Mobile Game Pricing

Posted: 03.21.08

If you compare software prices to the cost of developing console, PC, and mobile games, something seems to be out of whack. World of Warcraft costs about $50 million to develop and market, Call of Duty 4 – probably $20 million total, Gears of War $10 million to develop and a few more in marketing. The prices of these games range from $30 - $50 (barring subscription fees). By contrast many mobile games cost $50 - $250K to develop. So how can the mobile game industry expect people to pay $10-$20 a pop when as a percentage of development the value is nowhere near a console or PC experience?

Much of the blame can be directed at the high margin requirements the networks demand for "on-deck" purchases. Some would argue that people have no idea about the ratio of game cost to development cost but I would argue that many people (especially gamers) do have a sense of value delivered in relation to development effort and expense. For whatever reason, the bottom line is that consumers have showed little interest in subsidizing the high costs of running networks by paying relatively high prices for mobile games. The current generation of mobile game should cost no more than $5 each in fact some should be $1 per game.

Will this make a lot of money for developers and publishers? Depends on the game, but as the word of mouth, social example, and momentum spreads this pricing could expand the entire market by a factor of 10. ”A buck a game man what are you crazy?” Maybe – but if I have to choose between a 160 square pixel version of Barn Stormer for $10, which will be lost forever at the next cell phone purchase or an AC/DC Back in Black MP3 album which will be burned/backed up and owned forever – I’m going to choose the music – and I believe games and music do compete for money. People only have a certain amount of dough for entertainment.

I’m no Apple fan boy but indeed, if there is anyone who understands the economics behind this thinking its Steve Jobs and Apple. Though the iPhone is not a great gaming platform because of the lack of hard buttons (which could be overcome with a Bluetooth gaming controller), if iTunes can offer a choice of quality games at $1 - $5 a pop – it may become the largest single cell phone platform for video games based simply on the software pricing model. Apple can’t patent appropriate pricing so the door is wide open for others. Please hurry up so I can start buying 2 games a month.