The Future of Pricing for Nintendo Games
The price of The Legend of Zelda: Tears of the Kingdom, Nintendo’s upcoming Switch game, has been set at $70. This news came as a surprise, considering that Tears of the Kingdom is the sequel to one of the best-selling and most highly acclaimed titles on the system. It also sparked questions about the pricing strategy for future Nintendo games, particularly as other companies like Sony, Microsoft, and third-party publishers have raised the cost of their new games in recent years.
However, according to a spokesperson for Nintendo, the $70 price tag for Tears of the Kingdom does not signify a new standard for the company’s first-party games. In fact, the spokesperson emphasized that Nintendo determines the suggested retail price for each product on a case-by-case basis. This statement suggests that Nintendo will remain flexible in its approach to pricing its first-party titles.
To gain further insight into this price shift, I reached out to Omdia Principal Analyst George Jijiashvili. He explained what has led to the increase in game prices in recent years and how Tears of the Kingdom showcases Nintendo’s flexibility in setting prices for its first-party titles. It appears that Nintendo fans are now starting to experience the impact of inflation that has been affecting the game industry, albeit on a case-by-case basis for now.
The Price is Right
Although Nintendo stated that not every significant first-party game will be priced at $70, we can already see evidence of this in action. For instance, Pikmin 4, which launches after Tears of the Kingdom on July 21, is currently available for preorder at $60. While Zelda’s price suggests that Nintendo may consider raising the price of its most highly anticipated games to $70 in the future, the choice to start with Tears of the Kingdom may not apply universally.
When asked why Tears of the Kingdom was selected as the first $70 Nintendo Switch game, a company spokesperson reiterated that Nintendo determines the suggested retail price on a case-by-case basis. Nonetheless, it is a surprising decision to implement a pricing change for a single exclusive game nearly six years after the release of the Switch. Jijiashvili believes that Nintendo likely made this choice due to Tears of the Kingdom being a follow-up to one of its most critically acclaimed and best-selling games. However, he does not believe that $70 will become the standard price for all major Nintendo releases, as evidenced by the $40 price tag for Metroid Prime Remastered. Nintendo seems committed to maintaining flexibility in pricing its first-party titles.
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It makes financial sense for Nintendo to charge a little more for a game like Tears of the Kingdom, which is expected to be one of the biggest releases of 2023. But what factors influenced Nintendo’s decision in the context of the game industry and the global economy?
For over a decade, consumers became accustomed to AAA video games being priced at $60. While there were occasional exceptions, this became the industry standard until the release of the PlayStation 5 and Xbox Series X. Publisher 2K was among the first to announce a price increase, and other companies like EA, Sony, and Microsoft soon followed suit. According to Jijiashvili, this shift can be attributed to inflationary pressure on game publishers.
He explains that the cost of developing AAA games has significantly risen, but prices have actually decreased when adjusted for inflation. If game prices had kept up with inflation since 1990, they would now be over $90. Additionally, general inflation has further impacted publishers, causing an increase in various costs, such as salaries and tools. Eventually, most publishers will find it challenging to avoid passing on these extra costs to consumers.
Jijiashvili shared a graphic created by Omdia, illustrating the inflation-adjusted price points for each generation of games. The graph clearly shows that prices have only continued to rise exponentially, and even the game pricing shifts highlighted in the graph were insufficient to keep up with inflation when they occurred.
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Nintendo resisted price increases for its Switch games for a significant period, apart from the pricing adjustment for Breath of the Wild in the EU back in 2017. Even now, Nintendo is taking a more conservative approach to pricing compared to Sony and Microsoft. According to Jijiashvili, this may be due to the weakened Japanese yen, which benefits Japanese publishers by increasing their U.S. revenues when converted to yen.
The Price of Inflation
After several years of resisting price increases, Nintendo has finally decided to release a Switch game at $70. While the company claims that this pricing change is not as monumental as it may appear, it will undoubtedly generate discussion around Tears of the Kingdom and become one of the defining aspects of the Breath of the Wild sequel. However, Jijiashvili does not believe that the $70 price tag will have a negative impact on game sales. Given the success of Breath of the Wild and the anticipation surrounding its sequel, it is unlikely that the higher price will deter a significant number of fans, resulting in negative sales figures.
Breath of the Wild has sold 29 million copies as of December 31, 2022. While matching this achievement may be a daunting task for Tears of the Kingdom in the final years of the Nintendo Switch’s lifespan, it has the potential to keep pace as one of the biggest games of 2023. This release serves as an opportunity for Nintendo to test a new pricing strategy, even if it might not be permanent.
As inflation continues to rise exponentially, nearly every game publisher has adopted the $70 price point in some capacity. Although Nintendo will continue to determine game pricing on a case-by-case basis, the pricing of Tears of the Kingdom confirms that the era of $60 as the standard game price is coming to an end.
The Legend of Zelda: Tears of the Kingdom is set to launch on May 12 for Nintendo Switch.
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