Why Do Videogames Cost So Much In Australia?

Why Do Videogames Cost So Much In Australia?

As a general rule there are three things that Australian video game publishers will not talk about: rumour, speculation and the price of games in the Australian marketplace.

But at the moment the pricing issue is at the top of the list – a topic publishers avoid like the plague. Even those that have the leeway to approach the debate, like Sony’s Michael Ephraim, refuse to be drawn on the specifics.

But as exchange rates continue to trend in Australia’s favour, with the Aussie dollar now above parity compared to its US counterpart, importing from overseas is slowly becoming a more cost effective way of purchasing videogames – and as it becomes more prevalent, local pricing will eventually become an unavoidable issue for Australian publishers. Sooner or later they’ll have to address it, or face the consequences of being forced out of their own market.

Parallel Lines
“This is an interesting issue,” said Dr Mark Melatos, Senior Lecturer at the University of Sydney.

At a loss with the dead silence from video game publishers on the issue, we contacted Mark, a PhD in economics, for comment on the reasons why videogames cost almost twice as much here as they do in the US, despite currency parity.

Mark’s area of expertise is international trade policy and theory, so we figured he might know a thing or two – turns out he does. Apparently the boogie man may be a thing called ‘parallel import restrictions’.

“One of the main reasons things like books, software, and DVDs cost more in Australia than overseas is something called ‘parallel import restrictions’,” claims Mark. “These rules stop someone buying the product cheaply – but legitimately – overseas and importing it themselves to sell locally at a higher price, but still less than what current suppliers charge.”

This may not directly affect the price of games, but when retailers aren’t been given the opportunity to undercut prices via imports, publishers suddenly don’t have the motivation to price competitively. It’s the nature of business – if there’s nothing to stop you from selling a product at a higher price, why sell the product for less?

Competition essentially drives prices – which is why giant retailers like Big W purchasing games in bulk has been good for game prices in general, forcing specialist retailers like EB and Game to drop prices in some cases. But still, compared to the US and Europe there simply isn’t the same level of competition, especially when importing is restricted.

Mark agrees. “There may be less competition in Australia among game sellers than there is overseas,” he claims. “If there are fewer local vendors, they might be able to charge higher prices.”

The Villain Of The Piece
So who’s the villain of the piece? Who is responsible? It can’t be the retailers. Speaking to Mark Langford earlier this month, he revealed that the margins on video games at retail are low, and selling a new game at $79.95 is essentially equivalent to selling at cost price.
Is it the publisher? Well, common sense would suggest that if the retailers aren’t scooping the cream then the distributor must be raking it in from the extra dollars consumers pay in stores.

But during off the record conversations with people in the games industry, we’ve been informed that Australia is far from the highest performing region when it comes to profit.

It begs the question: where is all this money going?

Michael Ephraim is the one industry figure who has been most outspoken regarding the issue, but even he won’t get into specifics.

“From a business perspective, there is a lot of complexity involved,” claims Ephraim, “from very volatile exchange rates, to taxes and duties, distribution and transit costs, marketing and operational costs, size of market and so on. We try to be as comparable as possible within these parameters.”

According to Dr Mark Melatos, there may be veracity to that claim; higher operational costs in Australia may be part of a rolling set of circumstances that result in more expensive videogames.

“The other side of the coin,” begins Mark, “is that local vendors may face higher operational costs – higher wages to staff, and higher business taxes.”

These extra costs may still not be enough to explain the huge disparity in pricing.

“My gut feeling however,” says Mark, “is that these issues are unlikely to explain much of the price difference.”

Taking Stock
None of this really explains anything. Publishers aren’t making money over the odds and neither are retailers, yet the consumer still bears the burden of additional cost.

Another explanation may be in the way that local distributors do business with their overseas counterparts. Australian distributors, particularly when they represent another company (Mindscape, for example, distributes Konami games in Australia and Namco Bandai distributes Bethesda titles), will often buy their stock directly from their partners in overseas territories like Europe. The cost price of that purchase then determines the retail price in Australia.

We put this question to Mark Melatos – do international companies regularly over charge specific territories for stock? And what would be the benefit of doing that?

“There shouldn’t be much difference in the consumer price whether the games publisher sells direct into Australia or via its local subsidiary,” claims Mark. “However, there is a thing called ‘transfer pricing’ which multinationals often engage in to minimise their tax bills.

“For example,” he continues, “imagine Australia has a higher corporate tax rate than the US. Then a US multinational may try to maximise its profit in the US and minimise its Australian profit, thus reducing its overall tax bill.”

It seems very unlikely that this is the reason for the difference in prices – there are a number of tax laws that regulate this kind of trading, and all trading must be within market standards.

Australians Have To Regulate
It turns out that a very real culprit may just be regulation costs.

