at lower prices — $400 for PS5 and $300 for Xbox.

Powerful New Consoles

Both consoles are reportedly much better than their predecessors in terms of performance and graphics quality. Both Xbox Series X and PS5 will come with a solid-state drive that allows much faster loading times and a new feature called ray tracing, which provides very realistic graphics by simulating how rays of light bounce off of objects.

However, with such powerful consoles, game publishers are looking to increase their game prices based on extra development work and higher marketing costs. Take-Two Interactive, the owner of popular publishing labels 2K and Rockstar Games, was the first to announce price increases.

A new NBA 2K21 will now cost $70 on Xbox Series X and PS5. Shortly afterward, Sony confirmed a price limit of $70 after announcing the PS5.

“Our own Worldwide Studios titles will be priced from $49.99 to $69.99 (RRP) on PS5,” said Jim Ryan, Chief Executive of Sony Interactive Entertainment CEO. This decision would put an end to the $60 price that has been the gaming industry norm for 15 years.

Microsoft, on the other hand, hasn’t announced new Xbox game prices yet. Phil Spencer, head of Xbox, told the Washington Post he believes “the customer will decide what the right price is for them.”

“I’m not negative on people setting a new price point for games.”

Bartosz Skwarczek, Chief Executive and co-founder of video game online retailer G2A, argued that raising the price of AAA games “risks jeopardizing gaming for a new generation of young gamers.” Skwarczek expressed concerns over increased prices at a time when the economic crisis from the coronavirus outbreak may turn consumers off from purchasing new games.

“I think this is not a good idea to increase prices when people are suffering and the economy is suffering because of coronavirus and the economic crisis that we have,” Skwarczek said in an interview with CNBC.

“I think that could be played with a little bit more empathy towards gamers.”

Censuswide has recently conducted a survey in which 9 of 10 gamers think that new video games shouldn’t cost more than $60. The survey that polled 1,031 Americans in August showed that all respondents believe that paying more than $60 for a single game is too much, while 59% think gaming has become too pricey.

Still, in spite of these polls, the gaming industry thinks that gamers will be okay with paying $10 more for new titles. Also, some experts pointed out that accessing video games is much easier nowadays, some of which are available for free.

Many in the gaming industry think that a price increase is overdue. Call of Duty 2, for example, which set the current $60 standard upon its launch in 2005, would be priced at nearly $80 today, according to the US Bureau of Labor Statistics’ inflation calculator.

“There’s no good time for a price increase,” Steve Bailey, principal games analyst at research company Omdia said.

“But saying that, there may be times where it’s more suitable for there to be a price increase, and I think this is quite a suitable time. If you have to bite the bullet with a change like this, it’s best to do it in sync with major transitions,” Bailey added.

He said the gaming market is now much different than it was, with the inclusion of free-to-play games, digital discounting, and subscription offers.

Summary

Video game producers are betting consumers will be willing to pay extra for their games with the release of new Playstation and Xbox consoles; however, a recent survey found that the majority of consumers in the United States believe that gaming has become too expensive.

About the Author


Avi Ben Ezra

Avi Ben Ezra is the Chief Technology Officer (CTO) and Cofounder of SnatchBot and SnatchApp (Snatch Group Limited). He leads the Group’s long-term technology vision and is responsible for running all facets of the tech business which includes being the architect of the platforms and UI interfaces.

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