NBA 2K21: New Gen Console Video Game Marketing Pricing Justified or Gouging

Pre-orders for Take Two Interactive’s NBA 2K21 is here.  Kotaku staff writer Ash Parrish‘s NBA 2K21 Will Cost $70 on PS5 and Xbox Series X has opened up Pandora’s box.  An age-old debate, the question basically boils down to this. About something seemingly sacred – about video game marketing and pricing.

Is a $10 price premium justified to get the exact SAME game on next-gen consoles? Or is this a reckless assault on the $60 price tag we’ve all come to accept for AAA games?

If the thread of 170 comments posted in the last 48 hours is any indication, there is no easy answer.  

One thing I know for sure.  No matter what the publisher marketing and PR team says, there can be no pleasing everyone.  Without addressing the right from wrong, or getting into the details of making video games and publishing economics.  Allow me to distill the factors, and the types of consumer research and insights, that video game marketing and video game publishers, take into consideration.

Video Game Pricing 

Video game marketers have multiple tools for consumer insights and market research at their disposal.  To answer questions about “willingness to pay” and “ability to pay” marketers can conduct one or more of:

Qualitative Focus Groups and Interviews

In this case, a simple limited-sampled set of focus groups – asked of 10 to 50 players can be helpful.  If I were structuring the study, I would strive to have an equal representation of these following groups. Check out this Qualtrics VGMarket case study for an example.

• 1a. Die-Hard Early Adopters (who pre-ordered NBA 2K20)
• 1b. Franchise Fans (owners of NBA 2K20, who bought digitally or at retail, post-Pre-Order)
• 1c. Likely Competitive Conquests (owners of other Sports games on Xbox, Playstation, PC, etc) 
• 1d. Potential Cross-Platform Converts (mobile players of NBA 2K Mobile Basketball, My NBA 2K20)

Quantitative Research

Here a video game marketer can test consumers for both their “willingness to pay” and “ability to pay.”  Instead of qualitatively polling 10 to 50 customers and prospective players, one can survey 1000 to 5000, depending on expected differences between demographics (men vs women, teens vs 18-24 year-olds, etc)and Interest Types.  Tools like Samplify or SurveyMonkey can work very nicely for these studies, whether incentivized (survey takers receive a monetary or other compensation) or not.

Psychology of Early Adopters

Psychology plays a big part in “Why we game?”, “How we game?” and “How much we pay?” To early adopters of video games – like with first-gen space tourism, there is a big element of “bragging rights” and “peacocking.”  In case you’re not familiar with the concept of “peacocking” check out this compilation video of “peacocking in 

In other words, for someone who is always the FIRST among his circle of friends to get a new gaming console, a new favorite sports video games.  What IS the “bragging rights” worth?  Chances are, much much much more than $10.

Psychology of Franchise Fans

For franchise fans who bought NBA 2K20, but did NOT pre-order last year, is a 

$60 price point acceptable?  By asking the simple question below, video game marketers can readily understand the target Total Addressable Market of Franchise Fans, and how likely they are to buy within a 90-day window after the close of Pre-Orders.

Psychology of Collectors

To fans, especially fans and superfine of LA great Kobe Bryant, this is huge.  How do you place a price on the once-in-a-lifetime opportunity to own the Mamba Forever edition of NBA2K21? To true collectors and Kobe super fans, the perceived “value” cannot be quantified, just as the strong emotions cannot be forgotten. 

Again in terms of game market research and consumer insights, a price premium of even $40 – $99 for the current-gen Mamba Forever edition, vs $59 for the current-gen Standard  Edition – may be well within the “willingness to pay” for collectors and Kobe superfine.  For price-conscious fans who may not be huge Kobe fans, a $59 Standard Edition may suffice.

IP Licensing Costs

Video game studios and publishers can make a variety of video game content.  Simplistically these include both:

Branded-IP Content

When a developer-publisher creates gaming content based on an existing IP – like Super Mario Brothers, Star Wars, Frozen, etc – there are often hefty licensing fees that the developer-publisher must pay.  These can easily range from 10 to 30% or more of the average per-unit (premium-priced) or per-month net sales (on the App Store, Google Play, or Steam.)

 

Original-IP Content

 

While Original-IP Content frees the developer-publisher from paying 3rd-party IP Licensing costs, this also comes with the added burden of building a brand and market demand for the game, oftentimes from scratch.

Video Game Development

Video game studios and publishers vary widely by structures, sizes and expenses. Smart profitable video game developers – from EA and Nintendo to Supercell and 2K – have long used a framework and leveraging talented labor wherever it exists.  This means tapping into development, art, QA, support, teams from across the world.

So having an AAA video game where the primary development is done in the US and Canada, in-game art executed in Eastern Europe, service/support/community management spread across Ukraine and the Philippines, and advertising/media creative executed in Romania is not unheard of.

At the end of the day, video game developers and video game publishers are profit-seeking businesses.  So an AAA video game title with a studio size of 500 developers, artists, designers, marketers and community managers and average development cycles of 24 months can see video game development budgets balloon into the hundreds of millions of dollars.  Very very rarely, but it has happened before.  Furthermore, video game development can and oftentimes is an expensive undertaking.  

To get a sense of the type of testing and development required – to ensure Video Game Marketing to maximize discovery and re-engagement via word-of-mouth and sharing, take a look at my piece on Designed-In Video Game Discoverability.

 

In the case of Visual Concepts, Wikipedia estimates it has a staff of 350 employees, spread across 6 studios (Novato, Seoul, Budapest, Shanghai, Los Angeles, and in Orange County.) As some comments have pointed out, the video game industry as a whole is doing fantastic, take a look at my State of the Video Game Industry for more details.

Now back to our initial questions.  Is a $10 price premium justified to get the exact SAME NBA 2K21 game on next-gen consoles? Or is this a reckless assault on the $60 video game price tag we’ve all come to accept for AAA games?

Justified video game pricing signaling based on the high cost of development and quality, required on the new video game consoles XBox Series X and PS5?  Gouging of consumers based on market demand, and developer fiscal mismanagement?  Where do you stand?