Monday Musings: The Price Is Right?

wii_wario_land_shake_dimension_wario_chr04The price of games is a popular topic of discussion round these parts. Whether it’s on my Ask Me Stuff posts, in the various reader emails I receive, or seen in the comments you make every day, it’s clear a lot of you feel you’re paying too much for your games. But is this really the case? Are games more expensive in Australia than elsewhere in the world? Let’s take a closer look at the issue.

The average recommended retail price for a new release console game in Australia is approximately $100. Sure, some Xbox 360 and PS3 games come in above that, and Wii games tend to be priced a little lower, but on the whole $100 is a good basis for comparison. (And I surely can’t the only one who remembers the days of $150 SNES and N64 cartridges?)

Bear in mind that while you can easily shop around to find new release games for less than their recommended retail price, these discounts are set by the individual retailer rather than the game’s publisher. The only sensible way to examine industry-wide game pricing is by focusing on the RRP.

In the US, the average new release retail price for Xbox 360 and PS3 games is US$60, and US$50 for many PC and Wii titles. In the UK, it’s £45, although again there are variations of £5 above or below that price point.

Based on the exchange rate at the time of writing, the average US price converts to about $80 and the average UK price to about $90. So, yes, today it would seem that we’re paying $10-20 more than our overseas friends.

But currencies fluctuate like crazy. It wasn’t that long ago that, based solely on exchange rates, UK game prices would translate to well over AU$100 and we were paying twice what a US consumer would pay for the same game. Sometimes we win; sometimes we lose.

Yet the fact remains: our games are still 100 bucks, regardless of how the dollar is faring against foreign currencies. They were 100 bucks a few years ago; they're 100 bucks today. They’re not suddenly more expensive because the dollar conversion is unfavourable.

It seems silly to me to judge this issue by looking solely at something as variable as exchange rates. The issue of pricing is much broader than that.

For a start, a publisher such as, for example, Activision may well be a global corporation, but its Australian office is running its own business. It needs to operate within local market conditions, often facing specific distribution costs and retail challenges that aren’t readily comparable across territories.

Economies of scale come into play here, an important factor to consider when you’re trying to compare two markets of such vastly different populations as Australia and the United States. Transportation costs play a part, too, and you can see why it’s always going to cost a publisher more money to move stock to and around Australia than it would to ship the same game into UK stores.

It may surprise you to learn that publishers in Australia all purchase stock from their global head office. And they do it in the currency of that head office. Ubisoft Australia, for example, effectively buys stock from Ubisoft France and they’re charged for that stock in Euros. The same goes for every other local branch of an overseas publisher.

The legacy of our PAL heritage means that some Australian publishers report to European headquarters and see their finances recorded in Euros or British Pounds. Others deal in US dollars, while a few will need to convert everything to Japanese Yen.

Suddenly you’re looking at four different currencies that affect the games business in this country. Imagine if every fluctuation in those four exchange rates were to be factored into our game prices and applied on a weekly or monthly basis. It’s just not practical.

The result? Publishers have – at least over the last couple of console generations - settled on this $100 figure that accommodates the good and the bad. For every period where that price point is seeing widening profit margins for them, there’s another period where things start to get uncomfortably tight. One needs only look at what happened to Red Ant to see the tragic effect the latter can have over even a short period of time.

My advice to anyone thinking they’re being “ripped off” over the price of games in Australia is to stop the futile comparisons with separate overseas markets and start comparing prices within our market. Shop around and you’ll find you’ll rarely have to pay recommended retail price for the latest games. You might even start thinking they’re pretty good value for money.

Next Monday I’ll tackle the price of digitally distributed games. Between now and then I’d love to hear your thoughts on the issue of game pricing and any questions you might have around digital distribution.

Monday Musings is a regular column designed to get you thinking and talking about game design or an industry topic. I’ll be tackling a specific subject each Monday, so email me if you have any suggestions.


Comments

    I've never really seen the $100 - 120 RRP price of videogames as excessive. When you consider how many years (an average of 3) and the number of people (often over 100) that it takes to develop a videogame, then the various middle-men that are required to make the sales of the game recoup costs, such as those in marketing and distribution, and the store that is selling the game, it must all add up.

