Phil Spencer has gone on record about Microsoft’s decision to raise game prices to $ 70 for their most premium first party games starting next year.

This has been a pressing issue for video games for some time now, even if the urgency seems recent. Xbox head Phil Spencer chimed in on this two years ago, giving a nuanced opinion that gamers would decide on what prices they would agree to buy games on.

When we reported the planned price increases, we had noted that Microsoft would continue to release these games on the same day on Game Pass and as individual releases, and also that Microsoft made it clear they do not intend to increase the price of Game Pass itself.

While talking to the Second Request podcast, Phil had this to say on the topic:

“Pricing is always something that we’re conscious of, and the impact it has on our customers. There’s multiple prices that we can set in our platform, such as the consoles themselves, the price of the games, the price of the subscription.

And just given our economic realities right now, something had to give in terms of us continuing to run the business at the increased cost basis that we had. And the thing we decided to announce today.

We haven’t raised any prices today. We just wanted to give consumers a heads up on what’s to come in the next year. For our largest AAA games, the retail pricing would go from $ 60 to $ 70.

Like you said, we are in no way the first mover on this. In fact, other publishers, other platforms, have already announced this and made that move. We have not, we had held off as long as we could.

We still like the fact that our subscription is at the price it’s at. Our console with our Series S, is the lowest priced current gen console in the market. And managing the business, the move that we decided to make was on the retail pricing of our largest games. It’s really just the cost basis of building the games and ensuring that we run the business in the right way for our customers.”

Of course, Sony already did their PR work to make the $ 70 price tag acceptable to their audience. God of War development lead Cory Barlog opined that he was in favor of the raise in game prices. PlayStation Studios head Jim Ryan referred to the price increase as acceptable.

While the poor economic conditions coming from the pandemic are the first thing in consumer’s minds in relation to this topic, this has actually been a long time coming, and something the industry has struggled with for quite some time now.

Video game retail prices had not been raised in decades, but game companies already needed to make more money to recoup the costs of investment and production for these products.

As a result, the industry has invariably played with many different monetization models. Before free-to-play cosmetics and subscription services like Game Pass, we had DLC packs, which increased in numbers so much that developers then created Season Passes.

The industry has also dabbled in gacha and lootboxes, which have become unsavory for console players although similar microtransaction models had been and remain normalized for mobile.

Raising game prices to the flat $ 70 will mean most players won’t pay that amount, and they’re likely to pay a subscription to play those games. But this is a model that has worked for Microsoft; they seemingly make enough or more revenue by enticing more players to subscribe.

As for the games being sold by themselves; these new prices would simply be a fairer accounting of how much it costs developers to make those games. There will be less of those games sold in this form, but they won’t stand to lose money on each game sold.

But of course, the industry is more complicated than that, as many games that are sold at $ 70, also still have DLC and season passes. And there’s tons of other games that are and continue to be sold below even $ 60, because of their scale, budget, and other considerations.

It seems the industry has to simply adopt $ 70 as the new baseline for AAA video games.

Source: Second Request Podcast