Game costs soar but dare not raise prices? Former Sony President reveals the truth about the industry

Recently, Shawn Layden, former president of Sony Global Studios, shared a series of unique insights on the current phenomenon of rising prices and development costs of 3A games in an interview with Gamesindustry.biz.

Leden mentioned that despite the continued intensification of inflation and the cost of game development has increased exponentially, the retail prices of premium games have been almost "unchanged" in the past 20 years.

　　As for this contradiction, he analyzed: "I think the root cause is fear. No company is willing to increase prices first, for fear of losing players. In the end, everyone can only silently bear the decline in operating income and profit margins."

　　He recalled the PS1 era and said with emotion: "At that time, there were more sports cars parked in the company's parking lot than the PS4 era. The reason is very simple. In the PS1 era, if a game could sell 20 million copies, each price was $60, while the production cost was only $10 million, the profit was quite considerable. But in the PS4 era, the same sales volume of 20 million copies and the selling price of $60, the production cost soared to $160 million, which was completely different."

Leden believes that according to common sense, the price of the game should be gradually increased with the update of each generation of hosts. However, the game industry has bet on growth, adhering to the concept of "as long as it continues to grow, it can continue even if it is not profitable for the time being." But he stressed that the industry is approaching the critical point: "The development cost is ridiculously high. If a game's production cost exceeds $200 million, the profit margin will become extremely limited unless you can expect sales to reach 25 million copies. But except for big players like Rockstar, it is difficult for other companies to have such sales expectations."

In order to cope with the soaring development costs, industry leaders have been trying other ways to make up for it. "They would think, 'If you don't dare to raise the price directly, then keep the original price and make the extra cost back through DLC, microtransactions, battle passes, season tickets - whatever you call it -. Is this feasible?'" He also pointed out that the price of the game's luxury version is often easily exceeded $100 or even higher today, and it also comes with extra virtual items such as skins and weapons. And these virtual items cost almost negligible to publishers. "So, they're actually quietly increasing the mid-price range of the game."