After spending some time thinking about why there's been an uptick in press activity talking about how pricing for Xbox Live Arcade games has been rising of late, something clicked. At first, I thought it was weird that people were talking about it now, given that it's been a trend for well over a year now, as I posted here back in May of 2010. But then… it made sense to talk about how XBLA games are getting more expensive. Why?
Microsoft will be rolling out a new 1600 Microsoft Points cost level for XBLA games soon.
You could see it as soon as Microsoft's next Arcade promotion. At first, the new pricing level will be rolled out across a few hand-picked titles… but the new standard will spread and should be in wide use by Q3 2012, if not sooner. Publishers and developers will likely cite increased development costs as reasons for the increase—along with natural inflation—but it's worth wondering when or if enough is enough for consumers. How far is the industry willing to push its limits before the market is priced out of caring about these games, in general, or is that even a fear at this point?
The 1200-point plateau has had its share of winners (Bastion, Shadow Complex), but there have been some stinkers (0 Day Attack on Earth) and unexplained pricing decisions (RayStorm HD) that tended to make the plateau a questionable one. There are still some games that buck the 1200-point asking price, like Ms. 'Splosion Man for 800 points, but by and large most consumers expect new releases to sport the higher price tag. The expectation is that consumers will be conditioned to gradually accept the new price point, as well.
The problem with adopting this new price point will be for publishers and developers to prove the value of their games, especially when some new full retail titles can be purchased for the same amount of money. Games with this price point should and will be subject to tighter review standards and criticism. Expectations for graphics and sound, gameplay, and replay value all rise a little bit. This is why Microsoft will need to be selective with the games that are chosen and green-lighted to sport the new price tag. If games come out of the chute that don't impress as much as they should, reaction to the increase will be negative and could adversely affect sales moving forward.
Even if consumer conditioning takes longer than desired, don't expect this move to be reversed or for it to not happen. With the next generation of hardware on the horizon, games across the board will be more expensive in some way—whether it's directly at retail for $70, sporting fewer features in lieu of DLC down the road, or perhaps even renewable licenses. The standard for downloadable games will undoubtedly move to $20 each. The industry's path towards getting more revenue will continue unabated, and there's plenty of confidence that consumers are far too invested to move on to another form of entertainment at this juncture. It might be a bit of a gamble, but revenue continues to be strong despite rising prices and fewer features for software.