The other day I overheard someone complain, “Why are video games so expensive? $60 for new games! Consoles are hundreds of dollars1 Plus you have accessories and controllers ($60 each). If you want to play online these days most consoles charge a subscription fee1 Why is it all so damn expensive?”
Kids these days. They don’t know how good they have it!
Back in 1977, the Atari 2600 game console was released at a price of $199. In today’s dollars, that would be close to $800.
Today, console systems are sold at close to their manufacturing cost. The reason that the console manufacturers are able to sell their hardware so cheaply is that they make their money from a percentage of the sales for each video game made for their system.
In 1993, Doom, one of the most popular titles of its time, was sold at a retail price of $49.99. That would be $85.00 in 2017 dollars, which is more expensive than what the average AAA game costs today.
So, again, the question is how can game publishers sell their video games today so cheaply? In the 1990’s, the average video game budget was around $100 thousand, and today the average budget for a AAA game is about $60 million. That’s 600 times more expensive to make, yet the retail price is essential the same.
The answer is: volume. Because so many people buy and play video games now, game publishers manufacture more games and can sell them at a much cheaper price, adjusted for inflation, than they did 25 years ago.
That’s why video games today are so cheap. Now, excuse me while I go to Starbucks to get my $5 cup of coffee.