Rise of the Low-Income Consumer?

One doesn’t typically think of the Wall Street Journal as a fountain of useful game-related news, but some of the “big picture” articles in there are worth noticing. For example, today’s article, “Pump Priming Walmart”. The key quote: “With gasoline prices in retreat, low-income consumers will have a little more to spend. At the same time, with housing prices also sagging, higher-income house-holds could be sucking wind.”

Why does this matter? Because the game industry is currently being pulled in two very different directions. Some people want to make $20M AAA titles and charge $60 per unit. Others want to make casual games, employ user-generated content to decrease overall costs, experiment with micropayments, etc. Not that the latter group requires vindication — lately it seems like everyone is making or promoting casual and “free online” games — but this news seems to favor a softer price touch.

I’m certainly not saying that $60 games are doomed. Some will sell, and sell well. But frankly, if I were making AAA titles, I’d consider going with a $50 price point. (And frankly, if I were making a $600 console, I’d reconsider that, too.) The WSJ news isn’t the only reason, of course.

Nor am I contradicting my earlier arguments in favor of lifestyle brands. Video game lifestyle brands are about interests, not luxury. People may lose their taste for luxury when times get tough, but not their passions. Just ask EA — they’re still laughing all the way to the bank, post-Madden ’07.

I liked the end of the WSJ article, so I’ll close with it as well: “…the tug between hoi polloi and hoity toity is shifting. So far this year, Wal-Mart is outperforming retailers like Coach, Tiffany, and Williams-Sonoma. A few more months like this, and its lead will grow.” Tiffany’s of the video game world: watch out.

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