Take-Two CEO believes games are a great value for money, not that they should be priced per hour
Following reports that Take-Two Interactive CEO Strauss Zelnick suggested that game prices be raised, the publisher has responded, stating that Zelnick was simply sharing his belief that the current pricing model represents excellent value for money.
Several news outlets reported last week on a recent earnings call at Take-Two, during which Zelnick was said to have claimed that games should be priced on a per-hour basis. "In terms of pricing for any entertainment property, basically the algorithm is the value of the expected entertainment usage, which is to say the per-hour value times the number of expected hours plus the terminal value that's perceived by the customer in ownership if the title is owned rather than rented or subscribed to," he said.
The quote appears to have been taken out of context, as Take-Two has now responded to the reports, denying that the CEO made any suggestion of the sort. According to the publisher, he was instead outlining the general pricing convention for entertainment and arguing that games provide "terrific price-to-value" when compared to other mediums. He also stated that the company's strategy is to "deliver much more value than what we charge consumers" and that it is still aiming to ”make sure the experience is first-class, and the nature of the experience is not just the quality of what we offer, it’s also what you pay for it”.
Zelnick's viewpoint on value is not exactly controversial, as 100 hours of a GTA title is undeniably better value for money than a few hours of Skull Island: Rise of Kong, and even if you were charged per hour, it would still be significantly cheaper than watching a new movie, for example. Still, Capcom's COO believes in raising the prices of new titles, and live service models continue to become increasingly popular, so who knows what will happen in the future?
Zelnick’s full quote via Take-Two:
“Yes, I mean you don’t want to generalize too much from what’s going on in linear entertainment because the increase in subscription pricing and linear entertainment is really a reflection of the fact that too many streaming services were underpricing to acquire customers and then they realize those customers were not durable and the LTVs were upside down. So, they were basically adjusting their pricing to make sure that the LTVs are potentially positive. And I think there’s still more pain to come for services, and I can wax eloquent if you want, although it has nothing to do with our business.
In terms of pricing for any entertainment property, basically the algorithm is the value of the expected entertainment usage, which is to say that the per-hour value times the number of expected hours, plus the terminal value that’s perceived by the customer in ownership if the title is owned or subscribed to. And, you’ll see that, that bears out in every kind of entertainment vehicle.
By that standard, our frontline prices are still very, very low because we offer many hours of engagement. The value of the engagement is very high. So, I think the industry, as a whole, offers a terrific price-to-value opportunity for consumers. That doesn’t necessarily mean that the industry has pricing power or wants to have pricing power. However, there is a great deal of value offered. And look, it’s our strategy here to deliver much more value than what we charge consumers. It’s always been our strategy here. We want to make sure the experience is first-class, and the nature of the experience is not just the quality of what we offer, it’s also what you pay for it, everyone knows that anecdotally. So, that’s how we look at it.”