Friday, 12 April 2013

Australian Gamers vs Australian Game Prices

If you live in Australia, that title probably just struck a nerve. For as long as I have taken an interest in gaming around the world, it has surprised me that Australia gets gouged constantly on pricing for games. When I started buying games myself (not when I would beg my parents to buy them for me) it wasn't uncommon to pay AU$110 for a new release title. Now the price gap has dropped ever so slightly, however it is still there. To give an example, let's look at the price of recent AAA title Bioshock Infinite (referred to from here on as BI).
Sometimes it feels cheaper to just burn all the money...
Maybe the Joker had it right.
On you can buy BI for $US59.96. At the exchange rate at the time of writing this would be around AU$57. Gamestop as a brick and mortar retailer has it at US$59.99 Now lets look at the major brick and mortar retailers here in Australia. EB Games (who for all intents are purposes are Gamestop Australia) are selling BI for AU$78, or around US$82. JB Hi-Fi aren't any better (AU$79). Steam is the best value for Australians (but of course only on PC, if you use a console you are pretty much having to pay Australian retail not matter what), with it listed at the same price as Amazon and Gamestop in US$. That isn't uncommon with Steam as Valve tends to treat Australia to the same prices as the US, unless the games publisher chooses otherwise.

It seems that for boxed copies of the games, Australians are always going to be paying higher prices. However even when certain companies release digital versions of their games they may still jack up the price for Australia. To give a recent example, SimCity was released across the world on EA's Origin service as a purely digital product. No postage or shipping costs. Just click buy and download, no matter where you are in the world. This link is for the US, and this link is for Australia. In both the standard and 'digital deluxe' versions, the prices are jacked up an additional $20 for the Australian version. Why does this happen to Australian gamers? The costs to EA for the product have not increased simply because the download is going to an Australian IP address. It's not like they need to pay to ship a CD to Australia for the customer to play. The same files are up on Origin servers for the US customers as the Australian ones. There is no reason for this to happen.

While doing my research for this post, I came across this Kotaku article where the Australian Government has summonsed major IT companies such as Microsoft, Apple and Adobe to have them explain why their prices here in Australia are, according to the article, "up to 60% higher than in the US." This may not be about video games directly but it is part of the issue.
“While television and computer prices fell 14 per cent according the to the latest Consumer Price Index Figures, there’s still a long way to go – with some estimates suggesting that Australian prices are up to 60 per cent higher than the US.
“Given the widespread use of IT across businesses and the community, the prices paid for hardware and software can have a major commercial and economic impact.
But how is it that game publishers can get away with the pricing here in Australia to begin with? A simple idea called Parallel Import Restrictions (PIR). Essentially this is supposed to protect IP owners from people who buy items cheaper overseas and importing them for sale in Australia (Parallel Importing). A good non video game example of this is books. Brick and mortar retailers of books are usually more expensive than online retailers such as The restrictions don't apply to someone buying the book for themselves, but it does for people who want to then on sell them in a store. A retailer must buy from the IP owner or legal wholesaler.

In the games industry this means that publishers can legally raise prices in Australia to our wholesalers, and they cannot go elsewhere to source the games, even though the price they may be getting charged is the same as, say US retail price. Indeed in my time working for an electrical store that sold games, our cost price from a wholesaler was usually a few dollars more than US retail which would support this theory. Selling a game at $60 may well be selling at cost for most, if not all brick and mortar establishments in Australia. There is also the issue of local taxes, such as GST for Australia, the higher base employment costs and the costs of getting a game rated here in Australia (particularly before we got our R18+ rating). These are taxes, employment laws and rating laws that the local publishers have to comply with, regardless of where the product was produced.
Judge used legal speak. It's SUPER EFFECTIVE!
"Yes! Take that gamers!"

To conclude, while this is a complex issue, I truly believe that in the case of brick and mortar retailers there is nothing they can do unless the publishers reduce the local costs of games. However in the case of digital distribution in cases like SimCity on Origin, there is absolutely no reason for the price increase. Digital products aren't subject to PIR laws when going to the end user. They don't have any of the local taxes applied to them and certainly they would only in rare cases have local employment costs added on. It is my opinion that these services shouldn't be supported until the prices are the same for Australia as the US. There is no reason for the inequality here.

If you did get to the end of this without a headache, I salute you, and as always GAME ON!

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