Embracer Group CEO Lars Wingefors gives insight into the challenges of game pricing. Read on to explore his reflections on rising development costs and the need for adaptation in a competitive market landscape.
Embracer Group CEO Analyzes Game Pricing Dynamics
Navigating Market Realities and Consumer Preferences
In a recent interview with GamesIndustry.biz, Embracer Group CEO Lars Wingefors delves into the complex landscape of game pricing, reflecting on the challenges and strategies developers and publishers face in today's market. Wingefors' insights shed light on the contrasting performances of Embracer's titles and the broader industry trends, offering valuable perspectives on the ongoing debate surrounding game pricing.
Wingefors begins by dissecting the contrasting fortunes of Embracer Group's recent releases, notably highlighting the divergent trajectories of Dead Island 2 and Alone in the Dark. Despite both games boasting established Intellectual Properties (IPs) and substantial budgets, their market performances showcase the challenges faced by developers in standing out amidst fierce competition.
While Dead Island 2 emerged as a standout success, achieving three million sales and garnering praise as the fastest-selling AAA game in Embracer Group's history, Alone in the Dark struggled to meet management expectations.
The critical distinction lies in the execution of each game's vision and its resonance with the gaming audience. Dead Island 2 managed to capture consumer interest with its engaging gameplay mechanics and immersive world, leading to significant sales and player engagement. In contrast, Alone in the Dark, despite its investment in star talents like Jodie Comer and David Harbour and a sizable marketing push, failed to generate the desired level of consumer interest and sales.
Adapting to Economic Pressures and Rising Development Costs
As the discussion unfolds, Wingefors elaborates on the broader economic pressures that influence the gaming industry. He acknowledges the rising development costs that developers and publishers face, a challenge exacerbated by the reluctance within the premium PC/console market to adjust pricing accordingly. This reluctance to increase prices despite mounting costs presents a significant hurdle for publishers as they grapple with narrowing profit margins and increased financial risk.
In addition to escalating development costs, Wingefors highlights the proliferation of content choices available to consumers as a critical factor shaping the industry landscape, "Consumers have more content than ever to choose from. They love to engage in established IPs they've been playing before, which means it's harder to have them trying out new things or new IPs."
With an ever-expanding array of gaming options competing for players' attention and spending, developers must navigate a highly competitive market to stand out and achieve success. Wingefors' acknowledgment of these challenges underscores the need for continual adaptation to evolving market realities, emphasizing the importance of strategic foresight and flexibility in responding to economic pressures and shifting consumer preferences.
Exploring Pricing Strategies and Future Outlook
Amidst debates surrounding the proposed $70 standard price point for games, Wingefors offers insights into potential pricing strategies and their implications. While acknowledging the possibility of price increases, he points out the lack of widespread experimentation in this area within the industry. However, it's worth noting that reports from Bloomberg as early as 2020 indicated a gradual shift towards higher pricing, particularly for premium versions of games. This trend underscores the ongoing evolution of pricing dynamics in response to economic pressures and rising development costs.
Instead of immediate price hikes, Wingefors suggests alternative approaches such as lowering development costs, "lowering costs is a regular topic with my management. It's very interesting, but it's a bit sensitive to give colour around it." As Embracer Group navigates the ever-changing dynamics of the gaming landscape, Wingefors remains focused on the company's prospects while looking for a balanced approach to pricing and innovation. By leveraging insights from both industry trends and consumer behavior, Wingefors demonstrates a pragmatic approach aimed at addressing the challenges and opportunities facing the gaming industry.
Source:
Embracer Group CEO Interview With GamesIndustry
Bloomberg Report On Game Pricing
