$ 60.00 next-gen games: “unsustainable”

Or so thinks analyst Jeetil Patel of Deutsche Bank (hey, there’s a change – it ain’t our old Wedbush Morgan standby). In other words, he thinks we may be looking forward to a price cut in video games. He points to Electronic Arts cutting the price of Madden, FIFA, and Tiger Woods to US$ 50.00 as a possible sign. “Either the industry is still in transition, or the $ 60 pricing is not sustainable.”

Okay, whatever anyone’s opinion of EA is, given the… news of last year, it’s inarguable that they are (for better or worse) the dominant player in the industry. So the choice to cut the price of a next-gen game when the industry says that the $ 60.00 MSRP is needed to recoup dev costs might be… jarring for an economist. Take it away, Jeetil:

We believe the inability to sustain $ 60 into April suggests consumer appetite for premium priced titles is questionable. Note the reported reductions include Xbox 360 SKUs of the bellwether Madden game, as well as Tiger Woods & FIFA, the latter two being released this past quarter (all three cut from $ 60 to $ 50). Recall that EA also cut Xbox 360 prices in May-06 despite selling into price insensitive early adopters.

Translation: heck no, we (well, enough of us) won’t pony up the dough, Patel thinks so, as he tells GameDaily BIZ. Okay, this doesn’t mean to say that the industry will really accept fifty as the new sixty – but in the challenge to boost sales of video games, particularly for the recently-launched PS3, price-cutting supply-side theory might sound tempting.

Or so thinks analyst Jeetil Patel of Deutsche Bank (hey, there’s a change – it ain’t our old Wedbush Morgan standby). In other words, he thinks we may be looking forward to a price cut in video games. He points to Electronic Arts cutting the price of Madden, FIFA, and Tiger Woods to US$ 50.00 as a possible sign. “Either the industry is still in transition, or the $ 60 pricing is not sustainable.”

Okay, whatever anyone’s opinion of EA is, given the… news of last year, it’s inarguable that they are (for better or worse) the dominant player in the industry. So the choice to cut the price of a next-gen game when the industry says that the $ 60.00 MSRP is needed to recoup dev costs might be… jarring for an economist. Take it away, Jeetil:

We believe the inability to sustain $ 60 into April suggests consumer appetite for premium priced titles is questionable. Note the reported reductions include Xbox 360 SKUs of the bellwether Madden game, as well as Tiger Woods & FIFA, the latter two being released this past quarter (all three cut from $ 60 to $ 50). Recall that EA also cut Xbox 360 prices in May-06 despite selling into price insensitive early adopters.

Translation: heck no, we (well, enough of us) won’t pony up the dough, Patel thinks so, as he tells GameDaily BIZ. Okay, this doesn’t mean to say that the industry will really accept fifty as the new sixty – but in the challenge to boost sales of video games, particularly for the recently-launched PS3, price-cutting supply-side theory might sound tempting.