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The “PS5/XSX games have to cost more” myth

The “PS5/XSX games have to cost more” myth

Do they actually have to, though? A closer look at the situation raises some interesting questions.
Want to play new AAA games on the PS/XSX on day one? Compared to what you paid for the same PS4/XO games you might be asked to hand out ten more of those dollar bills. Question is: do you have to? (Image: Karolina Grabowska, Pexels)

With PlayStation5 and Xbox Series X just months away from release and most of their features unveiled, game publishers are bringing up a matter that’s been on their minds for some time. It’s no coincidence that it’s being brought up now, as the market prepares for the next generation of home entertainment systems: transitional periods encourage change by definition, accelerating processes and softening blows. But the matter those publishers are bringing up — a matter of $10/€10 in monetary terms, so… small, right? — adds up to millions of dollars of extra revenue for them every year. It’s about the cost of new AAA releases which, if said publishers have their way, will jump from $59.99/€69.99 to $69.99/€79.99 for the PS5/XSX versions.

This jump is already officially announced by one publisher and implied by a few more while debated by a handful of analysts and discussed by many media outlets as almost inevitable. A number of articles have been defending that position, largely painting the price increase as fair. A few market executives have even argued that such an increase in retail cost, if directly linked to development costs of AAA productions, is long overdue and practically necessary.

Is it, though? A close look at the reasons why this cost increase is now being discussed in a “had to happen” manner invites questions — and an even closer look at modern games development offers quite a few objections besides.

More expensive games: the financial perspective

Practically all arguments in favor of that $10/€10 cost increase for PS5/XSX games refer to the past. “The cost of all other forms of entertainment has increased during the last decade, but the last time the cost of new AAA games went up was in 2005”. “If inflation is taken into account for that 15 year period, then new games should be costing more than $79.99 today”. “The cost of developing games has increased exponentially while their retail price has not”. “The value proposition of video games — the relation between retail cost of a product and the hours of entertainment it provides — has been extremely high and a $10/€10 increase would not change that”.

The link of those arguments to past situations and practices does not mean that they don’t have merit. They do. They also make sense from a purely financial perspective: inflation, margins, costs, value, these are all terms that frame the matter in a certain way an analyst would like. But they can also be counter argued. For example: 2005 was a better time for most of us, financially speaking. It was not such a big deal back then for “HD” PS3 and Xbox 360 games to jump from $49.99/€59.99 to $59.99/€69.99. Inflation, on the other hand, is a term that can be twisted to fit an argument — but few would deny that while games have indeed not gotten more expensive, the average consumer’s spending power in developed or developing markets has not increased since then either. So it’s not like we all earn proportionally inflated salaries today for the inflated retail cost of new games to seem fair in 2020 (almost made it without mentioning the pandemic… almost).

Red Dead Redemption 2 offers up to 20 times the entertainment value of a good western movie — but its retail price does not reflect the overall cost of ownership of modern home gaming systems. (Image: Take 2)

The cost of other forms of (single pieces of) entertainment versus the cost of video games for the developed and developing markets’ consumer is valid as well — at first glance. Movie tickets buy someone 2 hours of entertainment for $10/€7.50, for instance, whereas $59.99/€69.99 could buy the same person 12–25 times as many hours of fun, not just 5–6 times more. Blu-ray or Ultra HD Blu-ray releases of the those same movies fare even worse, asking for $29.99/€24.99 to $49.99/€39.99 for the same 2 hours of entertainment basically (come on — how many times have most people really watched a modern film more than three times… or the extras on discs for that matter?).

So video games look almost like a steal in comparison, yes? A sum of $69.99/€79.99 for 30, 40 or even 60 hours of fun seem pretty reasonable, right? Well, no. These “back of the napkin” calculations do not take into account the necessary cost of a new home entertainment system, any peripherals or subscriptions, the percentage of electrical bills’ cost and the proportional cost of an Internet connection, nowadays practically required. These if put together for the duration of a console generation (say 6–7 years) plus the cost of games purchased during that period (even 1 per year) equal to an amount of money that can buy someone a lot of movie tickets. In other words: blockbuster AAA releases of video games do offer a lot of entertainment value, but they are very, very far from cheap. That is why an argument along the lines of “But look! Other forms of entertainment are practically ripping you off!” is not really convincing, let alone enough to persuade consumers that they should pay more for those AAA game releases than what they already do.

