Rants - Maybe Inflation Is Bad . . . for Gamers.

Ordinarily, I get giddy when I hear about rising inflation. While most dread rising prices, inflation is all a part of my fiendish plan to eviscerate my bloated student loan debt and turn my mortgage into the financial equivalent of compost. Besides, if prices of new things go up, I can always just buy more used stuff. That is what I thought until I had an epiphany. What changed my mind and convinced me that inflation was bad? Of course, it was news about the price of the Xbox360 gaming console.

The director of product management at Microsoft was quoted as saying that the "sweet spot" for pricing the Xbox 360 is $200. I have personally been in the market for an Xbox 360 (hey, I'm still within the demographic) and it's current price of $400 really is not much of a problem for me now. Ten years ago, when I was dirt poor, it would have been dang near impossible. That brings me to some other recent news, the average income for young people today is less than it was for the previous generation. Oh, and the prices for everything have gone up, especially essentials like food and gas.

Back to the Xbox 360, considering inflation, $400 is not a lot of money for a gaming console. In the mid 1970s, which was the worst decade ever, ordinary folks paid as much as $100 to buy Atari's Pong. Factoring in inflation, the cost of Pong in today's dollars would be $384. That's almost as much as an Xbox 360, or about the same as an Xbox 360 when it is on sale. The SNES debuted at $200, or $302 today. The original Playstation, one of the most successful consoles ever, debuted at $300, a whopping $406 by today's standards. So why isn't the "sweet spot" for a console closer to $400? Because today's gamers make less than their fathers did.

So my plan to exploit inflation and leverage my loans has a huge drawback for console makers and 20 and 30 somethings who want to play Halo 3; prices go up but incomes stay the same. This lesson is not limited to consoles. Sales of all goods will suffer from a drop in income. Current and future generations might have second thoughts about news cameras, quality footwear, and dentistry. They may even cut back on legal services (egads, that's my primary income) or premium foods. Sucks to be us, I guess.