Xbox Live Arcade Trend Watch: $15 Price Point Becoming the Norm

Editor's note: Thomas provides an eye-opening investigation of the trend of price increases for Xbox Live Arcade games using a mathematical model he developed himself. I'm interested in whether economic factors — such as inflation or the current slump in the economy — may influence the growth that he documents. I also wonder what the median price for XBLA games are over time, since outliers could nudge the average higher or lower, thus offering a misleading picture. -Rob

Last year, I looked at the rising prices of Xbox Live Arcade. I’m here to revisit my study and check the accuracy of my claims; I also realized how dreadful it is to read about math while reviewing my original article.

So, I'll answer two questions in this 2010 edition of XBLA prices: Was I completely off with a pathetic attempt of applied mathematics to interpret a horribly complex pricing system? Can I make analyzing XBLA prices sound even a little interesting?

Below is my data from the previous study. I extrapolated the post-2008 information because I only had data up to the middle of 2009. I also based the model on how market prices fluctuated in years prior, so I was confident that my data was accurate.

Quick translation, I predicted that the average price of Xbox Live Arcade games in 2009 would be $10.72. I also predicted that in the following year — our current year — the average price would be $11.93. Now that 2009 is over and I have a full list of XBLA games and their prices, I can find the actual average price and compare it to my model’s numbers.

In 2009, Microsoft released 90 games with an average price of $10.78 on the service. I predicted 96 games and an average price of $10.72. Not too bad. My model overestimated six games and underestimated the price by six cents — surely better than speculation and randomly pulling numbers out of my ass.

2010 is still up in the air. In my 2009 study, I predicted 117 games by the end of the year with an average price of $11.93. 2010 isn’t over, but after gathering some data, Microsoft plans to release 50 games with an average price of $12.04 by the end of August 2010.

My model may overestimate the number of released games in 2010, but the average price is right on track. At the end of August 2009, Microsoft released 56 games with an average price was $10.71. Here’s the interesting part — the section that doesn’t hypnotize readers into boredom because I use a lot of math — we have fewer games with a higher price this year than last year.

Last year’s study concluded with a couple of possibilities. The average price is higher because developers release more games with variable pricing. XBLA would be a treasury full of wonders with a diverse set of prices. The other reality is that $15 becomes the default price point for all XBLA titles — a non discriminatory price point that would govern a warehouse of virtual games.

So far in 2010, Microsoft has priced 22 games at $15 on XBLA. In 2009, 18 games received that price. This means that in 2010, $15 is the default price point for almost half of the games on XBLA. It is most likely the end result will be around 20-25% — according to last year’s data — but the bleak outlook of every game costing $15 seems more like reality.

Above is my updated model that I used to see the current trend of XBLA prices. Note that these values are not exact — they are just a good estimate. The end of the year forecast for the average price of a XBLA game will be $11.98.

2011 and beyond is where things get complicated, and I won’t go on record saying XBLA games will cost more than $15 by 2012. But I will claim that the question of whether a game costs $10 or $15 will be extinct. Players, video-game journalists, and forum posters have noticed the increase of XBLA prices. This is just the mathematical model that helps prove that accusation.