Is Strauss Zelnick Correct About the Value of Video Games?

A recent statement from Strauss Zelnick, CEO of Take-Two Interactive, sparked a debate about the pricing of video games. Although Zelnick did not suggest that games should be priced per hour, his comments highlighted the value that premium video games offer to consumers. According to Zelnick, the value of a game is determined by the expected entertainment usage, which is calculated by multiplying the per-hour value by the number of expected hours, plus the terminal value perceived by the customer. He argued that video games provide a great price-to-value opportunity for consumers due to the many hours of engagement they offer. For instance, 80 hours of gameplay in GTA 5 for $60 is a better value than two hours of a movie for $12. However, the perception of value is complex and varies from person to person. Some gamers may feel that a $10 mobile game is a good value, while others may think that a $70 console game is overpriced. The data suggests that high-quality games with long playtimes tend to perform well. Games like Hogwarts Legacy, The Legend of Zelda: Tears of the Kingdom, and Diablo 4 offer dozens of hours of gameplay, making them a good value for the price. Even shorter games like Spider-Man 2 and Super Mario Bros Wonder offer strong value when considering the cost per hour. Anecdotal evidence also supports the idea that length is a factor in determining a game's value. The success of Super Mario 3D All-Stars, a collection of three 3D Mario games with over 80 hours of gameplay, demonstrates that consumers are willing to pay for games that offer a lot of content. However, the current economic climate may affect consumer spending habits. With the cost of living increasing and consumer confidence declining, people may be more mindful of their spending. The last time the economy was in a similar situation, video games performed relatively well because they were seen as a good value alternative to other forms of entertainment. However, the gaming landscape has changed since then, with the rise of free-to-play games and subscription services. It is uncertain whether premium video games will continue to be resilient in the face of economic turmoil. Zelnick's argument that video games offer better value on a per-hour basis than other forms of entertainment may be important when consumers are being mindful of their spending. Only time will tell if his view is correct.