Take-Two Interactive, $TTWO, CEO, Strauss Zelnick, believes that games should be priced on a per-hour basis (CORRECTION IN STORY)
Take-Two Interactive, $TTWO, CEO, Strauss Zelnick, believes that games should be priced on a per-hour basis, per Exputer.
In essence, the value of a game is often tied to its duration, mirroring sentiments expressed by gamers over the years who contend that shorter games, typically enjoyed over a weekend, should not share the same price point as expansive open-world RPGs. When considering the pricing of any entertainment product, the algorithm is founded on the anticipated entertainment utilization. This translates to the per-hour value multiplied by the expected hours, coupled with the perceived terminal value when the customer owns the title outright, rather than renting or subscribing. This principle applies universally across various forms of entertainment. From this standpoint, our frontline prices remain relatively low, given the extensive hours of engagement we offer.
Naturally, not everyone concurs. A ResetEra discussion from the previous year asked participants to share "Games you felt were too short for their price," with some arguing that this perspective is too narrow. "I will and gladly do pay $60 for short games; that's never a problem," remarked JinglesBuny. "Five-to-15 hours is a sweet spot for me."
"I don't associate value with length," stated RockmanBN. "It's more like, was the experience worth it?"
However, Zelnick contends that larger games should command a higher price, rather than advocating for shorter games to be priced lower, potentially making the gaming hobby even more expensive. Nonetheless, he acknowledges that achieving this goal is unrealistic. "That doesn't necessarily mean that the industry has pricing power or wants to have pricing power," Zelnick added. "However, there is a great deal of value offered."
CORRECTION:
Unusual Whales was contacted by Take Two itself. Their response was:
Following below is an excerpt from the transcript (full version attached, noted on page 9) of Strauss’ answer, which you erroneously reported as him suggesting the need for a new pricing model in our industry for core games – specifically, hourly rates. As you will clearly see, while Strauss was outlining the overall, general pricing convention for entertainment, in no way did he suggest the need for a new pricing method for core games – and certainly not hourly rates. In fact, and to the contrary, he reinforced the need to continually over-deliver on the content/experience relative to the consumer and their spend – and always being in service of our audiences first and foremost.
In addition, today, Games Industry Business published an op-ed piece on the matter – correctly noting that he made no such assertion, which was erroneously reported by many outlets, including yours.
Take-Two Interactive Q2 FY24 Results Conference Call – Wednesday, November 8, 2023
Furthermore, they added from the CEO: “Yes, I mean you don't want to generalize too much from what's going on in linear entertainment because the increase in subscription pricing and linear entertainment is really a reflection of the fact that too many streaming services were underpricing to acquire customers and then they realize those customers were not durable and the LTVs were upside down. So, they were basically adjusting their pricing to make sure that the LTVs are potentially positive. And I think there's still more pain to come for services, and I can wax eloquent if you want, although it has nothing to do with our business.
In terms of pricing for any entertainment property, basically the algorithm is the value of the expected entertainment usage, which is to say that the per-hour value times the number of expected hours, plus the terminal value that's perceived by the customer in ownership if the title is owned or subscribed to. And, you'll see that, that bears out in every kind of entertainment vehicle.
By that standard, our frontline prices are still very, very low because we offer many hours of engagement. The value of the engagement is very high. So, I think the industry, as a whole, offers a terrific price-to-value opportunity for consumers. That doesn't necessarily mean that the industry has pricing power or wants to have pricing power. However, there is a great deal of value offered. And look, it's our strategy here to deliver much more value than what we charge consumers. It's always been our strategy here. We want to make sure the experience is first-class, and the nature of the experience is not just the quality of what we offer, it's also what you pay for it, everyone knows that anecdotally. So, that's how we look at it.