Just like new cars drop in price when you drive them off the lot, the resale prices of video games drop in price the day you buy them. In fact the resale price of video games released in 2007 dropped 0.24% per day. But do well reviewed games drop as much as poorly reviewed ones? We set off to find out.
For our analysis we looked at every game released in 2007 for Xbox 360, Playstation 3, and Wii. A total of 322 games. We then gathered resale price data from VGPC.com and review scores from metacritic.com for each game. We then charted the review score vs the price change per day for every game to see if there is a trend (Every trendline show below is statistically significant with 99% confidence. See discussion below for more details). The chart below shows all the data points:
There is an obvious trend with the lower the review score the bigger the price drop per day. Based upon the data, a game with a review score of 90 points would be predicted to drop in price 0.19% per day, while a game with a 50 review score would drop 0.24% per day. This might not seem like a huge difference but after a year the great game would sell for $16.70 and the bad game would sell for $7.38. The same basic trend holds true for each console too:
Xbox 360 Games: Review Score vs Resale Price
Xbox 360 games had an average review score of 68.7 and dropped in price 0.24% per day. A game with a 90 metacritic score drops 0.21%/Day and a 50 reviewed game drops 0.27%/Day. Also worth noting, in 2007 the 360 had the highest average review score of the three main consoles.
PS3 Games: Review Score vs Resale Price
PS3 games had an average review score of 61.6 and dropped in price 0.24% per day also. A Playstation 3 game with a 90 metacritic score drops 0.18%/Day and a 50 reviewed game drops 0.27%/Day. The PS3 is statistically the same as the 360 in terms of the price drop per day, which makes sense because many games on the 360 are also available on the Playstation 3.
Wii Games: Review Score vs Resale Price
The average Wii game had a review score of 45.7 and dropped in price 0.22% per day. A Wii game with a 90 metacritic score drops 0.16%/Day and a 50 reviewed game drops 0.22%/Day. The average Wii review score is below 50 so companies are making quite a few bad games for the Wii. But at the same time the Wii has the lowest percentage drop per day. Maybe all those casual gamers keep the resale prices up.
Why does this matter to the average gamer though? The video games you buy are a depreciating asset. If you are the sort who trades your games in to buy new ones or sells them online after you beat them, be sure you don't procrastinate selling your games.
Now developers and publishers take note too. If you make a game with a good review score it will sell at a higher price for longer. We only analyzed resale prices but it makes sense that the bigger the difference is between used prices and new prices, the more people are going to buy the used game. You will have to keep lowering prices to sell the game. Another good reason to STOP MAKING BAD GAMES.
Nerd Discussion Below. Warning! Here is some more info for math/stats people out there who want to know all the details about the regression. For the complete dataset (the top chart) the r-squared is 0.0539, so only about 5.4% of the price variation is predicted by the review score. The trend is statistically significant though with a p-value of 0.000025, way below the .01 needed for a 99% confidence level. Here are the other r-squared and p-value numbers:
With this type of data we wouldn't expect one variable to predict a very large portion of the price changes so we think 5.4% is pretty good. In the future we would like to run an analysis with more variables in hopes of improving the r-squared. We are considering using these variables in future analysis:
- Days since released - price drops usually slow down the longer a game has been available
- Publisher - certain publishers like Atlus tend to publish games that keep their value
- Serial game or not - games that come out every year like sports titles drop in price faster
- Is it the last year of the console's life - games released in the last year of a console's support tend to become rare and don't drop in price
This is part of our video game collecting 101 series.