Video Games Platform Pricing: New Pattern Prices Declining More Slowly

AUSTRALIA – Traditionally, we’ve seen pricing rise with the introduction of new home platforms and steadily decline throughout their life cycle. Looking at the current generation of platforms, we’ve seen a different pattern emerge, with prices falling at a much slower rate.

For console hardware, from 2002 to 2004 the average price of a console dropped $100 from the peak of last generation. This generation the average hardware price has remained steady for nearly four years after the initial peak of new hardware hitting the market, with a very slight rise in 2009. Only in the second half of 2011 behind console price reductions did we see a significant drop, with the 2011 average price decreasing to $45 below this generation’s peak of hardware prices in 2007.

The reason this slower decline in average price is important is that since 2000, over 61 percent of all console units have been sold under $300, and taking out handhelds (leaving just home consoles), over 42 percent of units were sold under $300. The market is now only starting to drop below that threshold for HD consoles.

One of the interesting things is that the average price of software in 2011 was actually 1 cent lower than it was in 2003 ($52.05 v. $52.04), and since 2000, the difference between the highest and lowest yearly average price has not broken $7.

Software pricing also hasn’t declined as it did previously – the average price of a title dropped almost $7 between 2002 and 2005 after reaching last generation’s peak. If we look at this generation, the average price of a game has declined just 40 cents from 2008.

Obviously there is a range of different reasons that those prices aren’t easily comparable, including new platforms, the rise of digital distribution, a different retail landscape, the global economy, and the strength of the AUS$.  Whilst the overall software price hasn’t changed significantly, the biggest change would be in the distribution of pricing, shifting from an even spread under $100, to the higher and lower ends of the scale.

 

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Gimantha Jayasinghe
612-8257-6464
Gimantha.jayasinghe@npd.com

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