IT Pricing Enquiry: No Evidence For Higher Costs On Digital Games

The federal government's IT Pricing Enquiry has concluded, and in addition to providing recommendations regarding pricing policy, there's one particular section which gamers will find interesting, even if unsurprising.

In the enquiry is a small section relating to videogames, stating publishers didn't even try to defend their position when it comes to charging higher prices locally:

The Committee notes that despite industry claims that costs exist for the creation and marketing of digitally distributed content, vendors have not produced any evidence to explain why differentials are so high for such content. In relation to games, for example, the Committee has not received any evidence which explains why it is almost invariably cheaper for Australian gamers to purchase and ship physical media from the United Kingdom to Australia than it is to purchase a digital copy of the same game.

So, it does appear that this massive enquiry, for gamers at least, existed to impotently tell us what we already knew. As Angus Kidman over at Lifehacker has pointed out, the purpose of the enquiry was never to introduce legislation to enforce fairness on pricing:

It is not going to recommend that competition law be changed exclusively for technology products to ensure that we get the same prices as the US. It’s legally unfeasible, politically difficult to imagine, and impossible to enforce in real terms. It’s simply not going to happen.

This is especially relevant in the gaming space, where as we've reported many times, publishers charge more for games because we're willing to pay the higher costs. Even in the case of digitally distributed games, with no shipping or other material costs, we still pay more. Mark Serrels wrote a great piece not too long ago examining the reasons for this.


Comments

    Lower cost = Lower piracy it's really simple???

      Pirates will always pirate reguardless of price.

        I pirate but if i see something for a good price I buy it, also over the years as my wage increased I have spent a ton on various things rather than pirate.
        I would like to see a reduction in price as I am sure people will purchase if they did so

        This, some people are just lazy scum when it comes to piracy. People pirate Humble bundles rather then paying a few cents (or god forbid a reasonable price) to developers and charity.

        See Valve in Russia for how you can reduce it substantially though.

        Yep, as evidenced by the fact that a humble indie bundle that can literally be purchased for 1 cent still gets pirated.

          How would one cent be profitable for the sellers of the bundle though? I think i would pirate in that case as my money would mean nothing to them. All i want is proper pricing we shouldn't pay more as "we are prepared to pay more"

            You would STILL pirate a $0.01c bundle for charity? What kind of low life would do that!

              I see where he's coming from... How is 1 cent going to make a difference? I don't pirate humble bundles but his point is valid.

                I don't see how any reason is valid for stealing content that is provided with the sole intended purposes of helping those less fortunate than others. x100 or x1000 people and it would add up, isn't that obvious. Being potentially $10 richer is better than being potentially $10 poorer.

                Had he referred it to some other sort of sale or item or situation then yeah, but he didn't, he referred to a charitable offering. Unless your moral compass neglects to care for those who need assistance then yes I see your point.

        True, but the number will drop a lot. I used to pirate the hell out of PC games. Then Steam existed. The only PC game I can remember pirating since was an old one that wasn't on steam, and Ubisoft was refusing to sell it to Australians from their online store.

        Cheaper Prices really do curb piracy.

          yep.

          and availability. I buy so much digital music now from bandcamp, indie label websites, etc, now that they sell at good $10-$30 prices (depending - usually its btwn 10-20) at 320kbps or flac.

          i've pirated a couple of albums in the last few years when i didnt want to wait a month for the CDs i just ordered to get to me from Europe .

        I used to pirate 95% of my games merely 4 years ago. Then I started using steam, gog and gmg. Now, I only pirate what gets banned. Ive been converted by summer sales and low prices. Most people would be too youll find as most are good honest people. Theres still people who wont of course and wwilljustify it any way they can but with much lower costs digitally the industry would be far more competitive.

          I may just be to cynical but I doubt numbers would drop in piracy if prices were lowered. To many lazy and entitled people that won't change their ways. Not to mention this generation that have been brought up on the internet whom belive that if they can download it for free then they should.

            Honestly since I started working (after high school) and using Steam and Ozgameshop, I haven't pirated a game for like 10 years.
            Maybe it's different now, but back then it was difficult, time consuming, annoying and fraught with danger. It honestly isn't worth the effort for me, when I can now buy a new game for the cost of going out for dinner... $100 games can F-off but getting brand new triple A titles for $40. That's where the price should be.

            Steam has show then 50% reduction in price for a game results in 3600% increase in sales.... (I think that was data from a few years ago though). Also that's in units sold not dollars.

