Tuesday, September 29, 2009

Second stupid question of the day: "How do they get away with it?""

I was catching up on news, and someone at Yahoo! Games asks how video console manufacturers and others can charge what they do. It's another stupid question. Here's my simple answer:

Because people are willing and able to accept the amount offered.

We'll take things one by one. Microsoft charges for a wireless adapter for the Xbox 360 and is "getting away with it" because...people are willing and able to pay that! Microsoft is cutting the price to $80, clearly hoping additional buyers at $80 will offset lost profits from those who'd have paid $100 (thus maximizing revenue). But at whatever price, no one is being forced to buy the wireless adapter, or an Xbox in the first place.

The wireless adapter hardly costs "$0" on the PS3 or Wii. It's part of the total package you bought. That means if you don't need it, you're still paying for it.

"Microtransactions" might seem a sneaky, even sinister way that a company will lure in buyers and increase profits by selling you extra pixels, but again, no one is being forced to buy them or even the game in the first place. It reflects the fact that a game's full price (meaning all features present) is considerably more than the basic ("retail") price you pay in a store. This guy may feel that these are "features that really should have been in the game to start with," but the end result would be a far more expensive game. Does he think programmers work for free, that the additional content is insignificantly costly to produce? "Giving" everyone the full content sounds nice, but the practical result is that the more expensive game would be bought by fewer people. Instead, everyone can buy the basic game and then purchase additional, customized content based on...his ability and willingness to pay.

Best Buy charges $130 to set up your PS3? Well, no one is being forced to pay that. Evidently some are still willing and able to pay it, otherwise Best Buy wouldn't offer the service. Perhaps they don't have a neighbor's kid, or one they can trust, and they'd rather pay $130 to a semi-professional (we're talking Best Buy, after all) to have a PS3 set up as a surprise.

Xbox Live Points: again, no one is being forced to pay, in any denomination. Is Microsoft being "sneaky" with the 0.8 conversion? No, for the simple reason that it's right there for people to see. I don't have an Xbox and never heard about it, and while it might seem silly, people don't have to agree to pay it.

"Downloadable games that cost the same as retail" and "standard retail" are pure fallacies. The games would not cost the same as retail, because if Sony were to make the same profit, the game would cost considerably more once you factor in the necessity of retailers' profits. Is Sony trying to be "greedy" and increase its profits? It's certainly trying the latter -- any company would -- but it's a misnomer to disparage it as "greed."

The game by necessity can't be traded, because it would only lead to piracy. If you don't like that, then once again, don't buy it.

Finally, if you don't like what you're offered for a used game, then don't accept it. Retail stores are in business to maximize profit, and they by definition will charge what the market will bear. First, there's no way they could survive on just a few dollars' markup per game. Second, the reason they can charge "so little" is because...people are willing to accept it.

You probably could make more selling online, but consider the time it takes to set up the sale, waiting for payment, and then having to mail it or meet the person. This is not "laziness": it's people's realization that there's a big cost to their time. So, more than a few people are willing to go to a game store, which is a ready and reliable buyer that will pay cash. This is in contrast to a pawn shop that will pay...a similarly low price. Oops, bad example for him to use.


Blogger jk said...

Why isn't everything free? Dude, that would be so cool!

Wednesday, September 30, 2009 12:59:00 PM  

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