    There's also the comparison to be made to DVDs and $$. You know, the classic argument of $ vs. hours of entertainment? In these situations a $40 RRP Blue-ray that entertains for 2 hours is expensive compared to a $100 videogame that may entertain for between 6 - 8 in a single-player campaign, excluding replays and multiplayer.

    And, as you say, shop around and you won't get ripped-off anyways! JB Hi-fi routinely sell below RRP and Harvey Norman do a great job of price matching. Just avoid EB Games.

    Or, you can wait a couple of months for the price to fall. Sure, you won't have it on release, but it's not like the game is going to change over time, and you'll have a better idea of which multiplayer games have maintained stronger communities, too, which increases value per dollar on the whole.

    More to say, no time to say it.

      However, when leaving a game a a few months to purchase hoping and waiting for the price to change, SOMETIMES it can affect the playability of it.

      FOR EXAMPLE:

      Games such as Halo 3, Left 4 Dead, Gears of War, Call of Duty - they never dropped price. Heck Modern Warfare only JUST dropped to $49.95 in AUS cause of the GotY Edition. Halo 3 took over 2 years to finally drop its price to 50 and Left 4 Dead & GoW 2 are still 80-100 brand new.

      Point is - other games that have a great online component do lose playability because people buy them when they are released and since there aren't heaps of games with great multiplayer & online playability like Halo Or Call of Duty - after 2 months people have thrashed that game and the number of people playing online drop. You purchase that game 3 months after release and over half the average number of people playing online are no longer online anymore. That is unless it is a popular franchise.

      I know this doesn't happen to all games - but it does happen to A LOT!

      But i kind of do feel that the RRP of 110 to 120 is a bit rich. Although like you say, JB, Big W, Kmart, Target - they are all pretty good with new releases. Unless its some BIG sequel or game from a massive developer - they usually have new releases at around 79 or 89 dollars. However EB & Game are major rip off's and i disagree about Harvey Norman - i believe they are just as bad as EB Games, they may price match like the others - but i've seen some 2 year old games still selling for 90 dollars.

    Thank you for writing this. The 'GAME PRICES SHOULD FLUCTUATE IN EXACT ACCORDANCE WITH THE EXCHANGE RATE!' argument has been irritating me for some time now.

    Perhaps you should be comparing the ratio of the minimum wage in each country to the price of a game, I'm sure even though it's lower in the US and UK their games are cheaper in comparison.

    I think the problem is that most games are made in America,Europe and Japan, so yes it does depend on foreign currencies and as you said $100 is used as a general rule to account for fluctuations.

    Another problem is the actual product is usually inferior to those bought overseas, Less availability of CEs, less pre-order bonuses, special content, multi packs (such as the hit-man or command and conquer triple packs ) and almost always later release dates.

    The fact is when it's cheaper, faster and a better product to buy online and have it delivered to my door (which I almost always do) the distributors/retailers simply aren't doing their jobs (care to release Mines of Moria yet Atari?). Even "Discounted games" at retailers like EB and JB hi-fi pale in comparison to what you can find new on eBay.

    The only time I buy retail is when I get games from my brother who works at JB HI-FI and gets a massive employee discount on pre-owned games such as doom 3 for $2.

    A lot of the time games that are terribly old aren't discounted to the extent they are in other countries as well.

    As for downloads often since it is a more direct means of distribution all the costs associated with a retail game should be cut out, yet still the content costs more here.

    "(And I surely can’t the only one who remembers the days of $150 SNES and N64 cartridges?)"

    Where the hell were you buying your games from David?

    I never paid more than perhaps $50-$60 for brand new, new-release SNES games. Gameboy games tended to be around the $30 mark for new releases. PC games wouldn't be more than $30-$40 brand new. Big W and K-Mart for the win. This was back in the days before EB Games came along and the only really specialist games stores were The Gamesmen and The Games Wizards.

    Anyway...

    I don't really think it's as cut and dry as you make it. While exchange rates do fluctuate, our dollar has been trading pretty steadily for the last few years - sometimes it can go up, sometimes down, but it's generally hovered around that US 70-80 cents mark for quite some time. We can draw some pretty good comparisons using that as a base.