            If you're going to download a game, here are your options. Buy it and download it and be pretty much guaranteed it will work, or download it from some unknown source and take a chance. If it's something you're not sure off then sure saving $100 is worth the risk. but $10 it's probably not worth screwing around with cracks.

            Yes people will still pirate, just like people will always mug you in a dark alley. You'll never get rid of it. But pricing things accordingly, especially in Australia where we get shafted on prices will make a big difference.
            Valve has already proven this in Russia. People thought they were crazy because Russia had a MASSIVE population of pirates, mainly due to their socio-economic situation. People in Russia couldn't afford games because they would often cost half of the weekly average wage. That would be like our games costing around $300....
            And yet, valve has had great success in Russia, and torrent figures have gone down since they released into that market (I think it was 2010).

            I think you'll find the % of pirates that are just assholes and DL stuff for free because they can is pretty low. I think most people pirate because the price is out of their reach, because they want a demo and don't want to drop hard earned money on something they don't know, because it's unavailable in their region (especially TV shows), or because they want a DRM free version.

            The last point is irrespective of price, but it's still a valid point. Some people prefer games that don't have to be always online, or using a slow, annoying 3rd party launcher, or simply to have a digital version of something they already own (less common these days).

            Valve has proven time and time again that ease of accessibility, suitable pricing and not treating customers like stupid apes results in a dramatic decrease of piracy.
            I bet that Netflix has proven the same thing with TV shows (though to be honest the biggest killer here is still the "current" season of something, which isn't on netflix).

              I think your giving people more credit than is due to them. I know a lot of people that pirate simply because they can. I honestly don't think you will find that % of pirates is low. If you have no moral compass against piracy then you are going to pirate. People who want to pay for things and support the industry find ways to do so, even if that means waiting till the game has a price drop or importing from someone who has a cheaper price.

              $40 for triple A titles!? You can't be serious can you? I think $60 is a lot more realistic.

                Thing is, trying to stop piracy from that demographic is impossible. So they don't really matter. It's not a lost sale because they wouldn't ever buy it anyway,.
                A lot sale is when a potential customer turns to piracy because of price, availability, DRM etc... That's what the industry has to improve on. That's where it's possible to win customers back.
                People who steal and have no "moral compass" won't be swayed either way. It's a waste of effort to chase those people.

                As for Triple A titles... I said $40 because that's what most of them cost on Ozgameshop for PC lately. Maybe $45... I think Watchdogs, BF4 preorders are around the $45 mark.

                I think the industry already realises these things to some degree. The difference between PC prices and console prices is a great example. They charge 30% more for console titles because they are harder to pirate and some a region locked and because they traditionally target mums and dads.
                PC games have come down in price compared to console games. Why is that? Because sales are down? Because sales are up? I think the industry has seen the figures for various price points, and they are starting to (very slowly) react.

              Also... What evidence is there that the things Valve do result in a dramatic decrease of piracy?

                There's been heaps of articles. Look up Steam in Russia. I don't have time right now to link stuff for you, sorry.
                or things like this http://www.shacknews.com/article/57308/valve-left-4-dead-half
                that show the increase in sales due to drops in price.

                  An increase in sales doesn't mean a decrease in piracy though. Don't apologise, I'm at work now and can't look this stuff up either!

            I believe they would slightly drop but I do not in any way believe they would disappear. I myself am an example of that, I don't think I'm an anomaly.

            I can't speak for everyone, but Steam converted me from pirate to paying customer.

      Appreciate what you say. And I'm also "replying" to many replies to your first statement.
      First: I don't pirate. I hate the idea. I'm a bit straight-laced.
      However: I won't buy if I feel the price is unreasonable. A producer will get money from me when it is what I believe it should be. Would you rather sell 6 DIGITAL copies of a game at $10 each or 1 DIGITAL copy of a game at $50. So apples with apples. Both digital. But you get $10 more by selling to 6 than 1. Bandwidth costs for that would be minimal.

      As an example. I'm not going to buy "Brave New Word" (Civ 5 expansion) until it's $15 or less. I'm waving $15 at them. I accept that 'early adopters' will throw money at them. However, until that expansion is $15 or less, they don't see my money. Here's the important part. I bet I'm not alone.

        That's how it should be done! You don't like the price, don't buy it for that price. Have some patience and wait until you can get it for the price you think it's worth.

    Could we see a console banned from sale in this country if it has region/geo-blocking or some sort?

      I doubt it. There's nothing illegal about region locking, but there's similarly nothing illegal about modding your device to remove the region lock.

