Are game companies really as evil as we think?

In a recent video blog, I suggested that Apple products were overpriced. Amongst the usual flood of death threats, I found this interesting comment from a viewer:

btw this kind of stuff also happens in the gaming industry. it takes $10 for the game company to make one copy of the game. then they sell it to us for $100 or more. this also happens with the game consoles and computers. the truth is that all companies are out to not make profit but make HUGE profit earning him millions of dollars in a matter of months

This is a pretty common view, one that’s often used as a defence by pirates. (I’m not suggesting that commenter was a pirate - the comment was just what got me interested.) “If it only costs a dollar to burn a DVD,” says the pirate, “then why the hell should I pay $99.95 for a pre-burnt one? What a rip-off! Why shouldn’t I steal from those profiteering game companies?”

Profiteer or buccaneer?

That’s a good question, hypothetical pirate. The answer lies on the other side of some facts and basic equations:

-Call of Duty 4: Modern Warfare was made by 100 people.
-It took them two years.
-$2500 USD per month isn’t going to make anybody a billionaire, but it’s a pretty decent salary in the USA, and making games is quite specialised, so lets assume that’s what they got.
-$2500 x 24 (months) x 100 (employees) = $6 million

So that’s what it cost to make one copy of the game. Not $10. $6 million. Wait, I forgot the DVD burning process. Make it $6,000,001.

That’s just the first copy - every copy after that will cost just a dollar. But they can’t exactly charge $6 million for the first copy and then $1 for all the others. Who’s going to buy that first one? No-one, except maybe Nicolas Cage.

So they need to find some middle ground. If they charge $1 per copy, they’ll never break even. If they charge $10, they’ll still have to sell 1,200,000 copies just to avoid making a loss, so that middle ground is obviously too low. (Remember, retailers take 50%, and I haven’t even factored in the marketing costs yet.)

Someone in an office somewhere did some number-crunching, working out how many copies they were likely to sell, and what was a safe price. The game went on to sell 13 million copies, becoming one of the most successful games of all time, but remember, the company had no way of knowing that would happen when they set the price.

In my video, my objection to Apple wasn’t their profiteering - it was their use of high prices to trick people into thinking their products were good quality. Were the CoD4 team profiteering? I think they were just playing it safe.

You can’t be too careful.

One more thing to consider: out of those hundred game makers, a couple would have been paid just to write the anti-piracy software. If it weren’t for the pirates, the company wouldn’t have had to spend that $120,000, and the game would have been cheaper.

This is why pirates who complain about prices are hipocrytes. If you think a game is too expensive, buy a cheaper game. That brings the price of the first game down - whereas if you steal the first game, that drives the prices up.

When you pirate a game, a movie, a song, a piece of software, a TV show, you’re not actually getting something for free. The rest of us paid for it.

MITIFOTIT:
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As well as being an actor and the inspiration for Agent Six, my brother is a film reviewer. I think you should let him tell you why The Prestige is among the greatest films of all time.