    The answer is yes, we pay on average a lot more for our games than they do in the US. Most of Europe, I believe, has pretty comparable prices to us though, so it's not just the Southern Hemisphere that gets shafted in that regard.

    There's no doubt at all that our retailers mark up the prices. We *should* be only paying $80-$90 for new release games. Instead we pay anywhere from $90-$120 these days (excluding those that come bundled with peripherals like Wii Fit or Guitar Hero).

    I blame the retailers, specifically the one I mentioned earlier - EB Games. When they showed up on Australian shores they started making a monopoly and brute-forced their way into the market. GAME eventually followed suit and bought out guys like the aforementioned Games Wizards in the process. It's primarily these two retailers that are driving up the game prices in Australia as they compete with each other and make a fortune from their used games policies.

    It's quite clear these retailers are putting a huge markup on their games if you go to another retailer that doesn't specialise in games, such as JB HiFi. JB make most of their profits from the other stock they sell and have no need to jack up the prices of their games. The result is significantly cheaper games across the board. I bought GTA4 as a gift just a few weeks ago for $69 at JB. The EB Games literally right next to it in the shopping centre was selling it for $120. And this is a game that's a year old now. You'll find the two big game retailers are still selling Twilight Princess - a damn Wii LAUNCH title, for the full $100. It's robbery.

    So yes, we do pay more for our games in this country in general. But you also need to know where to look for the bargains. In short, don't buy from EB Games, and try to steer clear of GAME too, unless they are offering some kind of special deals. Buy your games from places like JB HiFi. Or, if you feel particularly patronising, get EB or GAME to price match a JB catalogue. That's always a barrel of laughs.

      Well, I distinctly remembering when Super Street Fighter II - Tournament Edition came out for the Sega Mega Drive it was $150 at all retailers.

    I tend not to compare games with prices in other countries, but to other forms of entertainment. I doubt there are greater costs involved in building games compared to making films, and yet I can see a film when it's first released, and then purchase it to watch over and over again for less than the price of a new game. Surely the profit margin is a lot higher here, unless I'm mistaken.

      The difference here is that films have multiple chances to make back their initial investment - Theatrical, Pay Per View, DVD, Pay TV, Free TV - are all structured release windows in order to get more out of a consumer to make back the film companies investment.

      Games unfortunately only have the one release window at retail, or increasingly online at the same time. So game publishers need to make their money back through simple supply & demand. If 5 million people will pay $100 for a game - then why charge $80 when it maybe only gets you another million customers but less money back on that investment.

      David - The other thing you forgot in your direct analysis is tax rates - that $100 Australian includes $10 straight to the K-Rudd whereas the US prices you're quoting include no tax & then it gets added in on top of this price based on the tax rate of the state you live in.

      You can't compare game prices to movie prices because:

      - Movies can afford to be cheaper given how mainstream they are and the fact that each movie will be seen by millions and millions of people. Games (although becoming more mainstream) are still a bit niche, and a game is pretty successful if it sells over 1,000,000 copies which would be a flop for a Hollywood film.

      - Games offer many more hours in entertainment value compared to movies. For $14 at a cinema, you get 2 hours of entertainment, therefore $7 per hour. For $100, you can get 40+ hours of entertainment out of many games, therefore $2.50 per hour.

      - If game developers started expecting as obscenely high amounts of money per game that actors get paid per film, then games would undoubtedly be much more expensive to create than films.

    I remember paying $130 bucks for the likes of Turok Dinosaur Hunter and Extreme-G on the N64. I bought them from a store called Videogames Heaven at the time, but they were priced the same in the big department stores too.

    I agree that JB HiFi is most often the best way to go. When Gears of War 2 was released, EB was charging $100 for the standard edition and $120 for the limited. JB? $79 standard, $99 limited. It practically 20% off. While this price discrepancy isn't always the case, it's common enough that I always check JB first.

    Listen, we can sit around and argue price all day long, but it won't change anything - fact is that it's mainly the lazy/stupid people who can't be bothered shopping around that are complaining about the $100 - 120 price tags on games.

