Opinion: Is Strauss Zelnick Right About the Value of Games, Despite Not Advocating for Hourly Pricing?

In a recent Q2 earnings call, Take-Two CEO Strauss Zelnick made headlines when it was reported that he believed games should be priced by the hour. However, a closer examination of his answer reveals that this might not be the case. Zelnick’s view is that video games offer great value for money due to the depth and length of the gaming experience compared to other forms of entertainment.

Zelnick, when asked about subscription pricing in the broader entertainment market, stated that the value of any entertainment property lies in the expected entertainment usage. This is determined by the per-hour value multiplied by the number of expected hours, along with the perceived terminal value in ownership or subscription. According to Zelnick, the gaming industry offers a terrific price-to-value opportunity because of the hours of engagement it provides. This doesn’t imply that games should be priced hourly, but rather highlights the industry’s strategy of delivering more value to consumers than what they pay for.

When evaluating the value of video games, length and hours of gameplay become essential factors to consider. Games that offer extensive playtimes tend to perform well in the market. For instance, Grand Theft Auto V offers 80 hours of gameplay for $60, which is considered a better value for money compared to a two-hour Barbie movie priced at $12. By Zelnick’s measure, even “shorter” games like Super Mario Bros Wonder, with estimated gameplay of under 20 hours, still provide a strong value proposition at a cost of under $3.50 per hour.

While the length of a game matters to gamers’ perception of value, developers must prioritize quality. Zelnick emphasizes that a game’s length is irrelevant if it lacks quality. The challenge lies in ensuring that the length of the game meets consumers’ expectations without compromising the overall experience. Striking a balance between length and quality is crucial for developers to deliver value for money.

The economic climate plays a significant role in consumers’ spending habits and value perception. As consumer confidence fluctuates and cost-of-living concerns arise, people become more mindful of their expenses. It is essential to recognize that the gaming industry may face new challenges compared to previous economic crises. Rising prices and the availability of alternative entertainment options, such as subscription services and free-to-play games, impact the perceived value of full-priced video games.

During the 2007-2008 financial crisis, video games proved resilient as they offered better value for money compared to other entertainment options. While this may still hold true to some extent, it is crucial to acknowledge the changing landscape of the gaming industry. Today, consoles and games are more expensive, and consumers have access to a wide range of cost-effective entertainment alternatives.

The recent COVID-19 lockdowns have influenced consumer behavior and priorities. People may now be hesitant to sacrifice experiences like holidays and dining out, which they were deprived of during the pandemic. As a result, the gaming industry may face new challenges in attracting consumers’ spending.

In conclusion, Strauss Zelnick’s view that games should be priced by the hour is a misrepresentation of his actual statement. Instead, Zelnick emphasizes that video games offer better value on a ‘per-hour’ basis compared to other forms of entertainment. This perspective becomes particularly relevant when consumers are mindful of their spending habits. As the gaming industry navigates the changing economic landscape, striking a balance between length, quality, and value will be crucial to its continued success.

The debate over the pricing of video games and their perceived value continues. The gaming industry must adapt to the evolving economic climate and consumer preferences while delivering high-quality experiences. Only time will tell whether video games can maintain their status as a cost-effective form of entertainment in an increasingly competitive market.