Price drops are an integral part of this industry.

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The Price is Right:

Part 1: EA Sports V. Sega Sports: The Battle of Price Drops

Every time I walk into a videogame store, the new release section and featured items seem to be the most upfront material. I might pick up a box and read the back to see what it’s all about, but then see the price tag (usually $49.99 in the US) and place it right back on the shelf. Videogames have consistently been priced at $49.99 for a few years now, although the tides might be changing very soon. A number of publishers have slashed their prices from ten dollars to thirty-five dollars less than the expected price. Is there any correlation between the price drops and the quality of the game? Or have companies finally realized the value of the dollar and want to help gamers out?

Now I’m not one to argue with any price drops for anyone who does either has too much money, loves to throw away cash or is genuinely insane. The psychology of the price drops has both a positive and negative connotation for gamers. For example, Sega’s sports franchises, now known as the ESPN series, have cut down all of their new release prices from $49.99 (standard price) to $19.99, which is a dramatic drop. Once a gamer sees the price drop they usually think that the game must lack in quality.

The true reason for the ESPN price drops wasn’t because of the lack of quality. It was a genius plan to get sports gamers to switch from EA Sports’ and other companies sports games to their own. When the Madden NFL 2005 and ESPN NFL 2K5 games launched a few months ago people who were contemplating which game to get usually went with the ESPN franchise, due to the cheaper price tag. The reason why Sega decided to implement the price drop was a number of factors. For one, EA Sports has always run its franchises based off of their name. You can credit half of the “Madden” sales solely to the fact that it is a “Madden” game. Certain names sell, and in the case of EA Sports, the legendary player and coach has been the focal point of their profit. Another reason why Sega dropped the price was because of their recent deal with another publishing company, Take Two Interactive. The agreement they signed split the costs of publishing down significantly for both companies therefore they were able to live with the $19.99 tag.

In the end the ESPN NFL2K5 games sold just as much or even more than Madden 2005 sales, in terms of quantity. (Although the Madden 2005 made more in terms of profits.) While EA has the upper hand now, they know that the 19.99 mark will soon haunt them for the fact that Sega did exactly what they wanted to do. The 19.99 tag brought unsure fans into their franchise. Now that they have played the franchise chances are they are going to stick with their product, knowing that it is just as good as Madden and significantly cheaper. Seeing this, EA Sports jumped on the price drop bandwagon fully aware that ESN NBA 2K5 was right around the corner and expected to launch at 19.99.

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As the launch of the basketball series’ approached, EA Sports dropped the price of NBA Live 2005 by ten dollars retailing at $39.99. The drop worked to their advantage, although those familiar with Sega’s product didn’t fall for the price trap. ESPN NBA 2K5 was the highest rated basketball game of last year, and with a $19.99 price basketball fans won’t think twice about buying another game.

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The one new sports game on the shelves priced at $49.99, other than Madden 2005, is their NHL 2005. Sega, like expected, launched their popular franchise at $19.99 and nearly ripped open EA Sports’ sales figures. With the NHL hockey season over before it even began, due to the player lockout, hockey fans don’t really need to spend that much money for a hockey game, so the logical choice would be ESPN NHL 2K5. The timing for Sega was right on the money for their franchise, and will probably take over the throne of hockey games next year.

The feud of companies trying to earn higher ground will continue, with even bigger power struggles due to their newest strategy: price drops. Now all that remains to be seen is how the two companies play their hands next year, knowing fully well that one or the other might play around with their price tag to get that extra sale.

Part two of this two-pronged feature will dive into other companies’ strategy for lowering their price for the fourth quarter, and hopefully for all other time periods after.

- Eric Lahiji

element@armchairempire.com

(October 21, 2004)

An interesting footnote to all this is taking a look at Gamerankings.com’s average scores for the NFL and NHL games:

NHL 2005 (PS2): 77.2%

ESPN NHL 2K5 (PS2): 86.9%

NFL Madden 2005 (PS2): 91.9%

ESPN NFL 2K5 (PS2): 88.7%

Make your own conclusions.


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