Hello, I am an Economics teacher and wanted to apply some very basic economics to this idea that video game prices NEED to increase because they haven't in 15 years.
"After adjusting for inflation, however, today’s average hourly wage has just about the same purchasing power it did in 1978, following a long slide in the 1980s and early 1990s and bumpy, inconsistent growth since then."
"An elastic product is defined as one where a change in the price of the product leads to a significant change in the demand for that product. Elastic products have substitutes."
What this means is that video games are not something that people NEED, and they are very sensitive to changes in price. If gasoline suddenly jumped up in price 50% most people would be angry, but be force to purchase it because they need to get to work. The same goes for food, or anything else deemed essential or necessary. These are inelastic goods.
Video games, unlike sustenance and transportation, are goods that can be replaced or substituted (watch movies, play a board game, go to the park). Increasing their price could have the total opposite affect where it shrinks the market by pushing people out of it by charging too much.
Another example: Blu Rays cost $5 to $20, the same as DVDs did 15 years ago. Why is that the case? Because that is the price point that the market can bear.
"Using this methodology, Activision's Bobby Kotick is the most overpaid CEO in the US games industry. His salary was reported as $28,698,375 -- 306 times more than the average Activision staff member. With 92% of shareholder votes for this package, As You Sow believes this to be an excess payment of $12,835,277.
Meanwhile, EA CEO Andrew Wilson was estimated to be paid an excess of $19,673,861, with his salary at $35,728,764. There were 97% of shareholders votes for this package (An EA spokesperson has since told us this should be 86%), and it stands at 371 times more than the average EA employee's pay packet.
For comparison, the average CEO to worker ratio at S&P 500 companies, the largest 500 companies in the US, is 142:1."
The CEOs of Activision and EA are making more than 300 times their average employees salary. This is ridiculous even by business executive standards.
Modern Warfare 2 in 2009 cost $50 million to develop, and they spent $200 million on marketing. That is FOUR TIMES the development cost of the game.
Final Fantasy 7 in 1997 cost 40-45 million to develop and they spent up to $100 million on marketing.
The actual development costs of the games is VERY CLOSE, but the marketing budget is doubled.
I hope this didn't come off as too manic, I am just frustrated reading comments and seeing people defend and even welcome these price hikes. I might go back and edit this, as I just typed it as things came to my mind.