    I have been gaming since i was a wee lad, and at 23 now i can honestly say i have NEVER paid $120 for a game. I have paid $100 for a game, but only at launch (eb games midnight launches are kinda fun).

    Games can be found anywhere for damn good prices.. as said before you can pick up copies of GTA4 for either $110 brand new from eb or game, $78 brand new or $68 second hand at JB, or stick it out at a local pawn shop (cash converters or trad-o-rama) to get it for around the $40 mark.

    Every time i pass a jb or a second hand store i ALWAYS go in to see what i can find and i have found literally hundreds of bargains. Especially so in second hand stores where i picked up a copy of final fantasy 9 for $10 (another game specialist store was trying go sell it at $130 and ebay averaged $40) - but thats an old game so i guess it doesn't apply, but you get my meaning.

    EB also have massive sales several times a year, the biggest coming up in june, where you can find some decent titles slashed by up to 50% if not more. Hell, last sale they had i found the collectors edition of saints row 2 for around $60.

    Also alot of purchases i make are through ebay too, mainly for PS2 and PSP games, as it is generally cheaper than even pawn shops for such titles.

    NEVER buy from game though.. the only things they can do is console bundles, but even that can be a little iffy - i have never once found a certified bargain at game...

    i do so enjoy EB price matching JB HIFI, they just seems to get a little irritated about it. just a question does anyone know the returns policy of JB, i have never had a problem with a JB game, but if i recall for $5 EB give out a scratch protection thing, if i'm going to be playing a game a lot, it's not a bad safeguard.

    in relation to the post, $100 seems a lot for a game at the outset both because currently people are little more cautious with money, and because as some prior posters mentioned while that's hows much it costs at release, generally speaking, prices can drop quickly (some stores seem disinclined to lower the price over time. for example a year on and still EB sells GTA IV at the full price. on the other hand, why would they drop the price? if people still pay it, they would'nt need worry about dropping it.)

    Having said that, a game the i have really been looking forward to, I'll pick up on release day for whatever the asking price is, so long as it does not exceed $100 (maybe $110 if it's a must have) but i'm sure not going to pay $120 for a game that i can get 20% cheaper in a week or two.

    IMHO EB is not a horrible place to shop, they are obviously a store with a gaming focus, rather then stores such as JB or Harvey Norman, and i do have some brand loyalty, i did by my PS3 with them after all. but that was because they had the best deal at the time. I think it's easy to hate on EB because generally they are a little more costly then some other locations, but generally in a shopping center with 3 major gaming stores (lets say GAME JB and EB) there are good deals and bad to be had at each store, grabbing a catalogue for each, or even having a browse through their selection and price costs nothing but time, and if you are trying to save a little money there really is no harm in it

    @Michael - you raise a very valid point that is often missed in these types of debates, namely that the RRP here is often adhered to many months if not years after the product should be relegated to the bargain bin.

    Call of Duty 4 is a good example. A quick check of EB games shows it is still selling for $99.95, when at current exchange rates you could pick it up for $39.99US (or $52 AUD) from EB's parent company gamestop!

    By and large I think games in Australia are an absolute rip off and until a more reasonable pricing regime is developed I will continue to purchase most of my games via steam, where the cost to the consumer is more reflective of the cost and therefore profit margin of the distributor.

    Choo Choo!
    It's the Steam train.
    These days i pretty much exclusively buy steam discounted games.
    Bioshock for $7USD?
    Assassin's Creed for $10USD?
    Hell yes!
    Plus it's in my steam account so I don't have to worry about "scratch protection" or any of that BS. Tell it to install, get some dinner, Game On!

      Shit, I'd like to live in your easy Steam-loving world.

      Yeah, Steam is great, I saved $25 pre-ordering L4D on it, plus the early access demo. Got TM:UF for US$25 and Uplink for US$10.

      While I love Steam generally, there's still a price discrepancy between US prices and Aus prices. Compare Velvet Assassin, US$49.99 as listed on the website (US price) versus US$59.99 via the steam app (Aus price, but still in US$). Call of Duty 4 was even worse.

