Last week, a suggestion from analyst Matthew Ball that Grand Theft Auto 6 could cost $100 sent the video game community into a tailspin.
This is not to say that people wouldn't pay that, of course. Many would, especially since it is the most anticipated game in the history of the medium and one of the most successful ever released. The real question is if the industry will follow suit, pricing future big-budget games, known as AAA games, at $100 going forward.
Grand Theft Auto: San Andreas, which released in 2004, cost about $65, which adjusted for inflation equals to $100 today. And even though that game was a global sensation, selling 12 million units by March 2005, it was also reportedly one of the most pirated games in history, which widened its fanbase considerably.
Perhaps counterintuitively, piracy likely helped the widespread adoption of the franchise and helped grow the value of the brand, helping pave the way for GTA 4 in 2008 and GTA 5 in 2013 to become even bigger hits, despite both being released in an era during which piracy fell off considerably, a trend that continues to today.
In the streaming era, PlayStation, Xbox, and even Nintendo console owners can opt for subscription services that allow them access to vast libraries of games for a fee equal to one or two brand-new games. This is a trade that many choose to take. But as a result, gamers have become more selective about which games they choose to pay to play on the day of release.
GTA 6 won’t have any issues convincing anyone to buy it on the first day, it will likely break records whether it costs $100 or $500. The biggest problem with this is the standard it sets in the industry. Rockstar can argue that they have spent years and millions of dollars to make GTA 6, and that they should charge more for it, but will other studios accept that it’s a one off and keep the prices for their releases the same? Unlikely.
Gaming industry analyst and a former gaming executive Mat Piscatella believes that such a change would be unwise, he wrote on his Bluesky account.
"This is ridiculous. There's no need to make the base price of any game $100. Special editions, collector's editions, gold/silver editions, etc do the same thing, and a high percentage of day one buyers jump on those at their elevated price points. There's just no need," he said.
The reason, Piscatella explained, is accessibility. If something costs that high a price, it will limit the number of people that will be enticed to try the game. As a result, it will kill momentum for the game.
"You want to make the funnel as wide as possible, while also optimising launch money. You don't do this be making the base price of a game so high that the funnel narrows. It just makes no sense. At all," Piscatella added.
If this happens, gamers will become even more selective about which games they choose to buy for full price. Most, if not all games, drop in price in the month following its release. But by then, the judgment on whether or not it was a successful release has gone.
For developers, AAA games are jumping up in cost at an alarming rate. In 2018, the average price of production for a top-tier game was between $50-150 million. By 2023, the average had reached $200 million, and will likely keep rising.
That is too big a gamble, especially when companies often live and die on the success of a single game. If the entry cost is too high, more games will fail, and thus more companies would fail, which could have a ripple effect across the industry.
So even if Rockstar decides to charge $100, and I hope they don’t, it should be accepted as a rare example of a game that can do it, rather than a new industry standard to follow, for its own sake.
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
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