| NightlyPoe said: Simple behavioral psychology. The super-fast discounts from other companies have conditioned much of their consumer base to simply wait a fairly short amount of time and they'll get the same game, often a significantly better game thanks to DLC being tossed in on top, for 1/3 of the price. This is doubly bad because it both rewards waiting and punishes instant gratification. The reason they do this is because these games are often super-expensive to make and the developers need to ring out every dime they can get from them as fast as they possibly can. This is especially true of AAA single player titles. Add in that the competition is also aggressively discounting their games and it's all bad. Nintendo is on another level. They have their own consoles where they invariably dominate the sales figures. They also have ridiculous cash reserves. Nintendo doesn't need to make all of their money immediately to fund the next Mario game. So they can take the long view. They condition their consumers to not expect a price cut. At least not for a significant amount of time. In this way, Nintendo actually makes MORE up front as fewer consumers hang on to their money in hopes for a better deal later. The games also continue to be purchased at the higher prices for much longer. I mean, Mario Kart is four years old and still selling over 200,000 units every month. Any other company would have long since dropped the price to $20 in order to goose holiday sales figures and would get about $4 million in gross sales. Not bad. But because Nintendo is holding to the $60 price point, they're reaping $12 million in gross sales. Again, that's every single month! Not only that, but it's actually psychologically good for the consumer. Worrying about price cuts makes a person hesitant to purchase a game. If a game drops in price a month after you purchase it, that's a loss to the customer. Now, on the other hand, waiting and getting something for cheaper is a win. The problem is that wins and losses are not equal in human psychology. There's a human tendency towards loss aversion. People feel more strongly about losing a dollar than winning a dollar. Nintendo fans are rarely economic losers. The only game on the Switch I recall feeling bad about purchasing early is Mario + Rabbids. Of all the other games in my collection, thanks to the Amazon discount (sadly discontinued), the most I've seen games I purchased Day 1 undersold for was $3. And I'll gladly pay an extra $3 to be able to play the game a year earlier. So, basically, Nintendo has leveraged their isolation from the rest of the gaming community into being able to play the long game more effectively than anyone else. Funnily enough, third parties have also benefited. Anyone else notice that third party Switch software drops in price slowly as well? |
This is an excellent post and worth highlighting.
| pokoko said: 1) Well, competition, first and foremost. I don't see why anyone would even attempt to downplay that factor. It's probably part of the reason Nintendo never really tried to form an equitable partnership with third-parties across the board the way others have. Nintendo's consoles are primarily intended to push their own software. More than that, though, they've conditioned their fans to accept it. Once that happens, many of those fans will defend the practice. 2) As for why others drop their prices, that's pretty simple. The people who aren't trying your game at $60 might try it if it's at $40. Those that aren't trying it at $40 might try it at $20. When there is a lot of competition, this is viable way to increase exposure. Selling cheaply is better than not selling at all. Software isn't like a physical product where most of the investment is in the production materials. 3) More importantly, getting someone to try your game at $20 might turn them into a fan, meaning they might buy your NEXT game at $60. It's an especially smart move when you're talking about a continuing franchise. |
I'm not sure about the competition factor. I don't want to wipe it off the table either, but I just don't think it has that much of an influence. By competition you mean the numbers of games available, right? If we consider the customer's budget to be limited and the customer can only buy a few games at a time, then the total number of games is irrelevant on every console because every console offers more than enough games already. Nintendo gamers face the same decision problem.
If instead you mean it from a developer's perspective it's a different story, of course. Like one specific developer wants to stand out against the others and therefore lowers the own price so that the own game receives more sales aganst the competition. Ok, fair practice. But nowadays every developer thinks the same way and therefore every developer lowers the prices so the strategy doesn't work anymore. It's a classic game theory case.
Sadly, this strategy ultimately backfires because it causes the customer to get accustomed to lower prices and therefore cuts into the devolper's profits in the long run, and that's one contributing factor why DLC and MTX and GAAS even became things. Games are expensive to make, aren't they, so why not charge an according price? As a developer, you would want to receive as much profits as possible, wouldn't you?
Whenever I as a customer see huge price drops from huge AAA releases, like 20€ instead of 60€, I ask myself if the game is still profitable or not at 20€. If the answer was yes, then why was I expected to pay 60€ in the first place? It makes me wonder if the intention was to screw me over by this insanely inflated price. If the answer was no, then why do these suicidal prices even exist? The developer desn't even make money with this strategy. Instead, he must rely on DLCs and microtransactions and other shenanigans to make some cash. So ultimately, both situations are toxic in my opinion.
3) This is possible, yes. But at the same time it's also possible that the customer happily waits for the next release in the series to buy when it's at a low price because that makes him double happy. Playing a new game in a beloved series while still having paid little money. Great deal for the customer, of course, but no guaranteed win for the developer. As I said earlier, it's rather a double edged sword.
Nintendo's strategy is also a double edged sword, by the way. Just mentioning this for clarification. I'm not defending their system, I just understand why they do it, and I ultimately believe that they do the right thing.
Sahib said:
C’mon bro, most Nintendo games have indie level production values, even their biggest games aren’t even half as ambitious as games like RDR2, God of War, Horizon, Call of Duty, and countless more. |
Production values are not what drives the price of anything, but rather the level of customer demand.
| KrspaceT said: I still retain that if he price issues are such a big deal, that the third parties could exploit the heck out of it by taking over that niche. But they don't. So either they are idiots, or the option isn't as lucrative as you all think. |
I know right? Why don't third parties step in? Something seems to be missing in that logic.
| flashfire926 said:
The "less competition" argument doesn't make sense to me when the Switch is outpacing PS4/Xbox One in terms of number of releases, when launches are aligned. |
This is also excellent. It shows that the number of games is irrelevant in the big picture.
