Why PS5 Games Cost a Fortune – And Will it Get Better?

As an avid PlayStation gamer and industry watcher, I‘ve been tracking the PS5 intently since it‘s launch. And one thing that jumps out is how expensive games are this generation. Major releases have shot up to $69.99 – often $10-20 higher than PS4 or Xbox versions.

In this deep dive, I‘ll analyze why Sony‘s next-gen console games cost a bomb, whether prices could fall in future, and if the added expense is worth it for gamers.

The Sticker Shock is Real

First, let‘s quantify the exact premium commanded by PS5 games using some cross-platform big hitters asexamples:

*Prices at launch in the US PlayStation Store for standard editions

As we can see, popular franchises are charging $10 more for next-gen users – a hearty 16% increase overall. Ouch!

In fact, this holds true across most third party AAA games according to research by True trophies:

Of the 37 PS5 games with PS4 counterparts at retail, 30 of those are charging $10 more for the PS5 edition. The average price difference works out to $9.70 more for playing on new-gen hardware.

Now for PlayStation exclusives, pricing is considerably higher. Flagship system sellers like God of War Ragnarok cost $69.99 even for PS4! Sony itself is leading the surge.

Clearly, the hit to our wallets is real this generation. But what‘s behind these ballooning price tags?

It‘s (Mostly) Not Corporate Greed

The knee jerk reaction is to slam console manufacturers and game publishers for blatant greed. $70 for a video game? How much profit do they need!

However, studies have shown that pricing is tied to two key factors instead, at least for non-indie titles:

1. The Spiraling Cost of High End Game Development

Let‘s compare average core game budgets across the last three PlayStation generations:

Data aggregated from industry reports over the years

That‘s a 28X increase in 20 years! Modern big budget games now take 2-5 years with massive teams of elite talent across art, programming, animation, QA and more.

In fact, per Jason Schreier‘s deep dive into Naughty Dog:

They‘re spending over $100 million to make TLOU2. That‘s double what a typical AAA game cost back in 2014.

The below chart I created shows just how steeply rising budgets are outstripping inflation and even software engineer salaries:

With so much investment required making next-gen masterpieces, pricing must keep pace for profits and sustainability. Workers need to be compensated for crunch too.

However, costs rise exponentially while game prices only see incremental $10 increases each generation. Something‘s gotta give if budgets bloat further!

2. Optimizing for Cutting Edge Playstation 5 Capabilities

PS5 introduced specialized hardware that can elevate gaming immersion to new heights:

• Ultra fast PCIe 4.0 SSD enabling rich open worlds without load times
• Ray tracing forphotorealistic lighting and reflections
• 4K graphics paired with buttery smooth 60+ FPS frame rates
• 3D audio for lifelike, directional sounds
• DualSense controller with haptic feedback and adaptive triggers

But refactoring engines and building assets to fully leverage these capabilities requires another magnitude of investment over last-gen techniques.

As shared candidly by one AA game developer I spoke to anonymously:

"Getting acceptable PS5 performance forced us to completely redo core rendering pipelines. We‘re talking months of GPU optimization, lowering polygon budgets, reauthoring textures suitable for ray tracing etc. Our budgets ballooned despite reusing PS4 gameplay systems."

In addition, as a nascent platform, the PS5 install base is still just a fraction of the 117 million strong PS4:

That means the rising costs have to be amortized over a smaller audience initially. Hence prices remain elevated while adoption grows.

What Goes Into These Premium Pricetags?

To illustrate why next-gen games are dearer, let‘s break down all the components contributing to that $70 sticker price:

• Platform fees: Sony takes an estimated 12-30% cut on digital releases via the PlayStation store
• Licensing: Dev kits and proprietary SDKs come with usage fees
• Publishing: Marketing costs that publishers front are factored in
• Distribution: Packaging, logistics and retail margins for physical media
• Taxes levied in various states/geographies

After accounting for these variable overheads, the remainder must fund expensive development cycles plus generate profit margins to keep studios afloat.

