Welcome back to Free To Play, it’s been a while, hasn’t it? I stepped back from this series for a bit because I was burnt out on the topics and wanted to try something else for a while. For the most part in this series I have discussed economics topics that deal with macroeconomics, or the laws that govern large scale economies. In this article I’m covering a microeconomics topic, which is economics as they apply to individuals. Let’s talk about preordering games.
To say that the reveal of the Switch just a couple weeks ago was contentious is like saying the ocean is sort of wet. While “The Breath of the Wild” trailer seems to have unanimous praise, most everything else has had argument. The most pressing argument seemed to be about whether or not the launch lineup was worth pre-ordering. As an unabashed Nintendo fan and handheld maniac, I had a couple ask me that question, and my answer wasn’t what they were expecting. Is the pre-order worth it for you? I don’t know.
I’ve heard the joke about other groups, but it applies to gamers as well – ask three gamers a question and you’ll get four different answers. While it’s said as a joke, I think it actually applies to something like pre-order values. For example, both Aggro Sky and I were very excited about the BoTW trailer and intrigued by the possibilities of the Switch hardware. The difference is that he wasn’t intrigued enough to pre-order, while I was. Who was right on this? Well, we both are. It depends on how much the individual gamer values an item.
In microeconomics this is called opportunity cost and simply means how much it’s worth to you to lose the next favorite choice besides what you ultimately chose. Let’s illustrate this with a simple example that is common to most gamers. It’s payday and you’ve got $60 to spend on a game – we’re going to ignore sales tax for simplicity. Now, you could pick up the latest title that you’ve been waiting on, but you could also pick up a couple of older titles you missed out on.
Regardless of which choice you make, you end up with an alternative that you lose out on. When you get home and start playing your brand new game, you’re missing out on whatever enjoyment you would have gotten from the other game. While you certainly may have picked the games that were best for your taste, you are still losing out on the other choice.
This is not necessarily a bad thing. It’s not meant to be this nihilistic “you will never know what you missed” thing. It’s a statement of the rational approach most people take towards how they spend their money. Most economics assume that people tend to make rational decisions in what they purchase. Now, we’ve all made stupid purchases – I have a small collection of vintage cigar tins for no reason other than I like them – but most of us tend towards rational choices. Opportunity cost is simply a way of quantifying options that you could have taken, not an attack on your decisions.
Now let’s apply this to the Switch pre-orders. Essentially, if you just get the console and one game, you’re spending $400. I assume that if you’re pre-ordering like I am then you’re also scoring a copy of Breath of the Wild as well. I find that when you buy a new console it helps to have games to play on it. However, with just about three quarters of your Switch pre-order cost you can buy BoTW AND a new Wii-U to play it on. You could very likely find a used model cheap enough to get the Wii-U and BoTW for around $200. There’s a great opportunity cost of the Switch. A lot of people are likely to take the option of not getting the Switch immediately and just getting BoTW on Wii-U. There’s a myriad of choices to spend your $400 on.
Here’s where we come to my full answer on whether or not the Switch pre-order is worth it. And frankly, I do not know. For me to know this answer, I’d have to know enough about whoever asked it to know what they like. When it comes to things like games, a lot of the value is subjective. I personally wouldn’t pay $5 for a Madden game, but others buy each yearly
reiteration installment day one. It’s not the same as comparing objective values – the same size container of milk priced at two different amounts, for example – so you have to consider the individual’s tastes in games. It’s a matter of opinion as much as economics, and those vary wildly. Just as an example of this, I’ll state that of all the admins for this site I’m the only one getting a Switch day one, and that’s okay.
And that’s where I want to end this discussion. There is no right answer to a question about subjective value, as everyone has different opinions. For me, the value of having a Switch day one was more appealing than the opportunity cost. For you, it very well might not be, and that’s okay. It’s okay for people to have a different opinion, as long as it’s based on more than just kneejerk reaction. Opportunity cost is a great way to analyze your choices to make a rational decision, and hopefully one that people will look more into.
As always, thank you for reading this article. I hope you enjoyed, and maybe even learned something. See you all next time…unless it’s on March 3, because I’m busy as hell that night.