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Why Does Shadowrun Cost $10 More for 360 than PC?

May 15, 2007

Simple: the Xbox 360 is priced at an artificially low level to attract buyers and the Microsoft makes money back by charging licensing fees to third parties that make games for the 360. Those licensing fees are passed on to consumers in the form of higher prices for 360 games than PC games.

This is similar to the model that cell service providers use in subsidizing phone sales. They sell the phones at an artificially low price and then charge more for monthly service, which they bind the user to by locking the phone and requiring a service contract.

This is also like a loan from MS to the 360 buyer, to pay for part of the initial console price. That loan is the repaid over the course of the console’s life in the form of higher sales prices for games. The need for these licensing fees explains one of the big reasons MS doesn’t want homebrew games running on the 360– as these involve no licensing fee being paid to MS. This is also the reason that MS charges $100/year for the Xbox creators club that allows people to run XNA software made by other users on their 360. The annual charge makes up for a lack of fees for those games.

Why this model exists is a more complicated question, but that it exists is pretty uncontroversial.

SO WHY THEM DOES SHANE KIM GIVE THE FOLLOWING ANSWER WHEN ASKED ABOUT THE PRICE DIFFERENCE BETWEEN SHADOWRUN ON THE PC AND 360?!!:

The $59.99 for Xbox 360 and $49.99 for Windows Vista price points are our standard pricing for each platform. This pricing structure is not uncommon in the multiplayer-only first-person shooter genre, as numerous titles have seen success at this price point and gaming model. I think it’s premature to speak to pricing for all future projects, but as of now this is our pricing structure for our marquee titles like Shadowrun. Additionally, MGS has the same development costs as other developers and publishers out there. One advantage other publishers have that we do not is that they can leverage their marketing and development costs over all platforms, while we are focused on Windows and Xbox 360 as a first party publisher.

How incredibly obfuscatory! Why not just explain the how the business model for consoles currently works?

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