Consoles are already sold at a loss, for the most part. And if you think the XBox wouldn't have been priced at $299 if it hadn't supported DD, you're fooling yourself.

Of course it would have been same, but that cost was passed on somewhere else. More expensive DVD remote, extra controllers, etc. Probably marginal, but point is any extra cost always gets passed on.

Why do you think games have always cost so much? Today the development costs are through the roof so it makes more since, but it hasn't been that way forever. Games cost so much to pass on the cost of losing money on the consoles. Just like Shick and Gillette losing money on razors and making a killing on the blades.

Your statement doesn't support your point. If anything, it supports mine. Games didn't used to cost as much to develop, but they still had the same price in stores as they do now (with a few exceptions). Costs to develop games have gone up and up, but for the most part, games still cost the same now as they did then: $50 new.

Awe remember the N64 days...weren't those carts mucho bucks?

Just a side note....

I heard the games for the XB2 will be $60 bucks now Which they claim is passing the develop cost to the end user...who knows.

Cart based games cost more for two reasons:

1. Same as today, passing on cost of losing money on consoles.
2. They were propreitary formats and companies (namely Nintendo) charged developers an arm and a leg for the write to use their carts.

Thus the costs were getting passed on twice. Games cost the same now as carts are gone, and so are the licensing fees. Though I believe nintendo still charges some smaller ones for their GC discs.

At any rate, you have to be naive to think every single cost in making a console doesn't get passed on to the consumer in some form or another.

That's business. Companies don't give stuff away. Every single, solitary cost to them gets passed on to consumers somehow, sometime.

Things like DD5.1 support (which is worth the cost, don't get me wrong, I'd just like to see developers not half ass it) are a drop in the bucket, but they are still passed on somewhere.

Listen guys, I'm not going to go into a full economic lesson, its a fact that the costs are being passed on to the consumer. Please don't confuse the issue bringing up the constant rate or decline of game costs, you get into a different discussion altogether.

I am not trying to be offensive here, but I'm not sure how else to say this: If you don't want to accept economics thats your business, but at least do yourself a favor and research these ideas before you generate a post which frankly shows ignorance of the issue at hand.

If we want to discuss economics of the video game industry we really should create another thread.

Again, you're supporting my argument, not yours. N64 carts cost a lot more than PSX discs, yet if a third-party put out a game on both systems, it almost always cost $50 on both systems.

Perhaps you can answer the question as to why most third-party games that appeared on both PSX and N64 cost $50 on both systems, despite the huge added cost of producing the carts?

I'm not trying to be offensive here, but you're trying to pass yourself off as an expert here, but your thinking is very flawed. I might not be 100% right either, but you're way off on some points.

jeffdsmith is never wrong

Because it was already established that gamers would pay $50 for a game. There was no reason for Sony to lower price on the PSX games and cut into their profits.

Thus third parties made little profit on N64 games after licensing fees (which is why third party support was non-existent) and made a killing on PSX games.

So that's not an issue of cost determining price, but demand/willingness to pay determing price, as well as greed driving profit margins.

They could have killed Nintendo even more if they sold PSX games at $30 or $40.

Exactly. That was my point. (And is directly opposite to what you were arguing at first )

No I'm arguing that all cost gets passed on to consumers. Not that it is the only factor in determing price.

All the cost of the N64 carts and loss on consoles got passed on to consumers, and developers in turn saw little profits due to the licensing fees.

All the costs of PSX discs and loss on consoles got passed on to consumers, but due to low or no licensing fees developers saw larger profits.

Cost getting passed on is the same, the level of cost was just different.

Anyone selling a product is going to pass all cost on to consumers, or else they're going out of business fast.

The razor/blades example is perfect. All loss on consoles is made up on games, which sell for well above cost to make (even with todays development costs). Only difference today is no one drives up game cost with licensening fees as Nintendo nearly dug their own grave with them by alienating 3rd partys.

Does DD support make a big difference? Of course not. It's just a drop in the bucket of the loss they take on consoles.

But everything makes a little difference. Sure you can argue that it may not affect us as it's just getting passed on in games which cost $50 across the board (thus it's eating into their profits rather than adding cost to what we pay for games). But the caveat is that every dollar more a company loses on consoles makes it less likely for a company to drop game prices.

Think MS wouldn't like to have undersold Sony on games to gain more marketshare? Of course they would. But they couldnt' afford to do it as they take big losses in the X-box division as their console is by far the most expensive to produce of the 3 and they need every cent of profit on games they can get. Thus in their situation they'd like to pass more cost on to gamers, but they can't as no one would buy games that cost more than PS2 games.

