Take-Two CEO Strauss Zelnick Claims Videogame Prices Are Undervalued for the Content Offered
ICARO Media Group
Zelnick dismissed any comparison between videogame pricing and the subscription fees of TV and movie services, highlighting the unique commercial dynamics of the interactive media industry.
Zelnick emphasized that while videogames now incorporate subscription services, they operate on different principles compared to non-interactive media. He clarified that game publishers are currently unable to raise prices, even if they feel that they are overdelivering in terms of content.
To shed light on Take-Two's approach to pricing, Zelnick explained their methodology, which involves calculating the value of expected entertainment usage. This calculation considers the per-hour value multiplied by the expected number of hours, along with the perceived terminal value to the customer, whether the title is owned, rented, or subscribed to.
In simplified terms, Zelnick contended that pricing is determined by the relationship between the per-hour value, the expected gameplay hours, and the perceived overall value of the game experience. By this standard, Zelnick claimed that Take-Two's prices remain low as they offer extensive hours of engagement and high value.
Zelnick emphasized that the entire industry provides a remarkable price-to-value opportunity for consumers, given the quantity and quality of content offered. However, he acknowledged that the industry may not have substantial pricing power or the intention to exercise it. Instead, the focus is on consistently delivering more value than what is charged to ensure a first-class experience for gamers.
Zelnick acknowledged that few pricing increases have occurred in the industry, citing the recent price increase to $70 for certain frontline products in 2022 as the first significant raise in many years. He reiterated Take-Two's commitment to providing excellent value to consumers.
Zelnick's perspective on game pricing aligns with similar sentiments from other industry leaders. Capcom's president, Harushiro Tsujimoto, also expressed the belief that videogame prices are too low, given the substantial rise in development costs compared to the Famicon era. Tsujimoto proposed raising unit prices as a viable option for sustaining business growth, acknowledging the need to account for rising wages in the industry.
While Zelnick appears relatively relaxed about the issue, his viewpoint reflects the opinions of many executives who consider blockbuster commercial games to be significantly undervalued. With the weight of the company responsible for Grand Theft Auto behind him, Zelnick's statements carry significant influence within the gaming industry.
The ongoing debate surrounding videogame prices unveils the complex equation between the value provided to consumers and the economic sustainability of the industry. As gaming continues to evolve, finding the right balance between affordability and fair compensation for developers remains a critical challenge for stakeholders.