Nintendo knows best

Nintendo President Satoru Iwata seems to think that Nintendo, and not the software retailers, should decide how much their products sell for, citing high development and production costs as a justification for what amounts to price controls. He refers to the current practice of discounting as an “unhealthy product cycle”.

So that’s what you call it. Hmmm… the rest of us call it “the free market”.

There are several reasons that discounting is not only necessary, but inevitable. Let me count the ways…

  1. Most games are heavily hyped and have a limited shelf-life.
  2. Many games do not live up to the hype. Word gets around and people stop buying.
  3. There is fierce competition for shelf-space. Every week new releases come out, and this week’s hot new title will be lost in the crowd next week.
  4. There is only so much money to go round – not too many kids have $50 to drop every week on the latest new game.
  5. Once a game has been out a while, it enters the second-hand market. How do you compete with that?

Games are experience goods. Like music and movies, their perceived value decreases over time. Even more so, as hardware capabilities and gamers’ expectations go up every year.

Iwata-San… You have come down with a bad case of ivory-tower syndrome, and need to go back to school. You seem to have forgotten the concept of free market competition. It is the market, not you, who decides what to buy and how much to pay for it. The retailers know this. They discount because they have to.

Yes, development costs a lot of money. If that is an issue perhaps you should consider producing fewer more high-quality and above all more original games.

If the suggested retail price of any and all software is marked down in 6 months or 9 months, the customers will learn the cycle and wait for the discounting, which will simply aggravate the decreasing sales of new software

You’re reaching here. First of all, you are assuming that the customers will pay full price. Secondly, you are assuming that RRP is the real price. I disagree. I respectfully submit that the discounted price is the real price. What do I base that on? My own experience. For a variety of reasons, I do not buy games until they have been around for a few months. Here’s a revolutionary idea… try releasing it at the correct (i.e., discounted) price-point to start with, and then they won’t have to discount it further.

Oh, and if your costs are too high, why not slash your marketing budget and spend a little less on your hype machine? I stopped paying any attention to game announcements and ads years ago, unless they included screenshots. Real Gamers aren’t fooled by the hype – they ignore the glossy airbrushed full-page ads and go straight to the reviews and look for a demo.

You can try to control the market – the kids will simply spend their money elsewhere, and Xbox, Sony et al will eat your lunch. Good luck to you.

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