Former PlayStation leader Shawn Layden is once again discussing the pricing of games, suggesting that prices should have increased along with each new generation due to shrinking profit margins. Layden highlighted that over the past 20 years, game prices have remained stagnant despite inflation and rising production costs, leading to financial challenges for many companies in the industry.
The Fear of Increasing Prices
Layden believes that the hesitancy to raise game prices stems from the fear of losing customers. He stated, “No one wants to be the first to raise prices, you’re afraid of losing traffic. So what you end up doing is reducing your profit margin.” This fear has resulted in companies relying on alternative revenue streams such as DLC, micro-transactions, battle passes, and season passes to compensate for the lack of profit from game sales.
The High Cost of Game Production
The increasing cost of game production, with some games costing upwards of $200 million to develop, has made it challenging for companies to turn a profit unless they sell millions of units. Layden stressed that only a few companies like Rockstar can anticipate selling 25 million units, leaving many others struggling to break even. This has led to a financial crisis in the industry, where companies are compelled to sell millions of units just to cover their expenses.
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