Consumers will pay more than expected for new game releases this Q4, as the weak pound and record development costs force publishers to increase trade prices.
Activision has confirmed that the eagerly-awaited Modern Warfare 2 will carry a hefty RRP of 54.99 – and retailers have been warned that other publishers are likely to follow suit.
Indeed, one major Japanese publisher has told MCV it has already raised trade prices once in 2009 and may be forced to do so again.
Exchange rates between the Euro and the pound are making it very difficult for publishers to show an acceptable operating margin in the UK,” THQ's EVP of worldwide publishing Ian Curran told MCV.
You can't continue to trade as normal when the biggest territory in Europe has seen cost of goods increase by 30 per cent due to the strengthening of the Euro. Publishers somehow need to offset this drastic increase in costs. I'm not surprised to see the [Modern Warfare 2] SRP go up and I feel this will continue across more key titles.
Also, development costs for next gen software has increased at a time when the take-up on these machines is slower than expected and therefore the opportunity to sell more units is limited. The increase in cost of goods due to the weak pound has added to this burden, and therefore something has to happen to ensure publishers' return on their investment.”
However, a top games buyer at one of the country's biggest retailers said: A couple of months ago a few publishers mentioned that they were being hammered because of the Euro. To combat this they decided that certain titles would have a higher RRP.
You can guess the reception this got from retail. The fundamental problem is that the customer will feel conned that the latest triple triple-A is 50 at retail when last year it was only 40.”
Nintendo drew attention to the exchange rate problem in March, when it raised the cost price of Wii hardware. Major retailers told MCV they believed it was ‘inevitable' that other prices would rise.