Friday, November 30, 2007

The Value of Entertainment

Pondering the pricing of videogames, I've decided to try some simple economic analysis to see what conclusions can be drawn. I'll start with a quick snapshot of some common entertainment purchases, ignoring details like taxes, shipping, and bargain shopping.

The following table lists several different entertainment products as examples of various categories.

ProductPrice     Time SpentCost per hour
CD: Magic by Bruce Springsteen$18.981 hour$18.98
Comic: Conan 46$2.9910 minutes$18.00
DVD: Harry Potter
special edition
$34.993 hours$11.66
Movie: Enchanted
movie theater
$10.251.5 hours
(plus 30 min. of commercials)
Videogame: Halo 3$59.9910 hours$5.99
Videogame: Cloning Clyde
XBLA Download
$10.005 hours$2.00
Paperback: Storm Front$7.995 hours$1.59
Videogame: Oblivion$59.9980 hours$1.33

This table is loaded with assumptions, don't go jumping to conclusions just yet. Let's break down some of the key issues in the above table, as I see them.

First off, I'd never pay some of those prices. Getting the new Bruce Springsteen CD, or Harry Potter at a reasonable discount isn't that hard to do - I'm showing list prices above. If you're willing to buy things used, you can save more money. You can also rent some of these items, check them out at the library, or resell them when you are done with them. Movies are a little bit cheaper at matinées, or if you buy coupon books in advance. I'll ignore these details for the rest of this discussion though.

Second, in this crude utilitarian view, I'm completing ignoring any of the extra associated values of the various items. If you are sitting around the lunch table discussing a book with your co-workers, or in a movie theater laughing with friends and family, those are important parts of the experience which are not easily captured in a simple table like this.

Third, is the question of ownership. With the exception of two of the above items, after enjoying the product, I have a physical artifact left. Depending on inclination, that can be a burden or a blessing - I can put it on a shelf, and enjoy looking at a collection of stuff, or I can put it in a box, and move it from house to house over the years, I can loan it to a friend, which very effectively reduces the cost per entertainment hour. Or I can resell it on eBay, and perhaps recover some of my cash. Movie theaters and virtual content are the two exceptions. (Although without DRM, virtual content can be shared effectively without limit, leaving ethical and legal issues aside for the moment).

Fourth and finally, there's bound to be a lot of variance in the time spent section. I've generally marked these as the "first time through" - Harry Potter got some bonus minutes to view the extra content on the special edition. How fast you read books or comics is a matter of ability and preference. In some cases, multiple people can experience the same media simultaneously, effectively multiplying the time spent (hence the family watching the Harry Potter DVD is much cheaper than going to the movie theater).

Most importantly, some of the media is more likely to be experienced by a single user multiple times. Looking at the above list - I've pretty much packed the videogame times with "beating the game". After the time shown, I'm unlikely to play the game any significant amount of time. If you are a fan of multiplayer Halo, you might easily get 80+ hours out of the game, though. DVD's I rarely watch more than twice, even if I buy them. The only media I am likely to experience over and over again, would be music. If I have an album I enjoy, I can listen to the same track ten times within the first year, easily. Depending on the album, I might want to listen to certain tracks lots of times, and other tracks only once. This is an important distinction between music and other entertainment media, and speaks somewhat to the issue I raised earlier about why consumers are so keen on buying individual tracks. (Another difference is that music can be a passive listening experience, while doing something else - that's not true of most of the other cases.)

I will, however, note that in this naive view, some of the best entertainment bargains are videogames. Although the up front costs tend to be the highest, the time you spend with them can easily make up for that investment. Assuming, of course, that you actually end up spending that time with them - of the above media, videogames are the ones likely to have the most variance in time spent. You will almost always listen to the full cd if you buy one, watch the whole movie if you rent one, or (perhaps to a lesser degree) read an entire book once you actually start it. But how many people will really get the full value out of a videogame? That's a subject I intend to explore in another post.

If you think I've missed some key points, or you would like to contribute to the discussion, please leave a comment. I didn't include blog reading in the above chart, but if you neglect the basic costs of internet access and electricity, it's free.


jameshow said...

You did forget to take into account the capital cost of enjoying things like video games, CDs and movies. You can't watch a movie without a TV and DVD player, and while amortized over several movies, it still has some account. The same goes for video game systems; how likely are you to only have 1? For music: the iPod, the internet connection, the computer even.

Far and away the best value will be the book. Unless you take all of those years of grade school into account. :)

Anonymous said...

Unfortunately, you have served to highlight just what a bad 'deal' comics are in the entertainment scale of economy. ;-) Won't stop me from collecting them, though.

In terms of replay value, I have gained the most value from music over the years. I have (and listen to) songs that I purchased 25 years ago, but there isn't a video game on my shelf older than two years. Most books and movies are only used once.

While writing this comment, it occurred to me that food probably averages out at about $18-$20 per hour. I wonder if this is some sort of trend?

Sprig said...

jameshow: That's an excellent point, thanks for the feedback. It's interesting to put that in the context of digital books. If you bought the new Kindle from Amazon (leaving aside the first generation issues of the current device), that has a similar up front cost to enjoy the media - with the potential of lower overall costs, however, if digital books end up being cheaper than new edition hardbacks.

I've been pondering another form of analysis I'd like to flesh out, which may look at the book issue from a completely different angle with respect to the other media.

rwp: Both excellent points. I have a few more comments targeted specifically at comics and music, coming in future posts.

Once again, thanks to you both for your comments.