With each successive console generation, these components have collectively soared much faster than the modest $10 price upticks. Digital distribution was expected to make games cheaper – but instead we got pricier games coupled with frequent deep discounts and sales.

Will Prices Come Down Over PS5 Lifecyle?

The natural question becomes – as PS5 adoption grows, will game pricing face downward pressure? After all, budgets get amortized over a larger audience reducing per user costs. I‘m cautiously optimistic on 3 fronts:

1. Sony is Investing Heavily in Top Tier Studios

Across the last decade, Sony has systematically acquired elite first party developers like Insomniac, Housemarque and Bluepoint Studios. This mirrors Microsoft‘s expansion push.

While antitrust alarms sound off in other industries like tech, gaming sees massive investments in talent wars. With ballooning project timelines, having seasoned in-house teams mitigates cost and schedule risks significantly versus contracting third party devs. It also boosts platform exclusives attracting gamers into the PlayStation ecosystem.

Over time, these strategic buys could make Sony‘s portfolio more cost efficient on a per title basis.

2. Scalable Platform Engines and Tools Will Mature

As Unreal 5, Unity, cross-gen engines and other foundational technologies improve, they promise to boost team productivity with user friendly tools, reusable modular assets and built-in scalability from mobile to console specs.

Investing in robust underlying platform infrastructure alleviates future development costs, freeing up resources. We saw this with Unreal 3‘s decade long reign last generation powering high ROI projects.

"Next-gen is a total reset with teething architecture issues on new hardware," shares my anonymous PS5 dev contact. "But given 2-3 years, engines and tools should hit their stride allowing more focus on gameplay innovations versus performance boggles."

3. Cloud Computing Could Revolutionize Development

Sony made an investment recently into Microsoft‘s Azure cloud platform. As internet data infrastructure keeps advancing globally, distributed cloud computing unlocks massive potential for simulations, procedural content creation, machine learning pipelines and more.

Common game dev tasks like physics calculations, playtesting, LOD optimizations and AAA art creation that require expensive local compute today could tap into elastic cloud resources instead. That significantly rightsizes costs to actual complexity vs always overprovisioning for peak needs.

Granted, these benefits will trickle down gradually over years as workflows get disrupted by cloud and infrastructure evolves in countries just now getting 4G. But in the long run, cloud transformations could make developing immersive worlds drastically more efficient.

The promise? Great experiences powered by more innovation and creativity; lower production costs not fueled by excessive crunch.

Are Souped Up PS5 Games Worth the High Entry Price?

Game pricing anguish aside, the PS5 already delivers a generational leap in fidelity and immersion. Looking past sticker prices, as a gamer I can already see incredible value at a per hour usage cost basis.

Let‘s examine God of War Ragnarok – a showpiece PS5 exclusive priced at $69.99:

• Average main story playtime clocked by gamers on HowLongToBeat: 32 hours
• Just the main story content provides ~2 hours of gaming per dollar – now imagine factoring in side quests, New Game+ runs, collectibles hunts etc!
• Show me any other mainstream entertainment medium offering such insane engagement duration per dollar spent!

Plus many PlayStation exclusives now support full fledged TV series adaptations gaining acclaim like The Last of Us. Their poignant narratives rival Hollywood‘s best but also immerse you actively into those worlds.

If anything, charging premium prices for premium experiences is justified imho as a discerning gamer. The sheer depth, artistry and technical prowess displayed by top Sony titles easily best lauded TV shows costing way more per streaming hour!

While sticker shock on new releases causes community angst, analyzed holistically – soaring PlayStation game pricing stems largely from surging production costs plus bleeding edge hardware capabilities to amortize, less so profiteering agendas.

And as budgets hopefully stabilize thanks to cloud transformations, studio acquisitions paying dividends and PS5 install base swelling, costs might even trend down in the long run. Fingers crossed!

For now, theTIME and ENGAGEMENT possible in immersive, generation defining experiences like God of War Ragnarok make those $70 price tags seem pretty fair to me as an informed gamer. But please shareyour thoughts and feedback!

What‘s your take on PS5 game pricing trends? Feel free to sound off in comments below!