“But what about those increased game development costs?”, one might ask. Ah, that’s another story entirely.

More expensive games: the development perspective

Hardcore gamers have already heard all this before because that is almost always the way next generation games are promoted in order to have said gamers part with a not insignificant amount of money for the new systems that run those games: bigger, better, more. That usually means bigger worlds, better graphics and more effects, even if those promises often need several years of work from developers in order to be kept in the form they were given. In the case of PS5 and XSX these promises have already been outlined and they are indeed of the same type. So why the jump from $59.99/€69.99 to $69.99/€79.99 for their games, even for versions of games that will also appear on less capable systems?

Game publishers talk about the complexity of new games for the PS5 or XSX: the kind of complexity that requires more work, more resources. High resolution — 4K, for real this time… we hope — graphics, ray tracing lighting techniques, multichannel object-based sound are some of the features these new games will offer. More effort on the developers’ part, more time and resources needed, higher costs that have to be passed down to the consumer in order for AAA productions to be as profitable as the publishers want them to be. Hence the higher price of blockbuster PS5/XSX games. It does seem to make sense… at first.

Taking a closer look at modern games development, though, can make “complexity” seem like a misleading term. Games for the next PlayStation and Xbox will be developed in the same way most games for their predecessors were made: digital 3D models will be sculpted by tens of millions of polygons and then downgraded to less detailed versions that the new systems can handle, digital textures will be created at extremely high resolutions and then downgraded to less detailed versions the new systems can handle, digital environments will be built by hundreds of millions of triangles and then downgraded to less detailed versions the new systems can handle… a pattern emerges, yes?

Faster loading times in PS5 and XSX games will come as a result of the much higher speeds of their SSD storage, not as a result of much more or much harder work on the developers’ part. (Image: Microsoft)

In modern video games most creative processes are now streamlined and what developers will not do is change those processes just because a new PlayStation or Xbox are more powerful than their predecessors. They will use the same processes to aim higher instead. Less compromise in model fidelity, less reduction of detail in the environments, less or better or smarter compression for the textures… everything combined will result in superior game graphics on screen. But all this does not actually require that much extra work. It is the same work done for more advanced hardware capable of handling a greater amount of visual data. It is not necessarily a more complex process. If nothing else the exact opposite could prove to be the case: the next PlayStation and Xbox will require less effort in order for their games to remain close to the original vision of their producers compared to the versions run on their predecessors.

Game publishers, following that, will emphasize that next-gen games will be better than current-gen games in all technical aspects, even when we’re talking about different versions of the exact same games. Higher display resolutions, higher and more stable frame rates, faster loading, lower input lag, you name it. That surely deserves a tenner more on the sticker, no? Well, again: not necessarily. The fact that games will load faster on PS5/XSX than on PS4/XO largely has to do with the fast SSD the former employ as opposed to the HDD the latter depend on. It does not have to do with much additional work from developers. The fact that games on PS5/XSX will offer variable refresh rate (VRR) while the PS4/XO versions of the same games won’t is not down to extra work. It’s down to the chipsets of the new systems supporting HDMI 2.1 displays so they can show each second the maximum amount of frames their games were producing anyway.

The list is long — and it can get quite technical — but the takeaway is this: next-gen games will be better because of the more powerful systems running them, not because there was a lot more work involved in their development process compared to current-gen games. A lot of people — mainly Microsoft executives and a fair percentage of the media — have compared PS5/XSX to PCs when framing the former as evolutionary versions of PS4/XO. The analogy, while not accurate or fair, can be used to make a point. Publishers arguing that PS5/XSX games have to cost $10/€10 more based on their technical features is like Valve announcing Half Life 3 and then arguing that for PCs capable of running it at 4K/HDR with VRR and ray tracing enabled the game should cost $69.99/€79.99, whereas for lower-spec PCs it can cost $59.99/€69.99 (the price publishers are keeping for PS4/XO games). This just doesn’t make sense in a consumer market. No sense at all.

