Your Video Games Are Dropping in Price

Just like new cars drop in price when you drive them off the lot,the resale prices of video games drop in price the day you buy them. Infact the resale price of video games released in 2007 dropped 0.24% perday. But do well reviewed games drop as much as poorly reviewed ones?We set off to find out.

For our analysis we looked at every gamereleased in 2007 for Xbox 360, Playstation 3, and Wii. A total of 322games. We then gathered resale price data from VGPC.com and review scores from metacritic.comfor each game. We then charted the review score vs the price change perday for every game to see if there is a trend (Every trendline showbelow is statistically significant with 99% confidence. See discussion below for more details). The chart below shows all the data points:

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Thereis an obvious trend with the lower the review score the bigger theprice drop per day. Based upon the data, a game with a review score of90 points would be predicted to drop in price 0.19% per day, while agame with a 50 review score would drop 0.24% per day. This might notseem like a huge difference but after a year the great game would sellfor $16.70 and the bad game would sell for $7.38. The same basic trendholds true for each console too:

Xbox 360 Games: Review Score vs Resale Price

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Xbox 360 gameshad an average review score of 68.7 and dropped in price 0.24% per day.A game with a 90 metacritic score drops 0.21%/Day and a 50 reviewedgame drops 0.27%/Day. Also worth noting, in 2007 the 360 had thehighest average review score of the three main consoles.
PS3 Games: Review Score vs Resale Price

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PS3 gameshad an average review score of 61.6 and dropped in price 0.24% per dayalso. A Playstation 3 game with a 90 metacritic score drops 0.18%/Dayand a 50 reviewed game drops 0.27%/Day. The PS3 is statistically thesame as the 360 in terms of the price drop per day, which makes sensebecause many games on the 360 are also available on the Playstation 3.
Wii Games: Review Score vs Resale Price

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The average Wii gamehad a review score of 45.7 and dropped in price 0.22% per day. A Wiigame with a 90 metacritic score drops 0.16%/Day and a 50 reviewed gamedrops 0.22%/Day. The average Wii review score is below 50 so companiesare making quite a few bad games for the Wii. But at the same time theWii has the lowest percentage drop per day. Maybe all those casualgamers keep the resale prices up.

Why does this matter to theaverage gamer though? The video games you buy are a depreciating asset.If you are the sort who trades your games in to buy new ones or sellsthem online after you beat them, be sure you don't procrastinateselling your games.

Now developers and publishers take notetoo. If you make a game with a good review score it will sell at ahigher price for longer. We only analyzed resale prices but it makessense that the bigger the difference is between used prices and newprices, the more people are going to buy the used game. You will haveto keep lowering prices to sell the game. Another good reason to STOPMAKING BAD GAMES.

Nerd Discussion Below. Warning!Here is some more info for math/stats people out there who want to knowall the details about the regression. For the complete dataset (the topchart) the r-squared is 0.0539, so only about 5.4% of the pricevariation is predicted by the review score. The trend is statisticallysignificant though with a p-value of 0.000025, way below the .01 neededfor a 99% confidence level. Here are the other r-squared and p-valuenumbers:

Withthis type of data we wouldn't expect one variable to predict a verylarge portion of the price changes so we think 5.4% is pretty good. Inthe future we would like to run an analysis with more variables inhopes of improving the r-squared. We are considering using thesevariables in future analysis:

Days since released - price drops usually slow down the longer a game has been available
Publisher - certain publishers like Atlus tend to publish games that keep their value
Serial game or not - games that come out every year like sports titles drop in price faster
Is it the last year of the console's life - games released in the last year of a console's support tend to become rare and don't drop in price

Hopefullywith more variables we can increase the r-squared and be able topredict the changes in resale prices with more accuracy.