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Video game analyst Sam Naji looks at the replacement cost of video games and shows why they may be cheaper than in previous generations.

Often, we like to think we know how important something is. The decision is based less on logic and more on emotion, an intangible gut feeling. When it comes to video games we know when a game is under, or usually, over-priced. Unfortunately, this ability to price appreciation is affected by inflation.

Inflation has recently become a major problem around the world. No country is immune and there are real fears that high interest rates, suppressed demand and deflation could trigger stagflation or even worse – global recession. Reports of things steadily rising in price are happening daily.

At the time of writing UK inflation rates are at a four-decade high and just south of breaking into two levels. We are seeing the effects of inflation everywhere. The prices of products and food have gone up. McDonalds has increased its prices for the first time in 14 years. Amazon Prime will increase its price for the first time in eight years. Even technology, which often sees prices decrease over time, is not immune. Meta has announced that it will increase the price of the first two-year Quest 2 VR headset by $100 (although there are reasons other than price increases that are specific to Meta’s business as to why it is doing this).

What about video games? Aside from collectors of retro video games and consoles, when the price of old video game technology goes up, you know there’s a problem. Could we see the $69.99 price tag for new PS5 and Xbox Series games go up? Currently this is not the case, but anything is possible. If the cost of electricity and the cost of goods continue to rise, how long will the publishers take the rising prices before they give it to you and me?

Unfortunately, this article can’t answer those questions, but it got me thinking – how expensive are video games today? Let’s for now drop that elusive gut feeling and go with some hard facts and figures. How much do new games cost today compared to the old ones?

Thanks to Robert Grosso’s article for TechRaptor, we can measure how much new console games have been priced over time. Below are my graphs from that analysis.

Over time the price of new games has increased with a cycle of about 5 to 7 years, as shown in Graph 1. The increase in price seems to occur during the important development of the life of the console (such as when the technology of the game moved in the development of graphical optical drives were added). For example, between 1993 and 2001 the average price of a new console game was $49.99, but in 2005 with the release of the Xbox 360 and PS3 it increased to $55.

It is clear that prices have increased over time. We should expect this given the affordability of today’s consoles, the cost of producing games and the pace of inflation. In Graph 2, here are the same output prices but adjusted to the 2022 equivalent price, using the US inflation calculator.

This means that a 1977 Atari 2600 game today would sell for just under $200. As time progresses, the price of games falls accordingly. Xbox One and PS4 games that sold for $55 back in 2013, today would sell for $75 if game publishers followed inflation. Even the $69.99 games released in 2020 today would be priced at $88. That’s an increase of 14%.

This means that even though the average price of new video games has increased in price in absolute terms, they have gotten cheaper over the years relatively. Between 1977 and 2020 the average price of games decreased by about 2% each year.

In Graph 3, these two prices, absolute and relative, are shown side by side.

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