Are there exceptions to that rule? Yes, there are. Multichannel object-based sound does need extra work and it does need to be taken into account at the planning stage of a video game. A “locked” 120 Hz refresh rate at 4K resolution does need extra work and optimization, it does not just happen on its own. Platform-specific features, such as the extra functions of the DualSense controller of the PS5, obviously require extra work. There are some more examples of the same specialized nature. But these are features that most publishers will not bother with for at least a couple of years (if not more). Asking for more money now for versions of games that will most probably not offer the above is not easily defensible. Let alone $10/€10 more, which would be a dis-proportionally high cost increase for these features anyway.

Learning the ins and outs of new games systems has always been an accepted part of the transition from their predecessors and relevant costs should not be passed down to the consumer. (Image: Sony)

Developers reading all of this will probably have quite understandable objections. Not a huge amount of work is required to make games like those on current-gen systems perform better on PS5/XSX, for instance, but “a bit of work here” and “a bit of work there” can add up to not inconsiderable resources in AAA productions. Plus there’s a learning curve when developing for new systems, even for a PlayStation and an Xbox that largely use the same architecture their predecessors did: getting to know how to optimally use the non-standard way the PS5 SSD performs or discovering ways to get around the “split-speed” RAM in the XSX does require work. Thing is, these are all accepted parts of the transition to new platforms (and their inclusion in the multiformat strategy of a publisher that will release the same games on current platforms anyway). It is not the kind of cost that should be passed down to the consumer.

Long story short: there is no “extra complexity” in games development for the PlayStation5 and Xbox Series X. Just different, higher targets. Do these higher targets require a lot more work or major changes in the overall creative process of their games? Not really, no. In fact one might argue that the new systems, being much more powerful than their predecessors, can actually make development easier. If one takes into account the more capable, flexible development tools and/or more powerful development infrastructure — both available to even small teams of creators these days — it seems almost disingenuous to argue that PS5/XSX titles absolutely have to cost more.

The current $59.99/€69.99 tier in games does not relate to any set amount of duration or features anyway, nor does it signify anything in terms of product quality (that’s why the fixed pricing model should be abandoned sooner rather than later). So a jump from $59.99/€69.99 to $69.99/€79.99 is even harder to quantify or defend at this point.

More expensive games: the layman’s perspective

The financial and development perspectives of new AAA games going for a $10/€10 increase in price for PS5 and XSX are mere points of reference. They are of interest to us industry people, they may be of interest to a number of hardcore gamers out there, but they are not necessarily of any real interest to consumers.

In fact they should not be. Not one bit.

Most of the people these next-gen games will be marketed to don’t actually care about why publishers feel entitled to a raise in next-gen AAA games’ retail price. They do not care about inflation on a theoretical level. They do not care whether these games will be easier or harder to make. They will care about that $10/€10 increase though. So they will have just one question for those publishers, a rather simple one: “You’re asking for a jump to $69.99/€79.99 for the new games I’ll likely want to play on the new systems. What does this price difference get me?” In layman’s terms: “Why charge more for the PS5/XSX versions of the same games? What does this extra tenner buy? Where is the added value?”

He sure looks like he’s waiting for an answer before handing out that extra cash and… well, counting in prospective PS5/XSX owners, he’s not the only one, is he? (Image: Andrea Piacquadio, Pexels)

This is a question that most publishers won’t be able to answer as convincingly as they’d like — especially publishers that lean hard on multi-format releases. Since it’s too early to target just the new PlayStation or Xbox, their first and second wave of games will mostly offer just “optimized” versions of the games that the PS4 and Xbox One will get because of their vast user base. As a result these new multi-format games will just load faster, look prettier and perform better, as well they should on more powerful hardware. But the core mechanics, general functionality and the overall game design — what makes these games play the way they play — will be exactly the same. For now.

That is why, in the above context, it will be interesting to see where Sony and Microsoft will stand regarding next-gen games pricing. They are the ones that historically invest in AAA exclusive games for their respective systems — they have to do that in order to promote their new formats. But this time around it’s different: Microsoft will not offer any exclusives for XSX, will not do so for the next couple of years in fact. They insist that their new first party titles will be playable all the way back to the original Xbox One. So they cannot set a higher price for the next-gen versions of these “multi-generation” games (nor did they have any intention to as far as one can tell).

