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[Aranna]

From the little I know of marketing if a item costs more or says it has something you assume mentally that it is better, even if the items are exactly the same. The reason is you think cheaper goods are of lower quality, unless the reputation says otherwise, and that is why people buy brand name things at grocery stores, and not the store brand even if they are the same. For example if there are 2 boxes of cookies, from the same batch, and box 1 says made with all natural ingredients and the box 2 does not, then you assume box 2 was not made with all natural ingredients.

[Psyco Jelly]

I'm sorry, but to those attracted to quality, you would be a little off-putting. In general the way peoples minds work is "Price = Quality". The more expensive, the better.

For example, I bought a $50 wool cap (The awesome English kind) of high quality.

My dad has like 12 $10 baseball caps.

I prefer quality, while my dad prefers quantity.

[Neonivek]

Production costs is the major reason why the Point and Click Adventure genre died.

It isn't that it became unpopular it is that it become so expencive to produce that it basically had to be a hit or else they couldn't recoup the losses.

Computer games have sort of relied on targeting a small market and are charging ridiculous prices for a rare product

Not exactly that, it is that Computer games have lost a lot of their appeal from the general market losing out to the Consoles. What Computer games do really well at however is catering to niche markets.

They arn't so much relying as they have been locked out. Hense why a lot of people think the PC market is dying (in which I say "It is only shrinking")

I prefer quality, while my dad prefers quantity

No in this case it seems like "Snob appeal" or rather "It is expencive so it must be good"

Please don't get offended by the term "Snob Appeal" it is only a term that refers to the effect where things sell better using a higher price point.

I am sure his Baseball cap is as good as it needs to be. In otherwords Baseball Caps have "Perfect Quality"

While your wool cap probably isn't 5 times better then a Baseball cap. Actually I can't tell what it is in this case. I just like mentioning Snob Appeal

[Muz]

is your model more like... steam? or dwarf fortress?

Heh, I mentioned it in the first post. I don't really want to go in specifics, that should sort of give a clue. And I don't want to do a post-by-post reply, so here's a bit of a simplified overview

The business world uses a lot of tried-and-true models. But the nature of new technology breaks a lot of rules. The games industry functions as sort of a monopolistic high-tech model, similar to what Intel-AMD does. They have a good product that nobody has. Competitors offer other similar products, but there aren't many, so they take advantage of that to price extortionately. Yes, you have to make a huge profit to cover for research and development costs.

Now here's the problem. Game development clashes with sooo many assumptions in business models. First, no business model assumes that most customers would think about stealing the product. Second, unlike the high-tech industry model, there's no massive, clean factories, with precise quality control needed. You just get a massive machine that burns data to DVDs.. not even expensive with shiny dvd art and drm, unless you put in a color manual which nobody would read anyway. All the costs are in research and development.

Also, one of the things that annoys me the most is that while almost every high-tech industry is run by people knowledgeable in the technology, very few game companies are run by game developers. These people know little about game design or coding, and they make horrible decisions like rushing a game or taking out a vital gameplay element to suit the market. Also, a lot of them seem to have horrible business sense, otherwise they'd have figured out some things 

Another problem is the customer base. With say, food or paper or clothes, there's always a demand. Game demand is somewhat similar to cigarette demand.. most of the demand will come from fellow customers. Demand grows exponentially. Right now, game companies aim for a niche market and cater to them only. Irony is that high quality games like Dwarf Fortress is what kills them off. Long story short, let's just say that you want your girl/boyfriend to play a game you like. The main thing holding them back is inexperience.. probably some fear of losing, learning curve, etc, etc. Games are just not a mass market thing, and could be if they just weren't so tough to pick up. Blizzard games aren't even all that fun, but they're the biggest ever because they're very quick to pick up, easy to learn, but give a lot of room to be better than your peers. Blizzard games follow the cigarette business model, which is why they're so successful, even with a substandard product.

Marketing.. also different from standard models. Tell me now, if Fable 4 was being sold for $50 and Fallout 4 was going for $30, which would be higher quality product? It's got little to do with price, people look at reviews and word of mouth. Anyway, if you want quality, there's always the Collector's Edition, which will include action figures, a bonus DVD personally signed by the game designer, and a poster with the game's heroine in seductive poses. All at $225!

So, no, my model is not to just keep the price low. It's just dynamic pricing. Price what people are willing to easily pay. That does mean going a lot lower than current games, making a bit less initial profit, but if the big plan works, there's a hell lot more money to be made in that direction. And it keeps prices low too. Like if demand is high, it gets priced at $10, if demand is low, price goes to $2. Blockbuster games would hover around $20-$40 still, except in third world countries where they'd be low enough to suit what people could afford. And so on


tl;dr: The nature of games mean that you can't compare them to typical businesses. The closest business model would be the music industry. Or books, maybe.

[Neonivek]

Irony is that high quality games like Dwarf Fortress is what kills them off.

Ohh goodness... I had to resist the urge to laugh since I don't want to be insulting.

Unfortunately the most popular and best selling games don't always have the most quality or even the most fun.

In fact it is more accurate to reverse your statement. Games like Dwarf Fortress are killed by lower quality ones. (If I am using the definition of quality your using). It isn't entirely true mind you, just more true.