Farewell to the $60 Video Game

Like a lot of video game sequels, Call of Duty 2 was bigger and better looking than its predecessor. The 2005 follow-up to Infinity Ward’s franchise-spawning 2003 first-person shooter expanded on the original’s formula in a few different ways. Regenerating health replaced a finite health bar, and a new icon indicated the positions of active grenades. The game got longer and less linear and featured new squad tactics, chatter, and improved enemy AI. And a tweaked graphics engine enabled then-fancy effects such as smoke grenades, sandstorms, and blizzards.

Also, the sequel cost more. When it launched on PC in late October 2005, the game still sported the standard Triple-A price tag of $49.99. But when the game made its console debut almost a month later as a launch title for Microsoft’s Xbox 360, it cost $59.99—an industry-altering price.

Mat Piscatella, who’s now the executive director for games at market research company the NPD Group, was working for Call of Duty publisher Activision when the sequel launched. “That was a big debate, was whether we would go to $59.99 on Call of Duty 2,” he says. “[CEO] Bobby Kotick came in and said, ‘We’re going to 59 on Call of Duty 2.’ And no one else really followed at first. It took a few months for games to start following, but once they did everyone kind of jumped on board that train.”

Gamers jumped on board the Call of Duty 2 train too. The new price wasn’t without its detractors: GameSpot’s review of the Xbox 360 version griped that the game had a “higher price point than its PC counterpart.” But the spike in price didn’t stop consumers, who made Call of Duty 2 the 360’s best-selling launch title. In December 2005, IGN cited NPD data that said 77 percent of Xbox 360 owners had also picked up a copy of Call of Duty 2. Ultimately, the sequel outsold the original. “They were selling so many copies of Call of Duty 2 at $60 that the rest of the industry was like, ‘Well, hell, if it’s going to be 60 bucks, let’s go to 60 bucks,’” Piscatella says.

That was two console generations, 15 years, and 15 Call of Duty sequels ago. On November 13, Call of Duty: Black Ops Cold War—the 17th installment in the series—will launch a day after Sony’s PlayStation 5 and three days after the debut of Microsoft’s Xbox Series X. Versions of the game will also appear on the PS4 and Xbox One, the long-in-the-tooth competing platforms that launched in late 2013. Incredibly, Black Ops Cold War will cost $59.99 on the PS4 and Xbox One—the same price Call of Duty 2 retailed at in 2005. But on the next-gen consoles, the game will have a higher price point: $69.99. At long last, the industry’s price-hike history is repeating itself.

2K Sports broke the $70 seal in July when it announced that NBA 2K21 would cost $59.99 on current-gen consoles but $10 more on next-gen systems, although 2K’s parent company, Take-Two Interactive, insisted that pricing for its games would be handled on a title-by-title basis. Later that month, video game research firm IDG Consulting’s president and CEO Yoshio Osaki told gamesindustry.biz that “other publishers are also exploring moving their next-gen pricing up on certain franchises.” In mid-September, Sony specified that most of its PS5 launch-day lineup would retail for $69.99.

Microsoft hasn’t raised prices yet, and Ubisoft announced that its games would remain at $60 for the 2020 holiday season, although it wouldn’t commit to maintaining that price in 2021. CD Projekt Red kept the price for next-gen versions of hotly anticipated title Cyberpunk 2077 at $60 also, possibly because the game was made available for preorder at that price in June, before the news about 2K21. Other prominent publishers, including Capcom and Electronic Arts, have hedged and admitted only that they’re monitoring industry trends. But assuming Black Ops Cold War, NBA2K21, and Sony’s titles sell, a more sweeping price increase seems inevitable. “Given how price-insensitive day-one game buyers are for the games they want to play, I anticipate this sticking,” Piscatella says.

The $60 game is such an institution that gamers who’ve grown up on—or at least become accustomed to—seeing the same price on the sticker may be perturbed by the prospect of an escalation to $70. But gamers have been somewhat spoiled by that perplexingly stable standard. The surprising aspect of the forthcoming increase isn’t that games are getting more expensive. It’s that this price hike didn’t happen long ago.

Over the past 15 years, the U.S. inflation rate has averaged about 2 percent per year. According to the Consumer Price Index inflation calculator maintained by the U.S. Bureau of Labor Statistics, $59.99 in November 2005, when Call of Duty 2 came out, was equivalent in buying power to $79.02 in September 2020. The $59.99 it took to buy Call of Duty 2 on launch day has been equivalent to more than $70 in present-day dollars since September 2012, which was more than a year before the Xbox One and PS4 appeared. In fact, judging purely by inflation, an increase to $80 would be more consistent with past pricing—to say nothing of the exorbitant prices routinely attached to cartridge-based games in the 1980s and 1990s. (Not that I’m trying to give game publishers ideas.) High-end games have never been cheaper than they are now.

