The Industry Average Game Price Dropped to $5-$10: Have Casual Games Become Fast (Junk) Food?

The major game portals are offering downloadable games for less than $10. In the past, it was said that $20 is the “industry average”, but now it seems that $5-10 is the industry average for downloadable casual games. This means one hamburger (junk) meal now costs the same as one average casual game. Hopefully the downloadable games are not seen as junk…

Big Fish Games has their games pass that let’s users buy games for only $6.99 (volume discount). Amazon is now selling games for $6.99 or $9.99 (those are Reflexive games). Playfirst offers games for $9.99 (with game pass). GameHouse is selling games for as low as $5.99 (with FunTicket). And if you check out other big game portals you’ll see similar prices.

James C. Smith – Producer/Lead Programmer points out that:

Customers see the sames game on many or all of those systems and compare the prices.

You can buy Jewel Quest II…

* …for $12.99 as a boxed copy from Amazon.com (or about the same from Target or Walmart). This is a typical price for a casual game in retail
* …for $2.99 as an iPhone app. This is a typical price for most iPhone games
* …for $10 as an XBLA game for 360. Typical for playform
* …for $5.99 as a subscription download from Big Fish (It’s actually $6.99 by the way)
* …for $9.99 as a digital download from Reflexive.com
* …for $9.99 as a digital download from Steam (they don’t actually have Jewel Quest II but most casual games on Steam are $9.99)

When people are used to paying $10 or less for download games on Wii, XBLA, iPhone, and retail they are going to hesitate to spend more for a PC download. I really don’t see this as a portal price war. It is portals catching up with mass market expectations.

After a bit of thinking, I have to admit that I agree with James here. It cannot be said that this is only about a portal price war. It’s more like “price war” against other (non-casual/downloadable games) markets. By lowering the price casual games have better chances to gain a bigger market share in the games market. It could very well be that this move (price reduction) can actually bring more people to the casual & downloadable games market.

New PC games cost $50ish when you purchase them as digital download. New Playstation 3 games cost even more. When people see that more and more casual (and indie) games are being sold at $5-10, the chances are that some of these folks will start to think if they really should be buying more casual type of games. (the moment that average Joe Gamer’s parents get to really know this option, you can rest assured they will be happy to buy casual games for their kids)

Does this hurt portal sales?
I don’t think so, in fact, I think it can be the opposite if they gain bigger market share (and can increase the volume). There’s some price testing done, and some games have bought more revenue with smaller prices. Some games have sold more with higher price. It depends about the game and the offering. Since portals are selling almost all games with the same price, there’s no much room for individual game price testing. On the other hand, portals have been extensively testing the prices and have came to the $6.99 / $9.99 price point because it’s optimal for them. They might be selling more copies, and if this lower price helps them to gain more market share (away from consoles, non-downloadable games – and even totally new markets) it can mean bigger profits for casual developers.

So, developers will profit?
Well… yes and no.

It’s true that development costs have gone up. It’s true that more developers are getting under the wings of big portals. It’s true that direct selling can get trickier. It’s probably true that developers will start to think more about alternative ways to generate revenue (free game, ads, micro-purchases etc.) It’s also true that if portals manage to expand the whole casual games market size (which is quite likely, although it’s difficult to predict how much it will grow) then it can be good for developers.

If there’s 200 million buyers instead of 100 million buyers in line for games, then naturally it can help gain more sales. Of course it can mean that there will be even more developers fighting for the crumbs (so to speak), but I believe the portals are moving alongside with the customer and helping them to buy more.

It’s a massive switch. It’s a big change to go from “$20 is the industry average” to “$5-10 is the new average”. I truly hope that those $5-7 price games would come with some sort of game pass system (which basically means “volume discount”: you need to buy games worth $60-70) and hopefully the game pass could benefit developers too. It sounds healthy price reduction, and makes sure people stick to buying more. We’ll be much wiser about the effects by the end of year 2009.

What about customers?
One thing is true for sure: customers benefit. Now you can go and buy 2 games for the price of one.

Now we developers hope that the customers really do that…

Update: Jake gives some points about this issue in his blog.

7 thoughts on “The Industry Average Game Price Dropped to $5-$10: Have Casual Games Become Fast (Junk) Food?

  1. wazoo

    So basically the portal bubble is collapsing.

    It’s far too early to tell, but perhaps it’s Amazon’s plan to create a chain reaction which will result in Amazon owning just about every major portal out there.

    This is definite proof IMHO (if any was still needed) that the only way to survive as an Indie is to move into niche products as far away from portal clones as possible.

    Reply
  2. dfish

    When people are used to paying $10 or less for download games on Wii, XBLA, iPhone, and retail they are going to hesitate to spend more for a PC download. I really don’t see this as a portal price war. It is portals catching up with mass market expectations.

    Wouldn’t it have been a better scenario for developers if the wiiware, xbla & iphone marketplaces caught up to the rather larger pc market and increased their prices? Isn’t that something the CGA should lobby for? If not, what is the point of the CGA?

    Reply
  3. Philip Dijkstra

    I think this pricewar should be limited by those that have invested, meaning the developer. A 40% cut on $1.00 with no investment is fine for a portal but a developer has to get back his investment first before he makes any profit. I think indiedevelopers need to make (united) agreements on a new price-model: lets say $3 per game (baseprice divided in catagories) + 25% of the sellingprice above $3.

    A $20 game would make: $3 + 0.25*($20-$3) = $7.25
    A $5 game would make: $3 + 0.25*($5-$3) = $3.50

    (actual numbers based on completely nothing, just an example)

    This is the only way a developer can keep some grip on ROI and thus get any external investors. The current pricemodel scares away investors with only low-low-budget games remaining.

    Reply
  4. Sebastien Larocque

    I think casual games are played like people go see a movie. It lasts only a few hours and prices have become similar. There are so many games on the market and people have limited time to play, so it is not a surprise that gamers are willing to pay a low price for games that they will play only a few hours.

    Reply

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