Time premium

As everyone knows, time equals money.

You can see this principle in action in business every day. For example, first class post will get you the letter delivered quicker than second class post but costs more. In terms of courier services, overnight shipping costs more than standard air delivery. Or to take yet another example, taking a taxi will get you to your destination quicker than taking a bus but also costs substantially more.

So, its basically accepted that you can get quicker service by paying more money. This also makes eminent economic business sense ("creaming the crop"). Different industries adopt this principle differently.

For example, if you go to a restaurant, you don't get the option of paying extra money to have the chef cook your meal first (for this purpose, I don't include slipping the waiter a bribe!). In the F&B industry, you cream the crop by offering better food and better service via fancy restaurants. Different operating model - same principle.

And now for the inevitable video game comparison.

In the past, the video game industry creamed the crop by offering older games at a reduced price. Fairly standard practice for retail goods - as the retail product gets older, reduce the price to try and capture more sales and create buzz around the product again. As I said, fairly standard practice.

However, recent game launches in HK show a very disturbing trend.

Most Xbox 360 games in HK sell at retail for around $300-330. Call of Duty 4, considered a AAA title and released in November 2007, retailed for $450-500. That is even assuming you could find a copy at retail (yes, the game completely sold out despite the high price point). Even now, this game is still selling at $400-450. The recent release of Grand Theft Auto IV, another AAA title, was at a retail price of $370-420.

Why are these games being sold for more than any other game on the system?

The only reason I can think of is that these games were highly anticipated AAA titles. Considering the history of the developers, you could be reasonably certain that these games would be good, if not great. More importantly, the publishers/retailers could also be reasonably certain that the games would sell even at the higher price point (which in fact, turned out to be the case).

And this pisses me off!!

I could swallow my bile and buy the game anyway. However, this is really hard to take considering that I can't help escape the feeling that I am being scalped. I look at the price point and my principles kick in and scream, "Nooooo! You are being ripped off simply because these companies know that morons like you will buy this game regardless of price! Don't do it! Take a stand with your principles!"

The problem is that if I don't buy the game, then I will be missing out on the huge buzz surrounding said game. I won't have a clue what everyone is talking in my gaming circles. In school terms, I will become the nerd kid that no-one wants to hang around with and is always picked last for the football team. You know, the kid with the Harry Potter glasses and Spiderman costume that provides all the jocks with lunch money. Of course, the really humiliating thing would be that, not only am I detested by jocks, I would now also be ostracised by the rest of the nerd community!

When Call of Duty 4 was released and I saw the price, I stood firm. I am a man of principle - I was NOT going to be scalped. Despite the flow of unbelievably positive reviews (how could any game get such good reviews?), I weathered the storm to my nerd cred and stood firm. I HELD THE LINE!!

When Grand Theft Auto 4 was released, I looked at the retail price and I stood firm. I am a man of principle - I was NOT going to be scalped. Once again, I would hold the line. And then the flow of even more unbelievably positive reviews started. It just wasn't possible! How could a game get an average review score of 99%?!?!?

I caved. I sold out my principles for the measly sum of HK$40 (at least I know how much they were worth now). You see before you a broken man, the tatters of his shattered principles fluttering in the wind. There is just one consolation in all this...

It really is a damn fine game.