        If only this were true.
        The problem is that all the console manufacturers have mage the region coding and the DRM the same component, and since the Free Trade Agreement with the US it is illegal to work around the DRM of a system. Since it's the same component, and you can't get round region locking without getting around the DRM it is actually illegal to work around region locking in a console (because it also bypasses the DRM). So unfortunately "nothing illegal about modding your device to remove the region lock" is great in theory by the manufacturers found a loop hole (this is why the R4 is basically banned in Australia, you can't beat the region locking without beating the DRM).

          Thanks for that. I didn't realise things had changed since the ruling making them legal a few years ago :-(

            Thanks as well. Where in the new FTA did it stipulate that?

              I found this article from a couple of years ago that gives a pretty good run-down of the situation.

              http://www.gizmodo.com.au/2011/02/mods-vs-lockers-region-coding-and-the-legal-dilemma/

    As more ppl realize this more will import.

    This in itself will put market pressure on these companies. Not overnight and it depends on how many ppl do it but thats the only way it will happen imo

      I still buy during launch window for a lot of games, but I order prior to launch online, and have it a few days after.

      I see the more likely outcome is that Australians will become conditioned to buying games from overseas, and distributors will stop distributing here all together, knowing that we'll happily cover the cost of shipping for them.

        Yeah but they wont be able to charge more in the markets we buy from as they would start alienating that market too.

    The title was misleading a little...when I first read it I thought it meant "there is no evidence for higher costs on digital games" and I'm like..."What? Are they looking at the same prices as everyone else?". But then the actual article made more sense.

    as I thought, nothing will actually be done to stop it. Knowing the Government though they'll probably put a tax on foreigner exporters at some point to bring ozgameshop and co up to Aussie retailer prices because, you know, BUY AUSTRALIAN and all that crap

      You do realize that just about every retail chain that sells games is foreign owned right?

    We need to start voting with our wallets.

    I haven't bought a game during "launch window" since Halo 4. I refuse to now when I know the price will drop so quickly, same for digital games.

    It was hard to change my habits, but it's worked out for the better. We all need to do this in order to see a change. If the publishers see we're no longer willing to pay the ridiculous pricing, they'll drop the prices.....or stop selling games here.

      Unfortunately I think you'll find that we (the outspoken, tech savy shoppers) already vote with our wallets. However, we are a minority, and the masses still buy full price retail.
      Until every mum and dad buying presents for little timmy for christmas realises how different the prices are, "we" aren't going to make a difference.

      The problem is, IF that ever does happen, the retail sector will cry so hard that the government will just remove the $1000 minimum taxable import duty thing... Granted in some cases it may still be cheaper to buy overseas and pay the import duty... but it's going to make it more annoying.

        @Inquisitorsz. The "mom and dads" are practically only ones keeping me in business. My prices are pretty low to be competitive but not as low as ozgame and online, Why, just 2 little things called Rent and Wages. If you think its a outrage paying $100 for a game, you should see what i have to pay in Rent and Wages. The import duty of $1000 is one of the highest in the world, most places have $200, some $50.00 Why are we $1000.00. I would be happy to do those same prices as i agree, but all i ask for is, give me a Equal playing field to let me compete. I'm getting screwed over something i have no control over and looks like will be getting screwed over even more with goverment making it even easier for online and not me. The guy who employs ALOT of people and contributes ALOT to the country.

        No money for me, no jobs for my workers. Unemployment goes up and someone will need to pay the unemployed.

          So what you're saying is that we should pay more because you decided to invest in a broken industry...

    I flat out will not pay more than $50 for a game (lately I find myself not even wanting to pay $30), so what I do is this thing that people use to do all the time, but don't seem to be able to do any more. I wait. I'm dying to play Metro Last Light, but I haven't seen it at a price I'm happy with.
    Lucky I'm a PC gamer and the price of games come down fairly quick. I don't know why and how console players are willing to pay $90+ for a game.

    Last edited 29/07/13 3:25 pm

      http://www.ozgameshop.com/pc-games/metro-last-light-code-by-email-game-pc

      Metro Last Light $34.99
      You're welcome

        Thanks, but I'll wait til its cheaper. I could of got it in the Steam sale for that much.

      Im paying $170 for GTA V collectors edition day 1. It just comes down to how much cash value you put on your time. I'm definitely going to get my $170s worth out of it.

    So...the whole point of the 'Enquiry' was?

      Toothless tiger. All growl no bite.

        Three cheers for Australian politics!

          And imagine how much the inquiry cost us...