      Given that the distribution cost is effectively $0 (at the very least, the difference in distribution cost is ~$0 between US and Aus), we ARE paying more for games via Steam, even if it is generally cheaper than through local retailers.

      (Yes, I too tend to buy them only when discounted.)

    Whenever a new release game comes out, they never really sell for $100, or in the case of ps3 or 360 games 109.95 or 119.95, the most i have paid for a new release game since i have owned a ps3 is $89, you need to shop around, and when you can save yourself $30 dollars why not wait.

    If you shop at kmart, take in the bigw or jbhifi or target catalogue, and they will match the price and beat it by 15% of the difference. so technically you pay $5 less on than the sale price. I have staff discount too so ends up being around $81. Very reasonable price to me.

    i work at Target, we had MGS4 and uncharted on sale for $37, i sold heaps of copies, great price for great games

    What we need is a comparison of an average basket of goods in terms of Australian Dollars vs US Dollars.

    Things like a bottle of coke, a Big Mac, the average price of Banana's etc. as a common currency, to compare the actual living costs of US vs Australia, then multiply that to the US price of a game (after factoring shipping costs) then we will have an accurate measurement of what a game should be worth

    @Karsaroth

    "I doubt there are greater costs involved in building games compared to making films,"

    You'd doubt wrong. These days it can be just as, if not more expensive to make games than movies. Games also take significantly longer than lovies to make. That's generally why licensed movie tie-in games suck so bad. They don't get the time they need to do it properly.

    @Chuloopa

    "Games can be found anywhere for damn good prices.. as said before you can pick up copies of GTA4 for either $110 brand new from eb or game, $78 brand new or $68 second hand at JB, or stick it out at a local pawn shop (cash converters or trad-o-rama) to get it for around the $40 mark."

    Maybe it's just me but I never buy second hand games, no matter who is selling them. With second hand games the profits go straight to the seller, and none to the people that actually worked on the game. I do occasionally buy games from eBay, but only brand new ones.

    Another well-written article with excellent points. This should serve as a reality check for the "we pay too much" crowd.

    I was in the UK a couple of years ago when our dollar was strong against most currencies. I decided I might check out some games and was shocked at the prices when I did the conversion: there I was hoping to get some cheap games, but everything was around $100-$150.

    In March this year I was in Japan, and with the rather poor exchange rate games were roughly the same price as here. Had we enjoyed a better conversion, games might have seemed dirt cheap over there, but this proves one of David's points: we didn't have that rate. Exchange rates change by the minute, it's simply not logical to hold these sorts of comparisons up as evidence.

    There's also variable taxes across nations to consider, as well as average wages as Ayrton Coll pointed out. The only thing that really needs to be considered is are games affordable? Yes, they most certainly are. I don't think there has been a time since I started working as a teenager when I haven't been able to afford to buy games. Of course the regularity of purchases is variable but even a full-priced $99-119 game shouldn't be within the reach of any working Australian, provided they are sensible with finance.

    The main new point I'd like to make (if anyone is still reading) is the length of enjoyment you can get from a game. $90 for a sub-10 hour game seems reasonable, if a little tight. Consider, though, a game like Fallout 3. I got 70+ hours out of that game for around $90. That's astonishingly good value, especially if you compare to the cost of a new release DVD or cinema ticket.

    Of course, games are of wildly varying length and separate entertainment markets cannot be directly compared much more than separate countries' markets can, but I think it's still a pertinent comparison.

    The simple answer is to not buy new releases.

    If you're patient and wait a while you can get the same game for 50 or 60 bucks.

    Gaming has become a secondary hobby for me and Ive made it a rule never to pay more than AUD50 for a new game.

    Good post - the "my games should have dropped overnight because the exchange rate dropped" crowd annoy me no end. Yes, the average RRP of a game in Aus is about $100, but hardly anybody pays that, and (unlike the US especially) there no local or state sales taxes to also take into account in that figure.

