Will Gamers Take a Hike?
And although game prices have generally stayed the same, says Wedbush Morgan analyst Michael Pachter, the cost of entertainment, such as movie tickets and sporting events, has risen.
"I think consumers expect [a price hike]," says Pachter. "They've gotten a gift that game prices haven't gone up."
Pachter, Kotick and some other analysts believe that consumers will readily pay more for games. In his presentation, Kotick said that when Activision released Doom for the current Xbox, it debuted two versions of the game: a special-edition package for about $60 and a regular edition at $50.
Sales of the more expensive edition comprised more than half of the units Activision ended up selling, Kotick said.Prices haven't risen on games in recent years, because "the publishers have all been wimps," says Pachter, whose company has no banking relationship with the companies mentioned. Most analysts don't doubt that publishers will likely be able to charge a premium for special editions of games. And for the few blockbuster titles out there, publishers will probably have wide latitude in what they charge, analysts say. "I think there's no doubt that for the next version of [Take-Two's] Grand Theft Auto, there's another $10 on the table if they choose to take it," says Steve Monticelli, a fund manager with Mosaic Investments, who keeps close tabs on the video-game sector but has no current positions in it. But many analysts doubt that publishers will be able to sustain a broader price jump. The cost to make games might be rising, but that doesn't mean consumers will pay more for them, say these analysts. "I don't think the consumer cares" about developing costs rising, says Spiegel, who, through options, has synthetic long positions in Take-Two and Nintendo. "Looking to the consumer for compassion is a pretty bad idea."
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