But that isn't necessarily true either. If you buy an XBox and only buy two games, or buy all your games used, etc, the loss taken on for selling an XBox at below cost will never be made up. MS will be guaranteed to lose money on your particular XBox.

The original point I was making is that if MS hadn't supported DD, they woudn't have dropped the initial cost of the XBox from $299. It still would have sold for $299 and games still would have cost $50. The only difference is that it would have taken a slightly smaller attach rate for MS to make up the losses on the hardware sold.

The inverse is true for Gamecube. If Nintendo had added DD support, do you think they would have launched the Gamecube with a price of $205 (or whatever) instead of $200? Of course not. Would games be priced any higher ($51 or whatever) at release time? Of course not. It would be stupid to think otherwise. The costs to the user would be the same. The ONLY difference is that Nintendo would need a slightly higher attach rate before profits were.

Like I said, in this case the added cost just cuts into their profits on games and accessories, because the companies can't mark up the cost b/c the competition would kill them.

Every added $1 of cost makes it more impossible for any company to drop prices on games and accessories below the industry standards. That's the main consequence of added cost.

Does DD support affect that. Of course not it's too small an expensie. We've gotten off topic and I was talking economics in general. All cost gets passed on somehow. Either directly by adding to the price, or indirectly by cutting into profits and keeping prices from dropping.

And of course used game buyers and people that only buy a couple games hurt console makers. They hate these people.

Proud to admit I've hurt MS. Only bought one game new in my 2 years of owning an X-box. The library just doesn't appeal to me, bought it just for KOTOR, picked up other games (only one of which I dug was Halo) in the trade forum or used.

If you think DD is keeping them from dropping prices on games, consoles, or accessories, you're being silly. There is no way they would have dropped prices on anything. They're just eating the costs in the hopes that it will mean the console is more attractive to potential customers, and thus more consoles are sold. The games and consoles still cost the same as they would with or without DD.

Jesus did you not read what you quoted:

Does DD support affect that. Of course not it's too small an expensie. We've gotten off topic and I was talking economics in general. All cost gets passed on somehow. Either directly by adding to the price, or indirectly by cutting into profits and keeping prices from dropping."

Point being that small costs matter little, but adding features does add up. DD, DVD playback, HD etc. add cost and reduce chances of price drops on games etc. when all factored into cost together.

...

I didn't specify in that post that it can be passed on as reduced profits on those kind of items, in turn reducing likelihood of price drops. We hadn't got there yet.

I was a little over forceful there as well, as I doubt DD has that much of an impact by itself, but really I'd have to know what the licensing fee is for sure(I was thinking it was about the same as DVD when I made that post, but now I'm recalling I read once that it was much lower maybe around $10). If it's something like the $35 or whatever the DVD consortium fee is then, I'd retract my above argument and go back to the belief that it has some impact somewhere.

But at any rate, I've wasted enough of my time discussing this.

my head hurts.

DD costs more. Would it increase the price of the system? No. The hardware co. would eat the loss, like MS. This is why Nintendo went PL2. They weren't as comfortable eating money, when the percentage of users using DD probably isn't that high.

Move along. Nothing more to see here.

Yep, good summary Michael.

The only thing we need to worry about as gamers is what affect adding more and more stuff to consoles will have on game prices.

The latest egm mentions a rumor that next gen games (specifically x-box 2) may retail for $60. They cite rising development costs for games as the reason. Personally, I'm of the opinion that adding more features (and driving up cost and loss on each console) will have more affect on any future increase in game prices than the cost of game development.

If that is what you feel, then why were you arguing with me? That is what I've been saying the whole time.

We had a misunderstanding. I didn't mean to argue that DD itself adds cost to the price per se. But that it gets passed on either as cost or loss in profits (which can effect the consumer in a variety of ways).

I was arguing the mechanism of cost getting passed on, not just the DD issue itself. I just confused you with my one poorly worded post you reposted above.

But at the same time, I'm not sure I entirely agree with Michael, but that's what I feel the case likely is. But it's impossible to know for sure without knowing exactly what DD costs per machine. If it's high, again it can't affect what we pay directly, but could be one of a multitude of factors keeping game/accessory prices from falling.

But at anyrate, I'm done as I just noticed you used to be julio, and used to be on my ignore list to prevent arguments. Name change must have changes that. Time to fix that.

I've had this name for probably 6 months or more. If you haven't noticed until now, I must not be starting too many arguments with you. Oh well, no harm to me.