    The price of games seems okay to me when I compare it to what I pay for other kinds of entertainment. If I gat an average of 10 hours out of a game (which would definitely be on the low side) and pay $100 (which would be more that I would, it works out at $10/hour. With a cinema ticket costing $15 for two hours, or a Blu-ray costing $25 - $30 for two hours (plus repeated watching), a play costing $20 - $50 for a 2 - 3 hours, then a game looks about in the ball park, price wise.

    Once you factor in games where I get waaaay more than 10 hours out of them, they look cheaper and cheaper - even if you amortise the cost of the console and screen across your games as well.

    video games heaven was great, i try to wait till games are around $50 what gets me is the PC vs console price difference whats the dillio

    The import pricing argument isn't going to go away while sites like cdwow.com.au and 365games.co.uk are significantly cheaper than local stores for exactly the same product.

    With digital distribution:

    I'd like to see a rationalisation of why some games are charged at different rates. The extreme example of this was CoD4 on it's Steam release. It's since been adjusted, but until then it was US$50 in the USA and US$100 in Australia. I can't see any reason for that.

    Then there's the issue that new digital releases are often priced equivalently as their retail counterparts. Surely there should be at least a marginal reduction. I can't accept the argument that the distributors are protecting their retail market - it just seems like they are cutting their own throats either way.

    I blame the publishers for high prices. We won't ever get games for $50 but when it costs $92 to buy a new console (ps3/36) game from Atari (that's cost) it's hard to sell it below $100, especially when your costs included paying people to work.

    I can think of two times in my life I've paid $100 for a game without feeling fleeced. The first was Shenmue on the DC when it launched, and that's one of the best purchases of my life. The other was Halo 2, at an EB midnight launch (which, unlike Chuloopa's experience, was shit-boring), and I got hours out of that game as well.

    Apart from those, I balk at anything over $75 on 360, PS3 and Wii, and anything over $45 on DS and PSP. I also do my best to fully support the Australian games industry and buy games locally - http://www.ecogamer.com/ has great price comparisons within Aus - unless the game isn't going to be released here or is out of print. The times I've looked at how much something is overseas compared to buying it locally, the risk of getting it shipped from wherever it is to Aus isn't worth it when I could stump up the extra $10 - $15 and buy it down the road without having to wait.

    Like a few commentators above, it's pretty rotten to see old games still priced at their RRP a year or more after launch. Those titles are just going to gather dust on store shelves until a sale rolls around. Why not lower the price by $15, shift the stock, and get something new in? Hell, I've even seen a new version of a game (say, it's just gone budget or had new box art) in the same store as the old version, and even though the games are identical, the old one is still priced higher. Not that I'm looking at EB or anything.

    In regards to your comments on exchange rate, international traders don't just trade on current exchange, but take forward coverage on exchange positions when the time is right. So there is a good liklihood of "more swing and less roundabout".

    I guess I am mostly pissed off with the price of Wii games. Not in relation to other countries, but just in general.

    While the development costs of some of the New IP, good quality, PS3 and Xbox360 HD games are probably fairly high and are priced accordingly, the cost of developing a new IP for the Wii, never mind porting a game from the PS2/PSP to the Wii is no doubt a small fraction of those costs.

    I guess all that extra money goes to Nintendo in Licencing fees. And don't get me started on the price of their consoles.

    Please correct me if i am wrong, but wasnt there an article a while back here that bitched about how we were paying twice as much for games here than people do in the US?

    As paulus mentioned above, I have very frequently seen EB selling 2nd hand games at above new prices (or $3 - $5 cheaper, which is still a rort), especially during their "sales". What's worse is that twice i have called them out on this and they just shrug. Also, my local EB (Broadway, Sydney) will not price match JB, as the closest store is too far away. I would love to support a videogames only store such as EB or GAME, but with their lackluster pricing policy, and as gaming gets more mainstream, I can see them dying out pretty soon.

    Also, as somebody mentioned above, support the industry. Don't buy a second hand game if it is only marginally cheaper, as developers see none of the profits. Otherwise we may start seeing "one console only" games where you have to be logged on and confirmed to play. We don't want that do we?

    Cheers, David. I think that probably set a lot of people straight.

    How about having a look at how EB sells second-hand games for more than RRP? I'd like to hear what some publishers and industry reps have to say about that practice.

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