Game's Aren't More Expensive Because of Inflation

Inflation and Game Prices
Credit: Creative Commons

Inflation and Game Prices
Credit: Creative Commons

In just a few years, inflation has skyrocketed, especially in the U.S. where a dollar today is worth meaningfully less than a dollar from just a few years ago. Some inflation is inevitable, but how much the world has seen in such a short time is cause for concern, and accordingly, many blame inflation for video games becoming more expensive. This isn't the case, so in this article, we'll explain why games aren't more expensive because of inflation.

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Inflation and Game Prices

Inflation and Game Prices 2
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Credit: Creative Commons

The best point there is against the idea that inflation has caused games to go from $60 to $70 is that, well, before the last couple years of intense inflation, games already were being sold at $70. When the PS5 and Series X launched in 2020, many games were priced at $70 instead of the usual $60, so it's hard to say that inflation between 2020 and 2022 caused this raise in price.

But what if you think that inflation, generally, has caused game prices to rise? Unfortunately, this isn't supported by the data, either. Take a look at inflation between 2005 (the launch of the Xbox 360, which had $60 games) and 2015 (into the PS4 era where there were also $60 games) and you'll see that over a decade where there was an international economic collapse that game prices did not go up because of inflation. There's more to the story.

In general, with any commodity, as inflation goes up, so do prices. If somebody's money is worth less today than yesterday, it makes sense to charge more money for stuff. This is a very basic economic principle anybody can understand, but there's a lot more nuance to the idea.

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For example, say you've got a clothing business, and you make shirts. You only make a penny on each shirt, but you sell a lot of shirts, so your business is doing well. But then one day, you hear that a new factory with all kinds of innovations and new tech has opened up, and they offer to make your same quality clothes at a fraction of the cost. Then, say there's a global economic recession, and say inflation skyrockets.

Everybody else is raising their prices because the margins are so thin, but you've got the secret sauce, so even though you're making less money per clothing item in the context of inflation, you're still doing a lot better than you were, and since evrybody else is raising prices, if you keep yours the same, you'll get more sales, too. The point of this example is to illustrate the idea that there are other variables that come into play when it comes to pricing than just inflation.

With video games, there are a lot of these other variables.

Video Games and Monetization

Inflation and Game Prices 3
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From the inception of video games through to the 2010s, games were not the juggernauts they are today. Gaming in the 2000s, for example, was kind of like podcasting today. It's a real thing that exists and most people know about, but if you actually have a podcast, the average person will probably think that's a little weird for a random person to have one. And the whole podcasting scene, while it has a few huge guys like Joe Rogan, isn't all that big and there isn't that much money in it.

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If games stayed at that level, successful but not a breakaway phenomenon, we likely would have seen inflation tie a lot more directly into the pricing of games. But with the smartphone revolution of the 2000s and the massive popularity of the PS4/Xbox One generation of consoles, games were finally catapulted into the limelight by the time of the late 2010s and, now, 2020s.

Exponentially more people buy games now, so there's much, much more money in the market, but simultaneously, games have also opened up their monetization to support all kinds of microtransactions and extra paid content that have massively expanded the dollars a company can extract from a single gamer.

It is true that games have also gotten more expensive. Games are bigger now, often have larger marketing budgets, and are more expensive to develop, sure, but this is only true for the biggest AAA games, and these expensive games don't even usually make the most money. Free-to-play games with comparatively smaller scopes and less expensive development cycles like CS:GO or Valorant or League of Legends tend to be the most successful games.

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This is in contrast to the indie movement where games are always priced lower than $60 or the Early Access generation of games that, also, saw games routinely priced cheaper than a full-fledged $60 game from a big company. Suffice it to say that games don't have to be as expensive as they are at the top-end to be successful or even the most successful, and even when they are, companies are making exponentially more money off games than they used to make.

So, Why Are Games More Expensive?

This is a question for another article, which we'll get more into, but suffice it to say that games cost $70 now and not $60 for a variety of reasons hyper-specific to this particular industry that have a lot, lot less to do with inflation than the prices of a carton of eggs today does.

Anybody that says games cost more because of inflation just doesn't really understand the gaming market.

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