Sony, on the other hand, will not offer PS5 games that can also be played on a PS4/PS4 Pro. They will offer different ones, developed with the new system’s strengths in mind. Will they price them at $69.99/€79.99? If they choose to remain at $59.99/€69.99 this will send a message of caution, so to speak, to third party publishers. Sony will never openly dictate how much they can or should charge for their games — this is not the way the Japanese company operates. By choosing to remain at the current price point they will sort of “set an example” they hope other publishers will follow. But if they do offer their own AAA titles for PS5 at $69.99/€79.99, then they will practically encourage all publishers to do the same. Which they will do. Gladly.

Should we all revolt against that $69.99/€79.99 price then?

Well, far be it from this journalist to fanatically urge people do this or not do that on any one matter (there are so many other issues actually worth taking to the streets these days anyway). But there is something concerning about this matter in particular: the corp people or media supporting the price hike of AAA games to $69.99/€79.99 seem intent on keeping the discussion going. Even during a year such as this — which is proving to be transitional for the gaming industry but difficult for billions of people — it feels like there is a kind of pressure to see this increase included in the next-gen “set of changes” as soon as possible. Which would be understandable, taking into account the launch window of PS5 and XSX, but… not entirely justifiable.

The new NBA2K will cost $69.99 for the PS5/XSX version while it’s unclear whether it’s bringing anything more to the table — other than shinier graphics and faster loading times, that is. (Image: 2K Games)

What would be justifiable is for consumers to ask the hard questions. Take a step back and examine all of this regardless of what some game publishers deem necessary. Why do these games have to cost more now? What added value do they bring to the table? Is there actually more work involved in their creation compared to the work being done on current-gen games? At the end of the day do they have to cost more or is the launch of the next PlayStation and Xbox just a convenient excuse to see this through?

Here’s hoping that, based on all the arguments included in this article, everyone can form their own opinion on the matter. At the very least, though, one thing should be obvious by now: consumers do not necessarily have to accept that $10/€10 price increase in AAA games released for PS5/XSX “just because” game publishers would very much like them to. These companies will have to explain and/or demonstrate that they ask for more money because they actually offer more with these next-gen games.

If they fail to do so it a persuasive manner then the choice of accepting the price hike or rejecting it remains with the consumer. Even if all game publishers agree on the retail price increase and practically “enforce it” — an unlikely but not unthinkable scenario — then consumers can still skip full price launches of the games they do not feel they have to play at release and wait for the inevitable price cuts. That would send a clear message that few publishers would dare ignore.

The day this story was heading for publication there were already different approaches from various publishers on this matter. 2K Games, for instance, had confirmed the $10/€10 price increase for the PS5/XSX versions of NBA 2K2021, whereas Ubisoft had gone the other way confirming that the next-gen versions of Assassin’s Creed Valhalla and Watch Dogs Legion would cost the same as the PS4/XO versions. So consumers have another option at their disposal come November: to choose the games of publishers not going for that price increase over the games of those that are.

What Sony and Microsoft decide to do in terms of next-gen games pricing will be quite important going forward. The choice of accepting, selectively accepting or outright rejecting the price hike for PS5/XSX versions of new AAA games, though, remains with the consumer. (Image: Sony)

As previously mentioned: what Sony will choose to do remains to be seen and it is quite important. If they do adopt the $69.99/€79.99 price point for their PS5 releases, then they more or less “green-light” the same price hike for third party AAA releases — and if third party publishers adopt that for the PS5 versions of their games, then they will most probably do so for the respective XSX versions too, regardless of what Microsoft does.

Whatever happens, though, consumers are still entitled to their questions about the necessity of the price hike and are still in a position to choose whether to accept it or not (or do so extremely selectively). Which leaves the ball in the game publishers’ court: can they — and will they — explain and demonstrate why PS5/XSX games have to cost more and where the added value of those additional $10/€10 for the consumer is? Or will they just raise their prices and hope for the best? Your turn, gentlemen.

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