Friday, August 26, 2011

Standard of living and video games

I had been planning on writing a piece to prove how cheap video games have gotten over the years by factoring in inflation, but it turned out a number of other people have already done that, some with pretty graphs and video segments.

So I'm going to dig a little deeper to show that the inflation comparison only scratches the surface.

Both the consoles and the games themselves have fallen in price. The two Nintendo titles from 1989 went for $95.44 and $121.46 each in 2010 dollars, although those catalog prices were a little above average at the time. It's true, video games have never been cheaper.

It's also important to remember that the $50 to $60 modern Xbox games are much more advanced that the Nintendo games I grew up with. Russ Roberts has gone into more detail with his comparison of expanding iPod features and memory coupled with falling prices. The lesson is the same: repetitive levels, 8-bit graphics and sound effects have been replaced with rich environments, HD graphics and voice actors.

Compare the basic left-right-forward-back movements of Doom from 1993 with the 3-D environments and cover to dive behind in Gears of War from 2006. The original Legend of Zelda manual had drawings to let the player know what the items and monsters in the game were supposed to look like. Some old-school RPGs had a few choices for the player to make, but they doesn't come close to the complicated plots and moral dilemas in games like Mass Effect and Fallout 3.

And even with those price drops and quality increases, there are now substitute goods to console traditional games that give consumers even cheaper alternatives, like downloadable titles, which fall in the $5 to $20 range, and now mobile games on smart phones, which fall in the $1 to $5 range. These alternatives tend to be shorter than the console games, but some like Section 8: Prejudice or Angry Birds are known for their replay value coupled with a low price.

In fact, mobile games have been so popular as a cheap alternative that the new portable Nintendo 3DS system flopped on release this year, its $40 price for new games couldn't compete with phone games cheaper than a sandwich.

If Brad Delong ever writes an updated version of his brilliant Cornucopia: Increasing Wealth in the Twentieth Century paper showing the complications in standard of living comparisons, than he'll have need find no better example than Pac-Man versus Castle Crashers.

Edit: I have more to say on this matter.


  1. What about the other costs associated with gaming today, though? Aside from the $60 a year to play online (which can be made relatively minute through a high number of hours played, I suppose), there are perpetual costs. For instance, games will give players updates for online play, sometimes quite consistently and constantly. I have no doubt games are cheaper on the whole today, but shouldn't these other factors be considered? has a decent article that touches on this:

  2. I think that's a fair point, but I do want to caution that keeping up with new map packs is something optional for online multiplayer games - a new category. Xbox Live is also optional - the free silver option still lets people download and and update games. These are apples and oranges comparison.

    These are new options, and consumers have always opted not to buy everything a console has to offer:

    As for the Cracked article, the article is a bit pessimistic and the point it makes about subscription-based games is a rival business model that I personally stopped participating in when I quit World of Warcraft two years ago.

  3. Michael, having overnight to think about it, I want to give you credit for your point. Map packs and DLC are optional, but they can be considered required for "competitive" play and the "full experience" of a game. These can indeed throw off the numbers.

    If you look at Dragon Age: Origins, the expansions were huge. There was eventually an edition that included all 9 DLC packs, and these editions tend start out at the $60 mark and fall in price like other games. Still, players who didn't want to wait spent more than the original price of the game in DLC.

    So yes, there are ways to play games that require service or DLC purchases. I consider these "new animals" that are difficult to compare to straight-up console games.