And you thought the PlayStation 3 was expensive...

When it was released nearly three years ago, Sony's PlayStation 3 video game console cost either $500 or $600, depending on how big the hard drive was. It sounded like a lot of money because we assume that dollars are fixed in value, when in reality inflation or deflation changes how much a dollar is worth all the time. Setting aside the consoles that were trying to be full arcade games for the home, or that made video game playing only one piece of their larger package of multimedia features, what was the most expensive video game system after adjusting for inflation?

It was Mattel's Intellivision, a mainstream competitor of Atari that was released in 1980 for $300 -- or for $746 in 2007 dollars. That's only 23% cheaper than the Neo Geo -- a home arcade system!

I know there are already charts of how much video game consoles cost in nominal and real terms across the years, but I've never seen a good scatter-plot or time-series plot. So here they are for 45 consoles (this time including the home arcade and multimedia ones), from Magnavox's Odyssey in 1972 to Sony's PS3 in 2006 (full table here):


I adjusted for inflation by using the Consumer Price Index, since after all these are consumer goods. I got the data from this chronology of video games, which is extensively referenced.

Notice that the nominal prices have gone steadily up -- there doesn't seem to be nominal price "rigidity" here, as though we had some psychological barrier against the creeping-upward prices on the tag. Well, at least until a mainstream console hits $1000 -- then we'll see.

In the plot of real prices, the typical consoles have gotten cheaper over time, probably due to economies of scale, memory getting cheaper, or some other technological advancement. Also notice that it appears that prices are lowest when there's only one company with most of the market share -- in the mid-late '80s when Nintendo was the only game in town, and in the early 2000s when the PlayStation 2 cleared out Nintendo's GameCube and Microsoft's Xbox. I don't have good market share data from the 1970s, but this appears to hold there too, since Atari was introduced in 1977 and didn't see real competition until the early 1980s.

This contradicts that idea that just having a huge market share makes you act like a bad monopoly -- prices should be higher when there's only one dominant player, under that idea. Instead, the period when there was essentially one system to play -- 1986 to about 1991 -- was characterized by an incredibly low-price console, the NES. It's not until the eruption of consoles during the 16-bit era and just after that prices start shooting up again.

And Nintendo, despite dominating the market for most of its existence, has always kept its prices low. The real price of the NES was $238. For the Super Nintendo, it was $301; $235 for the GameCube; and $257 for the Wii. Sony's consoles, by contrast, have ranged from roughly $350 to $500.

I've got similar data that I'll post soon for the handheld consoles, but it looks pretty similar.

So if you thought video game nerds today spend too much money on their vice, just imagine how much of their paycheck people forked over to buy an Intellivision. I don't remember any of it first-hand, but the video game craze of the late '70s and early '80s was something else (maybe it was the drugs). As I showed in a graph in this post, arcade game sales have never been matched since 1981 -- and that includes the home console sales too, at least as recently as 2002, notwithstanding how well the PS2 was selling then. In fact, it was only in 2001, after the PS2 caught on, that home sales had returned to their level before the video game crash of 1983. It's just too bad there weren't very many games for it -- just a bunch of movies.