Inflation isn’t the only justification for raising prices. Games also cost much more to make than they used to. As Take-Two CEO Strauss Zelnick said in August, “There hasn’t been a frontline price increase for a very long time, although costs have increased significantly.” Estimates of the average increase in development costs for Triple-A titles since the last large-scale price hike range from two to three times to more than 10 times (not including marketing costs).

Part of that expenditure comes from the ever-present pressure to include more content: Games that get good reviews tend to be bigger and longer than average, and the promise of more distraction per dollar is a powerful lure. “People buy games not based on what they think they’re actually going to play, but based on what they wish they had time to play,” Piscatella says. “So you present them [with] ‘This is a 300-hour experience, the biggest world ever.’ And people get all excited and they buy it and they play five hours … and completion rates are at like 25 percent. So three-fourths of your gaming population isn’t even seeing your endgame content.” (Hence the ongoing debate about games being too long.)

Even if most players never see some of that content, someone still has to create it. That generally means more developers, more crunch, and higher overhead. “The real cost is in the art assets,” Piscatella says. “That’s what really kind of drives everything. And as textures get more dense, as worlds get bigger, those prices are just going to go up and file sizes are going to go up, and it gets more and more expensive. So either you grow your player base or your audience, or you have to raise prices in order to get the return you’re hoping for.”

Sony Interactive Entertainment president and CEO Jim Ryan admitted as much in May, saying, “To the extent that the technology enables the graphics side of it to become more interesting and lifelike, [the games] will become slightly more human-intensive and capital-intensive to produce. So yes, we think there probably will be an increase in development budgets.” The transition from physical to digital sales offsets some manufacturing costs—when players download games, publishers don’t have to make disks, cases, and manuals to stock in stores—but Piscatella says those savings are marginal after one takes into account the percentage of sales that goes to digital storefronts.

One encouraging trend is a growing willingness to lower the price of games that may not last as long. “We haven’t had variable pricing models in games until recently,” Piscatella says. But EA’s Star Wars: Squadrons sold for $39.99 this month, and Insomniac’s PS5 launch title Spider-Man: Miles Morales will cost $49.99. In both cases, developers explained the reduced price by pointing to their game’s modest scope. Piscatella notes that because the concept of the $60 (or, soon, $70) game is so ingrained, the budget pricing approach can backfire by making consumers suspicious: “The perception is ‘Wait a minute, wait a minute—why are they trying to make this price lower? It must not be a great game,’” he says. But if this approach becomes more common with quality titles, gamers will eventually learn how to set their expectations.

In terms of entertainment value, Black Ops Cold War will likely offer the same sort of experience Call of Duty 2 did: a compact campaign coupled with online multiplayer. However, Black Ops Cold War will take up roughly 25 times more hard drive space than Call of Duty 2’s modest 4 gigabytes. Its multiplayer modes will support more players, and its next-gen versions will boast various technical bells and whistles, including shorter loading times, advanced 3D audio, haptic controller feedback, and support for 4K resolution, high dynamic range, faster frame rates, and ray-tracing. All of that flair increases costs, but until now, those costs hadn’t been passed to the consumer via an uptick in baseline price.

In that regard, the video game industry is an outlier. The average price of a movie ticket has climbed by more than 40 percent since 2005. Increases in cable TV bills have outpaced inflation for decades, and bills for streaming services have swollen too. So why hasn’t the cost of new games kept up?

According to Piscatella, the sales side of the industry always has been beholden to benchmarks. “If you’re building your plan off games A, B, C, and D, and games A, B, C, and D were price X, then you’re likely going to build out price X in your plan,” he says. “That’s changing, but there’s been a real hesitancy to be in the lead on that kind of thing for any number of reasons, from PR to retail pushback.” Because of that conservatism, Piscatella adds, “It always takes those games that are out there on the leading edge of the sales picture, the biggest, blockbuster-y games, to really push the rest of the industry that way.”

