Just want to answer this question. "The question needs to be said, what determines a Video Game Price?"
Video game markets (at least for the AAA and AA publishers) are best approximated by monopolistic competition.
From the article,
"Short-run equilibrium of the company under monopolistic competition. The company maximises its profits and produces a quantity where the company's marginal revenue (MR) is equal to its marginal cost (MC). The company is able to collect a price based on the average revenue (AR) curve. The difference between the company's average revenue and average cost, multiplied by the quantity sold (Qs), gives the total profit. A short-run monopolistic competition equilibrium graph has the same properties of a monopoly equilibrium graph."
Basically, this means in the short-term, game publishers can act a lot like monopolies; they have control over their prices and set them to whatever maximizes their profits. They aren't forced to be price-takers (although there is price-regulation/ceilings by the console licensers.) However, this doesn't mean they can just pick any arbitrary price. Instead, the price will rise to the highest level consumers are willing to pay. The stronger the brand, the better the game's reputation, and the higher quality it’s perceived to have, the higher a company can set that price or the longer they can keep it at maximum price; basically, companies can charge more if buyers see the game as worth it. This is very rarely, if ever, 1:1 with the relative costs of production. A game that costs $100 million to make but gets a 70 Metacritic isn't likely going to be able to stay at a max price as long as a game that costs $10 million to make but gets a 97 Metacritic. Now of course gamers are sensitive to budget tiers (generally) so an AA title might be expected to have a much lower price than an AAA title, even if the quality difference is in the AA title's favor. But this is a general sensitivity to budget, not something fine-tuned. Quality usually takes precedence over budget for "willingness to pay."
This is why a company like Nintendo can maintain the highest game prices the longest. They've tailored their brand to be associated with "quality." They're typically competing for best quality publisher in the industry, and considered such by many. People want their games, even their lower budget games, at full price so they can keep that price high as long as possible.
