Inflation is something that economists will keep a very close eye on, when it rises and falls it can have a big impact on a range of factors within domestic and international economies. During times when inflation is causing a spike in general prices, the purchasing power of individual consumers is heavily impacted – which can cause big issues for the gaming industry that relies on players purchasing new games and spending their money within the games.
In this article, we’ll be looking at some of the ways inflation plays a role in rising game development costs, and can influence the behavior of gamers.
- Higher Development Costs
Games take a lot of time and effort to develop, even the ones that you may think are simpler – like casino games. When you’re playing in an online casino, you may not realize the amount of work that went in behind-the-scenes to take the game from ideation to reality. Whether you’re spinning slot machines, or waiting for a live dealer to pass out the cards in video poker games, it takes a huge development team to design the casino, set up the live streams, choose the right music, and set up the back-end processes that allow you to make bets.
The cost of hiring professional game developers is going to increase, as well as the price of the technology and software that is required to produce the most popular online games. With combined price increases of all these things happening at the same time, it’s going to put a lot of pressure on video game studios. This pressure may mean that they aren’t able to produce as many games as they previously were, they may not have money to spare for marketing and promotional budgets, or they have to focus on simpler games that require less development time.
Changes in Consumer Behavior
During periods of high inflation, the behavior of consumers changes significantly and it’s important for businesses to recognize these changes and adjust their business plan accordingly. One thing that normally happens during times of recession is that consumers stop prioritizing unnecessary purchases, especially things that aren’t a necessity, like buying new games.
As inflation rises, the money that people spend on games usually drops significantly as customers choose to allocate their money to more important things like food, rent, and other basic necessities. Other things that often happen during high inflation are that customers will choose to shop at discount stores, pay for items using their credits, and switch to shopping in bulk.
This big change in the behavior of customers isn’t the best for game studios that rely on customers feeling spendy when playing their games. With fewer customers parting ways with their cash, games will make fewer sales, and game studios won’t be able to enjoy the same high revenue that they could use to reinvest back into new games.
Rethinking Game Pricing Strategies
Game developers seeking to retain current customers while also drawing in new gamers may need to adjust their pricing strategies during periods of high inflation. Some game developers may need to raise costs on games produced, in order to cover increased development expenses; others might risk cutting prices in hopes of drawing in new gamers; either approach can lead to short-term loss but long-term rewards.
One pricing strategy that more companies are starting to adopt is a subscription service, where customers are charged a smaller amount on a monthly basis, rather than being expected to pay for a product or service in one go. There are different variations of the subscription-based service model, and depending on the time of gaming product that developers are creating, they should pick a strategy that meets both their and their customers’ needs.
Increase in Price of Gaming Hardware
As inflation remains an international threat, countries like the UK are expected to raise interest rates over the coming months in an attempt to bring inflation rates down towards normal levels and thus raise costs; from your weekly grocery shop bill all the way through to gaming hardware purchases and more! All costs associated with living will become considerably more costly as interest rates increase further and prices continue to skyrocket.
The cost of things like gaming computers, consoles, and other gaming accessories will be affected by these price increases which can make it harder for gamers to get the gear they need to play video games. This can create very large barriers to entry for gamers who have tighter budgets or aren’t as willing to pay for the latest gaming devices.
This will increase the popularity of online games and cloud gaming that doesn’t require players to have any equipment to play. If a game developer doesn’t offer these options, customers may have to switch to playing with one of their competitors instead.