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THQ's Farrell: 'Future Of Gaming' In Mass-Market Retail Prices, More DLC Sales
THQ's Farrell: 'Future Of Gaming' In Mass-Market Retail Prices, More DLC Sales Exclusive
November 11, 2010 | By Leigh Alexander

November 11, 2010 | By Leigh Alexander
More: Console/PC, Exclusive

Beginning with the next MX vs. ATV title, THQ is hoping to explore an alternative business model for retail games -- launching at a lower price point and then selling more incremental content later. That's where the industry is headed, says company president Brian Farrell.

"What we're thinking about the business is we're turning it on its head a little bit," Farrell told attendees at the BMO Capital Markets conference in New York this week. "It's not, 'how high a price can we get', but 'how many users'," he suggested.

"If you can capture everyone under that economic curve, that's where you can make the most money," Farrell added.

The $59.99 price point is "keeping people out," he continued. A more accessible retail price point means a wider initial install base for a title, thus a larger pool of DLC customers -- and a more viable business model overall, according to Farrell.

"When we launched [MX vs. ATV] at $59.99, we'd do some units, and then when we brought the price down to the mass market-friendly price of $39.99, it would just pop," he said. "So the thinking this time is, let's initially launch at $39.99 -- it's a very robust game, very high quality, so this is not about trying to get a secondary title out."

"It's an AAA title, at that price point, but then with a series of DLC so people can extend their experience," Farrell explained. "We think this is the future of gaming. We think that's the way games are gonna go in the long term."

Although it largely remains to be seen, DLC tie ratios for console titles are expected to be a little bit wider than the 15-25 percent seen on PC -- but according to Farrell, the focus should be on expanded install bases for console titles. "The fact that you've created a hit -- that's the real win," he suggested. If an install base is large enough, the tie ratio becomes less important.

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Eric Adams
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I like Brian's approach on this one. Price the core game lower and offer DLC or components at a higher price point. For example, Black Ops would be $39.99 for Single player only and then $59.99 with MP unlocked. I too find that single player games with four hours of gameplay priced at $59.99 is not what it is needed in this economy.

Ian Uniacke
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This is a smart move. Good call THQ I hope it works out for you.

Benjamin Quintero
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I wish it was this simple. No one is going to just cut $20 without taking something significant out. Not when people have been conditioned to already pay more for less. I would agree though, selling single player with an option to unlock multiplayer would be an attractive sell for me. Also a $20 upcharge from an online store is about the same profit as a full retail game, after retailers get their cuts.

John Tynes
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I love this idea and I'm glad to see THQ try this. It's no mystery why gamers buy used games: they can get last month's hit title for $10-15 off. That's a big deal to people, not to mention the trade-in value they can apply to their next game.

Our industry cries like a baby about used game sales but it's because our price points have trapped consumers in this cycle. Today gamers feel pressure to trade their game in as soon as possible to recapture the most value, which kills multiplayer and DLC sales. If we got our games down to $40, $30, even $20 where we were comparable with books and DVDs it would cut the legs out from under the used game market, prolong the multiplayer window, and free up money and tray life for high-margin DLC.

David Serrano
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@ Benjamin Quintero: How many AAA games actually have the budget or the quality content to warrant a $60 retail price? The answer is... not many. The vast majority of AAA next gen. titles are overpriced. I think after 5 to 6 years of abusing the audience, the big publishers have finally figured out price gouging for low budget, low quality games hurts sales for bigger budget, higher quality games.

Bruce Baxter
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Finally a break in the wall - the prices, games being one of them have gotten ridiculous ever since Sony lost control of them (which is strange because just about every other Sony price is way beyond gouge levels - but the PSX / PS2 $49.99 game strategy may have been just that - a strategy). I hope this spreads - you cannot sell every donut for the same price, every product is not equal and every product does not warrant the same hike that another product does. I especially can appreciate pricing a core (lower) price for single player and tacking on extra for multi-play / dlc. Not only would more people buy - especially us Singleplayer folks, it would gave the developer incentive to make games that have a mode to play besides cash-cowing gamers for online "panhandling"...