THQ's UFC Undisputed 2010 to Feature Pay-Wall

Hardly. The cost of the games' budget has to be spread over the number of units the publisher thinks it's going to sell- a $20mln game expected to sell 5mln units needs to be sold at a margin of at least $4. The same game expected to sell 10mln can get away with a $2 margin. Discs generally cost more or less the same to manufacture, regardless of licencing fees, and cost more or less the same to transport- or at the very least, said economy of scales has already had all the effect that it is going to as a result of things external of that one title- it's the cost of researching and developing the game in the first place where the economy of scales is going to be most effective.

(This is the same in other industries, as an example, film- the expensive bit is production, which is usually paid for at the cinema stage, meaning low margins on DVDs is sustainable)

Except that, as pointed out by Namco Bandai's VP, there's an additional cost per disc as a licensing fee. A cost which does not, apparently, scale well (or at all) with scaled-down prices. If it were a flat rate granting the publisher the right to publish an unlimited amount of copies, or if it were a percentage of the MSRP instead of an arbitrary number, you'd be right that the economies of scale are in place. However, the licensing fee effectively becomes a part of the production cost, because no matter how cheap the game is to produce, the production company is saddled with a $12-$15 per unit cost.

Nonsense. This, again, follows the same mistaken assumption that used games exist in a vacuum, that retailers will just leave shelves empty if second hand games vanished overnight.

As I mentioned upthread, retailers are buying fewer copies of individual titles, knowing that a load of games will just come back through the used channel, this prevents publishers using an economy of scales to reduce wholesale prices in general, and also keeps the retailers from using the same effect on their own purchase (supermarkets who buy many more units than specialist stores tend to get better deals for this reason), which reduces margins for the retailer and makes it harder for them to survive on new titles alone.

Similarly, I mentioned certain games being pushed out of the market entirely- giving these titles a chance to shine at retail will result in a wider selection of games in the marketplace, bringing more different people into the store which will also increase sales of existing titles which may otherwise have been made in a more mainstream retailer, which runs us around the economy of scales thing again, and will replace the revenue from second-hand sales.

Except that as you've pointed out, the sale of used games don't exist in a vacuum and, as I've pointed out, even if the used games market disappeared, thanks to the way publishers are charged per unit, the price will not drop much. Every dollar taken off the price comes out of the publisher's pocket. When sold to the distributor, the game probably nets them about $10-$20 per unit.

And no, the retailers won't leave the shelf space empty if used games disappear. But the money they earn from the sale of the used games CAN disappear. Which, if this is correct, would be a significant blow to the company. Yes, a portion of that profit is from games which have been traded in and then sold back at five bucks off the tag, but some of that profit comes from older used games which have dropped to $20-$30 below that $64.99 price. If that profit disappears, Gamestop will have to change it's business model or maybe even start slashing stores to tighten its belt.

Prices artificially inflated by the used games market: Retailers need to buy games from consumers at a price high enough to make it worthwhile for the consumer to bring their games in, but low enough to be able to make a decent amount of profit when the retailer sells it on. Retailers need to sell the game at a price high enough to bring in this profit and be cheaper than a new game.

New game prices come down and those margins get squeezed- retailer margin gets too low and they lose their easy profit. The amount they offer to the consumer goes too low and nobody bothers and no stock comes in.

It's in the retailers' best interest to keep new prices artificially high, to save their used market- not a big conspiracy to fleece the consumer, just a reality of the massive house of cards the whole situation is. Used sales to the consumer are, at best, a solution to a problem it causes itself.

That's like stating that prices for new cars are artificially inflated because of the sale of used cars. Or movies. Or anything, really. As I mentioned above, the prices are artificially high because of the licensing fee right out of the gate. Sony, Nintendo, and Microsoft CHOOSE to keep the price high by forcing arbitrary licensing fees on gaming companies.

And the fact of the matter is, part of the reason the prices remain as they are is because that's what they've always been. Back in the day, the price was justified because the cartridges games were sold on were horribly expensive to produce, compared to a DVD or CD. Now, a copy of Prince of Persia: The Forgotten Sands costs as much to make as a copy of Shrek The Third. Movies manage to be cheaper than games by quite a bit.

And no, movies do not rely on their theater releases to earn money. Some movies earn a crapload of money from that, but others, like the Chronicles of Riddick, can earn their huge budgets back based solely on the strength of their DVD sales.

$34.99 is NOT an impulse buy for anyone who doesn't earn gobs of money at their job. $17.99 is very easily an impulse buy. $17.99 is NOT an impulse buy for anyone who doesn't earn gobs of money at their job. $8.99 is very easily an impulse buy. And so on.

You don't like the price because it's "The Price"- just because it's available $5 cheaper on second hand, you feel that's the price it should be. People are always going to consider everything that people charge for to be "too damned much".

No, I don't like the price because, as I mentioned, that's more than half of a day's wages. And your argument here is just repitition without stating facts. The economic theory behind a price drop is simple: Make more copies and you sell more games. Final Fantasy XIII, for example, is an A-list title and it's only sold 5.5 million copies worldwide... Out of a possible installed userbase of 75 million. Grand Theft Auto 4 sold 6.9 million, Metal Gear Solid 4 has sold 3 million, and freaking God of War III has only sold 1.1 million copies.

Those numbers suggest to me that hey, a lot of people don't like the price. And not because it's an arbitrary number. They don't like the price because of the amount. The guy who trades in a game isn't just doing it to get rid of it, he's doing it because he's not comfortable with the new price without doing the trade in. The guy who buys his games used is doing it because he's not comfortable with the price, either. The used games market is a symptom of the high prices, not the cause.

While I'm not strictly going to disagree with that, what's keeping prices up is used games, for the reasons above. In order to bring game prices down, used games have to go away. In order to get used games to go away, game prices have to come down, and round and round we go. There's not a single person in the entire games industry that doesn't accept that cheaper games would result in higher sales, but "knowing what to do" and "being in a position to do it" are two very different things.

Right now the only people in a position to make a change don't really care to. And it's hard to blame the first party sellers, in a certain light. Microsoft, Sony, and Nintendo don't have to pay a licensing fee to themselves, and because ALL games are expensive, they can get away with putting an expensive price on their own games and see huge profits as a result. First party titles earn double the money a third party title earns.

What publishers need to do is band together and do something about the mess. Release a system that'll require no licensing fees by splitting the costs (God knows Activision and SquareEnix could do it), or even just throw everything out onto the table, bidding war-style: "Here's the next hot new thing. Whoever gives us the best deal gets it."

Sigh.

I guess we'll have to agree to disagree on the rest of it, though.