This is a repost of an article I wrote in 2013. I was reminded of this post because I recently wrote about a queer theory paper about video game economics. Wow, some of my references are quite dated! And this predates gamergate! Also, LOL at “I don’t intend to make a habit out of discussing economics”.
With Black Friday upon us, the flame wars over next-gen gaming consoles have really been heating up. Which will win: the Wii U, XBox One, or PlayStation 4? No one truly knows, but gamers everywhere agree that everyone else is wrong and should feel bad about being so stupid.
- There is limited space for video games and video game consoles, and everyone knows it.
- Video games are in a state of monopolistic competition.
Video game producers are most efficient when they make fewer, larger games, for many reasons. Developing a game is a one-time cost, while actually manufacturing the game is cheap. Selling more copies of a game is not a matter of paying for more manufacture, but paying for better advertisement and development so that more people want to play.1 Note that it’s much easier to advertise one big game than to advertise many little ones. The main reason to have more smaller games is to better cater to different tastes (e.g. see the indie game industry).