Ask an Economist #13: The Return on Investment of Video Games
Welcome back to another installment of Ask an Economist! If you want to catch up on previous installments, find them all archived in the Ask an Economist
group. Don’t forget to leave suggestions for future installments as well! Now onto one of my favorite questions I’ve answered to date.
A few weeks ago, the fine gentlemen of Funhaus were having a discussion about how much entertainment you get from video games and what the ideal hours per game price is. Spoole claimed that his personal return on investment (ROI) for video games 1 (meaning that for every dollar he spends on a game, he expects at least 1 hour of entertainment)
. Much back and forth ensued around the number he seemed to pull from nowhere. Fortunately, this is exactly the type of question economists can answer. This installment, we’ll try and answer:
What is the ROI for video games?
To answer the question, I would need the help from the community. I had put out a survey
about gamers’ preferences, demographics, and time spent playing games. To the 76 people who took the survey (and the 59 who completed the whole thing), thank you!
Examining the data from the surveys, some trends immediately started jumping out. Depending on gamers’ preferred gaming genre, you could see dramatically different expectations of gameplay length.
Not surprising, RPGs (with MMOs under its umbrella) ranked fairly high in the expectation of game length. Simulation and RTS games ranked higher, though it’s subject to wider sampling error given the smaller sample size. FPSs ranked near the bottom in expected length. This isn’t surprising either given the trend of "relatively" short single player campaigns but lots of multiplayer value.
That table gives us a high level idea of gameplay length but what about finding that optimal point of value and length. We’ll need to build a good old fashioned economic supply and demand curve.
Yep. We’re building a slightly modified supply and demand curve just li...