“Things like how the game is rated can affect the price,” claims Mark. “If a game in Australia must be rated MA15+, whereas overseas it can be sold with a PG rating, then the price is likely to be higher in Australia because the potential market is smaller – a lower rating makes the game available to more potential buyers.”

But then Mark says something that forces us to stifle a chuckle…

“Is the rating regime stricter in Australia?” Mark asks innocently. “Do the same games get rated differently in different markets?”

Yes Mark. Yes they do.

So it could be possible that the manner in which games are rated in Australia, with all the extra costs involved (particularly with more violent games), may be responsible for the increased price of video games sold locally in Australia. Getting games rated in Australia is a substantial expense, particularly if the game is refused classification or requires more attention for whatever reason.

But is it enough to justify the huge increase? Probably not.

The End Game
The final answer, as vague as it sounds, is probably a combination of all of the above, in varying measures – that and the fact that Australian consumers are generally used to paying over the odds for goods in general.

“Australian gamers may be prepared to pay higher prices for the same games than overseas gamers,” speculates Mark. “In ‘economics speak’, Australian gamers may have ‘more inelastic demand’ for overseas titles. That is, Australian gamers may value the same games more highly (and, hence, are prepared to pay more for them) than their counterparts overseas.”

But that is changing, especially as the importing becomes easier, accessible and, more importantly, cheaper as the Aussie dollar goes from strength-to-strength. Australian consumers are starting to question the higher prices we have to pay for certain goods, and they’re voting with their hard-earned cash – overseas. Ironically, the parallel import tax, which exists to protect local retailers, may end up scuppering them in the long term, as they struggle to compete with import prices.

Ultimately the market must adapt – and adjust in order to compete on an even keel. That may result in video games becoming cheaper.

Mark Melatos agrees.

“Of course,” begins Mark. “The competition and parallel imports issue should be less of a problem now that we can buy stuff like software over the internet. Over time this should reduce the price differences.”

Time will tell.

Comments

  • Didn’t parallel importing for CDs get kicked out in the mid nineties? It was supposed to drop the price for them *worked well, no?*.

    Anyway, importing is the way to go, unless you absolutely must play game X at 12.01am on launch day…

    • Yeah, I remember hearing about that. A quick look on Wiki and apparently a variety of goods excepting cars and books had their parallel import restrictions cut away, but the source is down so I can’t verify it…

      Bah. A game being PG in the US and MA in Aus should mean nothing, since the average gamer is dramatically older than 15.

      “We put this question to Mark Melatos – do international companies regularly over charge specific territories for stock? And what would be the benefit of doing that?”

      ^ Yeah, they totally do. Look at Steam’s store. It’s ridiculous how massive the gouging is, there. http://www.steamprices.com/au/. I honestly reckon that THIS is the problem.

      • Jackson the price gouging on steam is done by the publisher and not steam. One of the key reasons that D2D was told not to sell digital to Australian’s was so they could charge the higher price.

        i mean activision must be laughing at the moment if there selling to retailers in Aus for 70 there making 70USD for every copy sold since the dollars so high

        • And, invoking Godwins law, the persecution of the Jews was done by Hitler, not the Nazis who personally shot, gassed, etc them. It was wrong to blame Mengele, Goebbels, Himler et al for Hitlers crimes, they were innocent?

      • Well currently looking at SteamPrices … a lot of parity with US.

        Not with the top 5 rip offs of course, but the specials seem about the same, they seem to be what I normally buy.

    • importing is great, i import most of my titles for my ps3. The only time i buy my games in AUS is when there is a collectors edition that is only available here or I’m expecting DLC for the game.

      I’m not sure if its the same for the 360 as i don’t own one but on ps3 the games are not region locked but unfortunately the DLC is.. so if i want to be able to buy and use DLC from the australian PSN i need a PAL version of the game.

      Importing from the UK counters this though..

      • Setting up a US PSN account isn’t hard to do nor is getting a hold of US PSN card to add funds thanks to Ebay and such. In fact, everyone should make themselves a US PSN account as their store has some stuff we simly don’t have, and probably never will.

    • It really *did* work. CD albums cost ~$30 about fifteen years ago. Today you can walk into a leading retailer and pay $20-$22 for a new album. Once inflation is taken into account, this makes them about half the price they were fifteen years ago. Naturally there have been price pressures on CDs from many fronts, but once these laws were passed, prices dropped by nearly $10 almost immediately.

      I find the prices of games in Australia disgusting and I’m sick to death of Aussies being gorged. I saw Call of Duty Modern Warfare 2 in JB yesterday for *$115*! Whatever happened to our free trade agreement? Even after overheads, including GST, $70 should be the upper limit on the prices of new games in this country.

        • Actually it was more to do with ease of piracy.

          School aged kids with no money learnt how to pirate CDs and download music for free and once they’d learnt how to do it even when they had jobs and money they were unlikely to purchase products they new how to get for free.

