We are definitely in the midst of a shifting market in terms of video game pricing. Video game publishers are increasingly searching for ways to beat the used game market, where companies like Gamestop make over $600 million a year by buying newish games from consumers and reselling them to others. The activity is completely legal (the first sale doctrine of copyright allows you to sell a copyrighted work after you buy it), but game developers would love to get a piece of that $600 million; Gamestop is currently making their money by living in the pricing problem publishers have yet to solve, namely that publishers don’t want to drop the price of the game at release, but by the time the first price drop comes around, many who didn’t want the game at $60 have already bought the game on the used market for the price drop price.
Publishers have tried to deal with the problem in a number of ways:
Sell a license to the game – Software can be licensed rather than sold, alienating the consumer from the ability to resell it. Computer games have started to go that way, and combined with things like multiplayer accounts and CD keys, have largely reduced the amount of piracy, or at least reduced the amount of fun you can have with a pirated copy (But look up “Spore” for a cautionary tale). But reselling PC games has never been a huge industry partially for those reasons, and video games haven’t made the jump to a licensing approach, perhaps out of fear of shifting to something too dramatic. The first console game that comes out claiming to deny the consumer the ability to resell it will face a tremendous backlash from consumers, and it isn’t even clear how such a plan would work – no publisher wants to go around suing the consumer as a means to enforce the license, and suing Gamestop is just as unappealing (they might just drop your games from shelves entirely). But I wouldn’t put it past an aggressive publisher to try it. Chance this approach becomes popular with consoles: 20%
Extend the duration of time that the game has value to the first purchaser – This has definitely become more popular, especially since it can make the developer money. Mass Effect 2 released a number of $10 expansion packs almost immediately after the game was released, in the hopes of convincing release price purchasers to hold on to the disc for a few more weeks. The Halo and Call of Duty series do the same with map packs, and really most major releases try to adopt some version of this approach now as a way of both milking the game for more revenue, and as a means of holding off a wave of discs from hitting the used market. Chance this approach becomes popular: 100%
Cut the price almost immediately – Portal 2 was possibly the first game to utilize such a dramatic version of this strategy – just a couple weeks after the game released, Valve slashed the price of Portal 2 almost in half. It’s not clear how much of this was motivated by slow sales, or possibly because of the PSN downtime that coincided with the game’s release, but I imagine it was driven at least in part by a desire to shunt the used market, which would have been especially hot for a game that was fully beatable in about 15 hours. The downside is, if every game you release takes this approach, you effectively just shift a large portion of your audience to that lower price point, because most people will wait a week to get $20 off (that is, after all, why the used game market exists in the first place). Chance this approach becomes popular: 5%
Ruin the experience for anybody trying to replay the game – This is a new strategy being used by Capcom in Resident Evil: The Mercenaries for 3DS. The game comes with a special feature, where saved data cannot be erased. While it will probably take the game’s release to discover what this actually means, it seems as if Capcom is limiting consumers to one playthrough of the game in “new” condition, and every subsequent playthrough will be tainted in some fashion by that original game – perhaps your character will stay overpowered, or will have access to amazing guns from the start, or other usual powerups received after beating a game for the first time. So if you try to sell the game to gamestop, the game will always retain these advantages, making a used copy rather unappealing to a new consumer. I expect the backlash on this to be pretty massive, and ruin any sales this (likely already bad) game would have had. Chance this approach becomes popular: 5%
Digital distribution – Steam’s success on the PC/MAC, combined with Blizzard’s success in releasing Starcraft II from their own site and the profitability of Xbox Live titles will likely lead some developers to consider full digital releases over Xbox Live and PSN in the future. Currently the hardware has some issues, namely that the consoles don’t have big enough hard drives to support holding many titles, but look for that to change in the next console cycle. Digital distribution is potentially extremely profitable simply for the ability to cut out the middle man, plus the game is impossible to resell in the that format. It also allows specific pricing control, with the developer able to lower the price whenever they want, perhaps even based on sales through the digital marketplace. Digital distribution has taken over on the computer, and it will be the future of consoles once the hardware can support large libraries of downloaded games. Chance this approach becomes popular: 80%
In the short term, expect most companies to follow the approach of releasing new content almost concurrently with the game’s release in an effort to prevent games from hitting the secondary market before the first price drop, perhaps mixed with some slightly earlier price drops, as a manner of taking some of the secondary market’s pie. In the long run, I expect most will move to digital distribution once the consoles themselves can support it. And look for a post on how poorly Capcom’s strategy will work in the near future.
danielmarkmiller.net 
Pingback: Gathering More Articles | withouthestatic