In the 1980s my family went and visited friends in Queens for a week in August. Down the street from the house there was a small shop with an arcade machine with Legendary Wings. Every day I’d start out with a fistful of quarters and pop them into the machine to get round after round. Eventually I purchased a version of the game for the original NES, and got so proficient at it that I could win basically on mental autopilot.
I thought of that when listening to a story on the radio about the decline of the home video gaming industry as a revenue generator. Here’s the relevant section of the transcript:
HENN: It’s in a state of flux. Sales and revenue for the big gaming consoles — like Nintendo and Xbox — actually fell last year something like 13 percent. It’s still a $10 billion industry, but that was a big drop.
VIGELAND: It is indeed. What’s going on?
HENN: Some of the smartest people in the industry say the price of what people are willing to pay for an hour of entertainment, for a video game, is dropping like a rock. Bing Gordon was the creative director for EA, Electronic Arts, for years. He’s now a venture capitalist in Silicon Valley and on the board of Zynga, the company behind FarmVille. In the early ’80s, Gordon actually helped set the prices for video games. He says back then people were willing to pay like $1 an hour for entertainment. Today that’s fallen to something like $0.15 or a nickel.
Before the NES the gap between video arcades and the older home gaming systems in terms of quality of play was huge. With the NES the gap closed enough that unless there was serious value-add I didn’t see the point of going to a mall arcade to play video games (here’s an example of value-add, a mall which installed a massive screen to display Mortal Kombat). Clearly on a per-unit basis I wasn’t willing to pay as much for video games as time passed. The emergence cheap and high quality home gaming systems flooded the market with so many “hours” of “free” comparable game play that the arcade lost its comparative advantage. Of course you still had to pay for the games and the hardware to run the games, but once that was out of the way the only limit was your marginal time.
Today there are so many different electronic entertainment options. The video game industry as it is today is structured for the production and consumption channels and expectations of the 1980s. The old video rental store store model is from the same era, and its decay and collapse is much more far gone. A local family owned video store where I live which once had a huge floor space just relocated to a much smaller storefront. In a newspaper story they admit that Netflix and other services have eaten away much of their core business, so they were downsizing and focusing on customer service. There’s no way that they could compete with new distributions channels on selection, so they were marketing themselves as a curation and consultation service. A lot like the music shops which carry vinyl. In a way they gave up on competing with Netflix and Redbox on breadth of choice, and are going head-to-head with Netflix’s recommendation algorithm.
We live in an age when content is king, but the king carries very little price. There are no fusion power plants or flying cars, but I have more access to information on my phone than I did going to the public library as a kid. In the early 1990s I used to buy slick NFL “pre-season” preview magazines, and would slowly flip page by page as the information unfolded. I was focused mostly on the Pittsburgh Steelers, but I’m sure I read every single page at least twice. I guess I’m old enough to understand what Jon Bon Jovi is saying below:
“Kids today have missed the whole experience of putting the headphones on, turning it up to 10, holding the jacket, closing their eyes and getting lost in an album,” he reflects. There was also “the beauty of taking your allowance money and making a decision based on the jacket, not knowing what the record sounded like, and looking at a couple of still pictures and imagining it. God, it was a magical, magical time.”
But I still think he’s crazy. Jon Bon Jovi is also a very wealthy man compared to the typical American, and the marginal value of money for him is probably not what it is for the typical person. I really have an issue today in terms of my content purchases with not knowing what I’m buying. In a world of nearly infinite content, at least from a human perspective, shelling out $5.00 for a paper magazine or subscription service where I might read only 1/3 of it doesn’t seem satisfying anymore.
More and more what I’ve been thinking is that I wish there was way to purchase and pay for content in a very fine-grained manner. For example, if I could be charged per page of a magazine or book I purchased. After all, there are magazines and books where you read a few pages, and lose interest. For example, consider a $30 book which is 300 pages. That would work out to 10 cents per page. Of course you can preview 10-15 pages in the bookstore pretty easily, but I’d be willing to save the time if I could pay in such a continuous and graduated fashion, instead of the lump sum for the content.