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Monday, March 26, 2012

Lifecycle of a Video Game's Price [30 Years of Data]

video game price lifecycle
The chart above shows the lifecycle for a video game's price as it gets older. A game will generally drop in price pretty quickly the first few year. Then the price decline slows down until it eventually reaches stability. After a long enough time, prices for the game start to increase again as it becomes harder to find and more of a collector's item.

The Early Years: Release to Year 5

The first five years after a game launches the resale price declines very rapidly. There are short reprieves from the decline every November and December when there is a brief holiday bump in prices, but the decline begins again in January.

During the first two years, prices will decline roughly 40% per year. In years three through five, prices continue to drop double digit percentages each year but it starts slowing down.

Example Games: Assassin's Creed II | Batman: Arkham Asylum | Resident Evil 5

Systems in this Period: Wii, PS3, Nintendo DS, PSP, Nintendo 3DS, Playstation Vita

Slow Decline: Year 6 to Year 10

In this period prices generally decline but the pace slows considerably. During this entire five year period prices will drop 40-50%, which is a much slower pace then a similar drop in one year in the 'Early Years' stage.

After five years most games are no longer readily available at retail and are only available via resale. This helps give prices more stability because supply is no longer increasing. But demand has usually dried up quite a bit as well as consumers focus on the more recent releases.

During this period the seasonal price swings during the holidays are much more noticeable. Prices will increase 30-50% during the holidays as consumers are forced to buy resale versions if the item is on a Christmas list.

Example Games: Call of Duty: Finest Hour | Halo 2 | Lord of the Rings: Third Age

Systems in this Period: Xbox 360, Xbox, Gamecube

Stabilization: Year 11 to Year 15

Prices are quite stable for games in this period of their lifecycle. Another console generation, or two, has come after the game was released and no retail stores carry the games or consoles anymore. Even used game shops like Gamestop have stopped selling these titles.

The only place for consumers to find the titles are usually resale from other consumers online or other consumer-to-consumer places offline like garage sales or flea markets.

The prices will show a very consistent seasonal pattern with price declines during the year and increases during November and December, which bring the prices back to the same level they were a year ago.

Example Games: Mario Kart 64 | Spyro the Dragon | Donkey Kong 64

Systems in this Period: Playstation 2, Nintendo 64

Pre-Collectible: Year 16 to Year 24

During this time period, a few games continue to lose value but most are very stable or start to increase in price. The price increases will generally be fairly small to begin with.

Some collectors start coming into the market and a nostalgia factor comes into the price. People who grew up playing the games as kids are now 20-30 years old and many of them want to play games they remember playing as kids.

Example Games: Super Mario World | Super Metroid | Moonwalker

Systems in this Period: Playstation, Super Nintendo, Sega Genesis

Collectible: Year 25+

Almost all games are either steady in price or increasing during this time period and some games start increasing very substantially. More collectors enter the market and are willing to pay top dollar for the most collectible games. These games are the ones with the biggest increase in price.

Complete games with the box and instruction manual sell for a big premium to the game only versions because they are quite a bit harder to find. After 25 years many games have been destroyed. Brand new games sell for many times more than the game itself because collectors are willing to pay a bunch of money for them and they are harder to find in sealed condition.

Example Games: Chip & Dale 2 | Little Samson | Mega Man 5

Systems in this Period: Nintendo NES, Atari 2600

Chart: Lifecycle of Video Game's Price with Console Release Dates

lifecycle of video game prices with consoles
The above chart shows the lifecycle chart with the release dates for each console shown for reference. Super Nintendo and Sega Genesis games might be the next ones to start increasing in price according to the past data. If the Genesis Price Index is any indication, prices actually started increasing dramatically about 3-4 months ago.

Obviously these trends and charts do not hold true for every game. There are some exceptions that increase in price after release or some games that drop in price much faster than average. For the average game this lifecycle is very close to how its price will behave over time if the past is any indication of the future.

How the Price Lifecycle Chart Was Created

We do not have price data going back 34+ years, but we do have four to five years worth of data for thousands of games at different stages in their lifecycle. We combined the price data for all the different games to determine the lifecycle during the entire 34 year time period.

The four years of Xbox 360, Wii, and PS3 data was combined with the four years of PS2, Gamecube, and Xbox prices at their respective years from release on the chart. The prices were indexed so prices differences at the start of one generation and end of another didn't cause a spike in the chart. This was repeated for each subsequent generation.

Any gaps with no price overlap or no price data at all we used trends for the previous generation to extrapolate the few months with missing data. The only long period of time with no data was between Atari 2600 and Nintendo NES, which was a little less than six years. All other time periods with missing data were less than a year or two.

4 comments :

Anonymous said...

another great article.

mndrix said...

Great article. I wonder if EarthBound, Terranigma and Harvest Moon will increase further or if they're just forerunners of the broader trend.

Anonymous said...

Excellent article containing very valuable information! I think many used game sellers were starting to despair of Genesis games ever becoming more valuable. About a year ago, one store owner saw that I was holding several Genesis games, and he practically begged me to take as many as I wanted off his hands at a large discount. I'm glad I've already got most of the games I wanted in my collection--now to focus on SNES before that gets too pricey!

JJ Hendricks said...

@mndrix - I imagine those games you mentioned will continue to increase in price as well, but are also forerunners of the broader trend. As interest in SNES games continues to grow games like Harvest Moon and Earthbound will continue to increase, but others will start increasing as well.

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