          I like to think the main point was to give the industry a chance to explain/defend itself. That didn't happen.... and now nothing else will.
          Perhaps if the mainstream media picked up on the issue, it might get more traction

            Well, the industry did, and the explanation was a succinct "Because we can, and there is nothing you can do to stop us"
            Adobe, Apple, Microsoft, etc all gave the Australian public the two fingered salute, and then smugly sat back as politicians coughed and shuffled their feet, and concluded their impotent inquiry.
            It was covered by the mainstream media, and nothing changed.

            What I bet we do see, is more whining and complaining from the usual suspects in a years time on how much piracy is originating from Australia.

            Then they'll realise we're returning the salute.

      Hopefully it educates people who aren't us. I suspect that a large percentage of people who still pay retail prices are more casual players, or people buying gifts. My parents have never been to a gaming website, but they read about this enquiry.

      Yes the point of the Enqui... Wait... Biri-Biri?!
      Good episode last weekend ;)

      To expose the problem to a larger target audience and to make the issue official. It may seem highly ineffective now, but that's far from the truth. The journey to fair pricing begins now.

    I thought that prices were set by the market? If everyone was only willing to pay $50 for new release titles, then that's what the price would become? Sadly gamers are ones to bleat about something in a game they don't like, but will be there, cash in hand, on day one.

      True, but the market is far wider than us gamers - think of all the aunts and uncles who don't know an Xbox from an Xbow, but do know that little Jimmy wants Resident Weevil 15 for Christmas.
      It is them that the distributors are relying on to keep the prices high, not the core audience.
      If, by some miracle. we convinced all the gamers not to buy the latest games until they were $50, our efforts would be all for naught due to well meaning relatives.

      The biggest irony is that it will be piracy, not market demand that will lower the prices.
      You can buy legitimate digital copies of Office here in Australia for $15, because Microsoft would rather sell it cheaper than lose out to piracy.
      Given we are the first generation to really utilise digital downloads on such a wide scale, this problem is only going to explode as future generations take up whatever solution is the easiest.

    The good news for Xbox live users is that arcade games are now cheaper since Microsoft switched to real currency. Previously we'd pay about $12.90 for a game that was $10 in the US and about $19.50 for a game that was $15 in the US. Now the prices match America. So a $10 game is $10. This is pretty good considering our dollar is weaker than the US dollar

    Good to see my letter I wrote to the enquiry grabbed some traction (was mainly regarding Steam).

    As pointed out in the SRIV article it DOES cost more to get games sold in Australia. They have to redevelop and resubmit to our Classification board when they accidentally put sex and drug use into their games.

    Too little, too late. The ship has sailed for me personally. Even if prices decrease in the next few years I honestly couldn't care less. I refuse to support a local industry & economy which has ensured we are subjected to laughably high prices, censored or banned games aimed at & restricted to adults, region locked games on almost every console to date and a severe lack of local of local servers!

    Publishers/developers should have retained some integrity and respect for consumers from the get go. Consumers should have also refused to put up with all of their garbage - not to mention the governments garbage in regards to dictating the entertainment choices of adults solely due to one baseless assumption - interactivity. They refuse to accept reality despite their own studies concluding what every other study has already proven countless times. There is NO evidence that Interactivity has any negative impact on grown adults what so ever. It's all about their obsession with grabbing the votes of over sensitive family types.

    Bugger this country!

    Yeah, Screw all those Australians who are employed in the industry and can't do low prices due to i dunno, rent and wages. But most of all Screw You cufcfan616.

      Yes, we should be forced to pay higher prices because YOU opened up a store. I mean, fuck having a consumer driven economy based on choice and producing services and products that are geared and prices to a consumer. No, because YOU chose to open a business, we have now obligated to give you money.

    "We're not going to do anything about it, because that would be hard" affirms pointless inquiry

    In the last few years my habits when it comes to purchasing computer games have changed dramatically and I do not accept high prices ($50+AUD) for any game. I doubt I am the only one and things will probably slowly change across the industry (I feel they already are). My steam backlog of amazing games from sales and indie bundles is huge and I have little desire to play anything on day 1. For the rare exceptions there are other avenues (everyone should have a reliable Russian friend on steam - I just got Crusader Kings II and *all* the dlc for 7 TF2 keys - about .75 keys profit for him and saved me $10USD).

    I only pirate games when a suitable demo is not available. why should i risk a $100 odd investment, with out trying the product. if i like the game i will then buy it, if i don't like it ill delete it and never play it again.

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