As the games get more immersive, look better, sound better, and the artificial intelligence gets smarter most gamer rejoice.  The part that gamers tend not to get as excited about is that as the feature list increases so does the price of the game.  But if you talk to the publishers of the games they will tell you that they are losing money and practically in the poor house and may not be able to keep their doors open much longer.  They have a long list of excesses about why they are loosing money, everything from pirating to people having the nerve to sell their used games once they have played through them.

All of a sudden I realized something, console manufactures make consoles that lose money why can’t game developers and publishers make games that lose money also?

OK, I know that at first that this makes about as much sense as trying as fighting for peace but follow with me for a second.  Console manufactures make a product that at the beginning of its life cycle actually loses money with every sale.  As technology becomes cheaper, and the process of making the console itself becomes more refined they begin to actually make money on the console with each sale.  Now it is also worth pointing out that console manufactures make royalties on the sale of any game and accessory that is made for their console.  While in the initial sale they lose money they plan to make up that lose with the royalties from the games and accessories that are sold for that console.  This is actually becoming a common business model.  Cellular services sell you the phone and lose money with that sale, but then make it up with the profits from the service fee you pay for over the next two years.  Ink Jet printers are priced to lose money, but then they make up that lose later on by selling you the ink cartridges at a price that they recover their loses real fast.  Why can’t game developers use this same business model, selling their initial product at a lesser price in order to sell more units then make bigger profits based on future sales related to that initial sale?  If game developers initially priced their game so they took a lose (or made almost nothing) with every game they sold but sold more copies of their game then they could make more money later on with all the extra options that are now available to game developers and publishers.

Pricing, If you price a game a new XBox 360, or PS3 game at $39.99 chances are you are going to sell allot more copies of your game then you will selling it at $59.99.  If you take a smaller profit initially you will sell more copies of the game and if your game is good you may sell so many copies that you end up making money on the initial game sales.  Then all the extras money make options are just profit for your company.  In order to do this and have this plan work the first thing you have to do is create a really good game.  Games like Gears or War, Lost Planet, Oblivion, Final Fantasy, Metal Gear Solid.  I think it is fair to note that Lost Planet sold over one million copies in the first week.  Capcom stated that the game cost about twenty million dollars to create, and they spent another twenty million dollars to promote.  Now by my math they made some where around sixty million dollars in the first week.  I am pretty sure they made money on that game just from the sales of the game not to mention all the other sources of revenue they have coming in from the game.  Plus how much more money they will make selling the game as platinum hit.

Advertising, the more eyeballs they have in game the more money they can charge companies to advertise in their game.  If anyone has seen Rainbow Six: Vegas, Splinter Cell, or Crackdown you know that in game advertising is a huge deal.  This is all money that game developers and publishers are getting besides the price that we the consumers are giving them for the privilege of playing the game they produce.

DLC (Down Loaded Content), once the game is written, adding more multiplayer maps, and more missions is not nearly as much work as creating a new game.  With the game engine done and a great deal of the character design and sound clips completed, it should only be a minimal effort to create extra loaded content.  If you sell allot of copies of the game itself initially then it stands to reason that more copies of your extra content will sell also, there by making you more money.  Bethesda has really picked up on this with Oblivion.  Releasing additional missions, and extras, as well as expansion packs.  Some of them they give away and others they charge what I think most people would say is a fair price (Not including the horse armor).  I think it is worth mentioning to make this work, you first off if you create a really good game that people will buy.  Creating DLC also helps your company make more money by keeping customers interested in your game and therefore not selling the game to EB/GameStop, EBay, Circuit City or other places that used games are sold.

Music, Electronic Arts announced recently that it is going to start selling exclusive sound track music from the games they publish on iTunes.  I think this is a great idea for finding additional revenue from the games you create.

Game makers need to do something because even analysts are saying that the sixty dollar price point for games is not sustainable.