Take-Two Interactive Software Inc. (TTWO) has announced that it is raising the price to $70 on its upcoming video game title NBA 2K21. The video game company’s bold price move on Thursday is the first change in nearly 15 years to push the price of games higher than the standard of $60.
“We believe our suggested retail price for NBA 2K21 on next-generation platforms fairly represents the value of what’s being offered: power, speed, and technology that is only possible on new hardware,” a Take-Two representative told Ars Technica on Thursday.
As game prices have remained flat, video game development has risen exponentially as games have become more graphically intensive and technically complex. The average big-budget title known as a “AAA” game can cost over 100 million to make with up to 500 developers according to gamesindustry.biz.
“I think, to the extent that the technology enables the graphics side of it to become more interesting and life-like, the games will become slightly more human-intensive and capital-intensive to produce,” Sony Interactive Entertainment CEO Jim Ryan said of PlayStation 5 development in a May interview.
The market research group, NPD analyst Mat Piscatella tweeted, “The shift to $69.99 should have taken place in 2013. But folks thought mobile was a threat to the console business. Instead we got collector’s, silver, and gold editions.” He added, “$69.99 may be the new standard pricing for next-gen titles.”
In the last decade, game publishers have found some alternative ways to offset development costs by selling special editions of their titles that come with memorabilia along with downloadable content and season passes to its content.
In 2017, Electronic Arts (EA) tried unsuccessfully to incorporate micro-transactions or “loot boxes” into its popular title, Star Wars: Battlefront 2. The addition resulted in a user backlash that forced EA to make changes to the game citing community feedback.
IDG President and CEO Yoshio Osaki said on Thursday, “IDG works with all major game publishers, and our channel checks indicate that other publishers are also exploring moving their next-gen pricing upon certain franchises.” He added, “Not every game should garner the $69.99 price point on next-gen, but flagship AAAs such as NBA 2K merit this pricing more than others.”
Take-Two’s stock is up 20% year-to-date with a Strong Buy analyst consensus that breaks down into 18 recent Buy ratings versus 5 Hold ratings and no Sell ratings. The $152.82 average price target implies 4% upside potential for the shares in the coming 12 months. (See Take-Two’s stock analysis on TipRanks).
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