Piscatella, who worked in sales for Warner Bros. from 2009 to 2016, says he unsuccessfully pushed for price hikes when the current console generation launched. Some of the resistance that stymied his efforts stemmed from the backlash to “Project $10,” an EA-led attempt in 2010 to make buyers of preowned games pay to download content that the original owner could acquire with a one-time code that came with the game. But that period also coincided with increased competition from mobile platforms and app stores, which intimidated publishers of console games. “We had all those articles about ‘Is this the last console generation? Is mobile going to take over gaming?’” Piscatella recalls. “And people were really nervous about that, and so there was a reluctance to go to that extra tier.”

However, publishers have found ways to increase their initial takes without officially straying from the $60 consumer comfort zone. Many publishers offer higher-priced collector’s or deluxe editions of in-demand games that include additional physical or digital content. Black Ops Cold War, for instance, will be available in an $89.99 “ultimate edition” for last-gen consoles that includes an upgrade to a next-gen version as well as extra weapons, vehicles, and other upgrades. “For some of the bigger games, the early sales of those games will actually weigh over 50 percent in favor of the more expensive editions,” Piscatella says. “So effectively, we’ve had a price increase. The average price of a day-one game at that tier is well over $59.99 now.”

Even so, Piscatella’s NPD data says that the average sale price of new games over their full life spans—including day-one sales and subsequent post-price-cut purchases—has been flat at roughly $40 since 2012. Thus, publishers have looked for ways to reap revenue later on, via paid downloadable content, season passes, episodic releases, loot boxes, microtransactions, and other enticements to spend. (Black Ops Cold War’s postlaunch DLC will be free, but players will still have the option to shell out for battle passes and skins.)

In that “games as a service” model, the list price—if there is one—is only part of the blueprint for profit. When publishers get gamers in the door, the real spending starts. “It’s all about … player retention, player engagement,” Piscatella says. “People are talking about that much more in the publishing community than they are even sales anymore. Because there’s a direct correlation between how long you can keep people engaged, how often do you keep them coming back, and your ultimate success level.”

All of those measures are end arounds designed to skirt the more drastic step of raising the price of admission, but that reckoning is arriving along with the new consoles. Piscatella anticipates that most of the console gamers who’ve been paying full price for games on day one will continue to do; anyone with the disposable income to drop on a console and a giant TV won’t balk at an extra $10 for a few games a year. As Piscatella puts it, “Sometimes prices rise because people will pay it.”

But not all people. Although wages keep increasing, the average American’s inflation-adjusted purchasing power has barely budged for decades. And while the video game industry has enlarged its audience and increased its earnings amid pandemic-induced lockdowns, many consumers are suffering from layoffs, furloughs, and other economic consequences of the current recession. For them, this price hike—however overdue—comes at an untenable time.

The good news is that the belated shift from $60 to $70 games is coinciding with a wave of more accessible ways to play. “Right as this is happening, we also have this big movement toward subscription services, to all-you-can-eat plans, to free-to-play games,” Piscatella says, adding, “there are a lot more options on the lower end of the price scale.”

If gamers can get used to borrowing and streaming instead of owning, they can get good deals. For $10 a month (the price of two $60 games per year), players can subscribe to Microsoft’s or Sony’s Netflix-style subscription services, Xbox Game Pass and PlayStation Now, and gain access to hundreds of titles—more than any one person could possibly have time to play. That’s on top of mobile gaming subscription services such as Apple Arcade and Google Play Pass. As Microsoft marketing exec Aaron Greenberg asked earlier this month, “Does the price of a game even matter if it’s included in your Game Pass subscription?”

In the case of Call of Duty, Activision is catering to every potential player, banking on there being a soldier in all of us. In addition to publishing Black Ops Cold War, Piscatella says, the company is thinking, “We’re also going to do Call of Duty: Warzone, which is free to play, at the exact same time, and oh yeah, you could do Call of Duty: Mobile. There’s all these ways of entering in, but they’re not cannibalizing each other.”

The upside of the freemium/subscription-based model is that it lowers the barriers to entry. The downside is that it may make it difficult for developers to justify investing several years and massive amounts of money in a deep, polished single-player experience that won’t pay off in the long term, leading to an endless succession of Fortnite clones.

That’s the future Piscatella foresees, although predicting tech trends is notoriously tricky. “By 2030, I expect an overwhelming majority of dollars to be free-to-play and subscription-based in the games industry,” Piscatella says. “So maybe we have two generations more where $60, $70 games are the norm.” In 2020, we’re bidding a belated but fond farewell to the $60 game. But before we see a PlayStation 6 or 7—if we ever do—we may say goodbye to big price tags for games altogether.