The Cost of Doing Business: Video Games Cost Too Much
- By: CM Boots-Faubert
- Posted 20th Oct 2012
There is a magic formula that is used in the process of game creation that determines the relationship between what can be spent on the development of a game, and when the expense will be paid off. As long as the estimates for sales always exceed the final line of that formula, it means that the game will turn a profit eventually, after which point it becomes pure profit for the studio and its partner, the publisher. For the most part the success or failure of a game revolves around how well the publisher managed the complex process of launching and promoting it, but those details are far less interesting than you might think, and go beyond the depth that this article needs to address. In fact the only reason that we mention it here is to bring it to your attention as a general issue, because it does actually have an impact on this story, just not the impact you might be thinking...
== They Warned us about 2012 - but not 2008 ==
We opened this article with the fact that GOG.com has been selling Interplay's games at bargain prices -- in fact the prices in question were not arrived at using complex formula or with a specific goal or range in mind, rather the approach was an odd and attractive one (at least for gamers) because the idea was simply that gamers pay what they felt the games were worth. Pay what you want, in other words. This is not the first time that the approach has been used to sell video games, or even the first time that the approach has been used to sell games from an existing catalog (older titles) but it is the first time that so wide a selection of really good games have been lumped together for such a sale.
The economic considerations present here are radically different than those that apply to a new game, or any game that has yet to reach its all-important break-even point. All of the titles that were part of the sale had already paid off their costs, so any sales that were made were mostly profit. Another consideration is that all of the sales were digital -- there were no boxes, packaging, shipping, or any of the other fees that traditionally fill the overhead costs for game sales at the retail level, and in fact the basic digital model that was used for those sales and the pure profit that resulted has its roots in events that took place in 2008 that it can fairly be said changed the video game industry -- because the success of not just digital distribution in 2008, but also the emerging used games market served as a major eye-opener for an industry that until then believed itself in control of the products that it sold, and the market upon which it sold them.
GameStop sets the pace by which the retail video game sales industry trots, combining traditional sales offerings with hard tactics to convince gamers to bring in every game that they have "finished" and trade it on on their next game.
In 2008 there was a lot of attention being given to the year 2012 in anticipation of a phenomenon comprising a range of eschatological beliefs according to which cataclysmic events were predicted to occur on 21 December 2012. That date, regarded as the end-date of a 5,125-year-long cycle in the Mesoamerican Long Count calendar, was being held out as the official end of the world.
The strength for its being selected has to do with a number of astronomical alignments, numerological formulae, and the conclusion of a b'ak'tun -- a time period in the Mesoamerican Long Count calendar which was used in Central America prior to the arrival of Europeans, and which ends on 21 December 2012... Or maybe marks the beginning of another b'ak'tun... The thing is nobody is actually for-certain-sure about that. Many self-proclaimed experts on Mayan studies say that what is coming is bad, but others say it means nothing, and still others say that it actually marks the approach of a good event. Regardless of which position you take though, none of the guesses have been accepted by mainstream scholarship, and the learned experts at institutions of higher learning have yet to weigh in one way or the other...
That leaves the 2012 situation still in flux, but in 2008 some pretty ground-shaking events took place that nobody noticed. Well, perhaps saying that nobody noticed goes a little too far -- because actually a lot of people noticed, and a lot of the people who noticed actually reacted to the events, but none of that made it into the papers, magazines, or on TV because it was not the sort of event that necessarily deserved the awareness of the average Joe (despite the fact that it was the average Joe who was most impacted by it.). What are we talking about?