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Research could help unlock profit in gaming

Dr Joe Cox.

Different versions of video games could increase profitability for companies, says Dr Joe Cox in his latest research.

Video game producers would reap huge rewards if they extend the practice of offering different versions of games at different prices, according to new research.

Dr Joe Cox, of Portsmouth Business School, recommends the tactic be employed by producers far more extensively than it already is in order to encourage consumers to pay amounts that are closer to the true value they place on a particular title.

Dr Cox, an economist, has studied the video gaming industry extensively. His latest research is published in Managerial and Decision Economics.

Video gaming has rapidly evolved into a major economic force in entertainment, worth an estimated £62bn a year.

He said: “The video games market is becoming increasingly segmented, with distinct groups of players exhibiting different levels of demand; for example, hardcore versus casual gamers.  Producers could increase their profitability by releasing many different versions of each game, with different features and price points, to appeal to these different segments of the market.”

His research demonstrates that consumers are typically willing to pay around 40 per cent more for special edition variants of games.

Video gaming hardware – the console – tends to sell at a flat or fixed price, but the price of software – the games – can vary enormously, depending on bundled features, whether accessories are included, and whether the game is a special edition among the many factors which influence price.

Dr Cox said producers could do much more to improve sales by offering games at different price points, extending the already commonly used tactic of launching special edition variants of some games.

“Video games software can very easily be adapted or ‘versioned’ to sell to consumers with different levels of demand.  For example, in addition to basic versions sold at a low price, mid to high-range versions could offer access to additional characters, weapons and or even entirely new game modes and multi-player features at the highest price points.”

Dr Cox carried out an exhaustive study of market prices for more than 5,000 games on nine platforms. The games spanned many genres and different age ratings and had received a wide range of reviews, from excellent to poor.

Dr Cox said: “Producers could be doing much more to harness such customer self-selection as a means of improving their profits. It’s a lost opportunity to ignore this pattern of customer preference and behaviour, especially when dedicated gamers appear to be willing to pay a premium to access additional features and content.”

2 total comments on this postSubmit yours
  1. Like the App Store, games could have in-game purchases to enhance performance which will squeeze revenues for firms and I’m pretty sure the keenest gamers will pay the price.

    • I think I read somewhere that the video games industry is bigger than pop/rock music now.

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