Hey, Big Spender! (Games Versus Movies)

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Since GameSoundCon is starting up tomorrow, I thought I’d direct your attention to an article written by GameSoundCon founder Brian Schmidt about the difference between the money raked in by the video game industry and the motion picture industry.  While it has been reported that games bring in more money than films, according to Brian Schmidt’s article, the figures for the game industry are distorted by the inclusion of hardware sales.  In fact, because film tickets are generally much cheaper than game sales, a blockbuster film must sell tickets to many more people in order to take in the same amount of money that a console game could earn through far fewer sales.

Reading this article on the GameSoundCon site, I found myself thinking about the idea of premium purchases.  What kind of psychological conditions need to exist in order for a customer to become a big spender — i.e. to opt to spend more money?  With a console video game, we are clearly looking at a premium purchase — these games can be up to 50 dollars or more.  Does the willingness to spend reflect on the depth and diversity of the experience?  Games typically outlast films in terms of their long-term entertainment value. Is this the reason why the top-tier console games are able to sustain their premium pricing?

The motion picture industry has made attempts to introduce premium pricing into its business model.  From luxurious theaters with reclining seats, to motion simulators with weather effects and smell-o-vision, to 3D formats, motion picture companies have been repeatedly urging movie-goers to part with larger sums in exchange for enhanced experiences, but success rates have been very limited or are rapidly on the decline.  Console video games, however, have been successfully charging premium prices for many years.

What I find interesting, though, is what happens when these two entertainment juggernauts start reducing their prices.  While movie theaters had dug in their heels for many years and refused to offer discounts, there is currently an initiative underway by the National Association of Theatre Owners for discount tickets to be offered in selected locations on off-nights.  While experimental and limited in scope, the trial period should be revealing in terms of whether discounts will lure movie-goers back to the theaters with more frequency.  In the world of video games, however, the discount experiment is fully underway in the form of the iTunes App Store, XBox Live Indie Store, the PlayStation Network Minis Store, Google Play, the Facebook App Center, and many other online retailers that offer games for drastically reduced prices.  If the movie industry hopes that discounted tickets will lure more people into theaters, then I wonder — have discounted games captured more casual gamers and turned them into frequent players/purchasers?

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In 2010, Reuters reported that free games had lured players successfully into gaming, converting them into paying customers.  However, in 2014 the optimism had waned as an industry analyst at the NPD Group warned that PC gamers, accustomed to receiving discounts, were now expecting all games to be very inexpensive.  Currently, XBox Live Gold members enjoy steep discounts with the “Deals With Gold” program, and PlayStation Network Plus members get their games at up to 75% off.

In contrast, however, the Gartner’s forecast for worldwide gaming revenues in the coming two years has estimated that mobile, console and PC games will see dramatic increases in their earnings. This seems to be good news for gaming — discounts for some game products may not have taken the luster away from the big-ticket games.  Our industry currently enjoys the benefits of a wider array of offerings that can be priced accordingly, whereas the motion picture industry continues to be saddled with a fairly uniform pricing structure that has been difficult for them to challenge and adjust.

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