          The music industry shot itself in the foot by over pricing the product in the first place. If they’d always been selling CDs for $10 or less piracy may never have grown at the rate it did.

    • Basically parallel importing is legal in Aus. Places like gametraders import all the time and sell their product.
      The publishers and the distributors are a greedy bunch. It shouldnt cost them as much even with the taxes and marketing. I have worked with a publisher and they provide a percentage of their markering budget to the distributors and wholesale department.
      Also I know from sources that some of local distributors buy games straight from the publishers overseas, making a huge markup and selling them to independent game stores such as gametraders at the same price as local distribution.
      Another classic example is gametraders does their own distribution of video games in house but keeping the profits at the corporate level and slugging the shops with a higher price and franchise fees when they sell it, in turn double dipping. Many shops have gone broke because of this. I would have thought with imports, the profitibality of the stores would be strong and we would be seeing them in large numbers compete aginst the likes of EB. Once again greedy corporate level management. No wonder the poor guys carry toys , t-shirts, figures etc to keep their head above water.

    • I spoke to the ACCC about this a couple of weeks back; they advised parallel importing with CDs was sorted out years ago, but that ruling didn’t cover this one – so it’ll have to go to court to get sorted out first.

      They did confirm, however, that the publishers are doing the wrong thing. However they advised the ACCC won’t act on it, someone else will have to take it to court.

      http://forums.steampowered.com/forums/showthread.php?p=18431600#post18431600

      Perhaps the ACCC will limit its involvement to an amicus curiae like they did with mod chippers, but what annoys me is nothing’s been done at all yet.

  • (First of all, the Facebook connect button in the comments section has gone crazy and won’t let me comment; there’s no box even though I’m logged in)

    An interesting article, and you managed to get some intriguing answers (or parts of the answer) even though just about nobody will comment on the true factors behind the price disparity.

    I definitely agree that the price rises probably aren’t in large part the fault of retailers or even publishers (if it’s true that Australia isn’t a very profitable market). Then again, a $50 difference in new console game prices between the US and Australia, given the exchange rates and even taking into account higher transport costs, doesn’t happen out of nowhere.

    One thing I’d question though is Dr Melatos’ claim that video games are an inelastically-demanded good for Australian consumers. I’m not one to argue with an economics professor, but gaming markets are relatively similar for blockbuster titles in Western countries (in terms of the range of titles available) and I’d wonder if it’s necessarily true that Australians would desire certain titles more than our American and European counterparts.

    • I think you’ve misunderstood what inelastic demand is.

      If a good has elastic demand, then if the price drops demand increases, and if the price rises demand drops. If a good has inelastic demand, then the demand stays pretty much constant as the price changes.

      Personally, I think there is some elastic and some inelastic demand in game prices. I wouldn’t be surprised if some AAA games could sustain their first week sales numbers even after adding $10 to the cost. After the initial marketing push, I suspect the demand does increase as the price drops.

      • I am aware of the difference, but thanks for explaining. I was referring to the Professor’s suggestion that the inelasticity was specific to Australia – I don’t doubt that there are differences between games, and that this would vary over time. My main question was how this supposed inelasticity was specific to Australian consumers rather than being a general feature of game buyers the world over. I can’t imagine any reason why Australia would differ significantly (in terms of buyer sentiment) from similar markets overseas.

  • Good theory if you completely ignore the fact some games on Steam have the same price if not higher than retailers here.

    Its not Steams doing, trying to charge you $89 USD for a game its the game companies themselves, and this has become all the more so apparent in the past few months as we’ve come into parity with the USD.

    The true gamers know all the legal avenues to acquire games for what our fellow US counterparts pay, with better parity and more stores and better trade, there’s less strangle hold on the average gamer by the bricks and mortar stores than there used to be.

    Now its only a matter of time before some of these stores start crying foul and start pushing for better “trade” legislation

    • I did here some talk that the higher online prices were from australian stores demanding them from the publishers, though I don’t know how much sway they’d have if we’re reguarded as a smaller market.

      And retailers have already started appealing for inport taxes on games, there should be an article somewhere on Kotaku.

  • Ok… so lets try and understand why a game on Steam is North America costs 49.99 US ( Fallout Vegas is a prime example, Civ V is another ) but 89.99 from here in Australia. They don’t pay any duty/taxes or anything of the sort?!?! As a great Aussie Poli once said: PLEASE EXPLAIN?

    • Partly because publishers are protecting local retailers from the onslaught of Steam and other digital distributors.

      While I’m sympathetic to retailers, it’s not a sustainable business model over the longer term.

      • Publishers are/have-been “protecting” Australian retailers? Why would they favour specifically Australian retailers?

        • Because publishers also want to sell their games through large physical retailers.

          If they allow Steam to undercut Australian retailers too much, the retailers won’t bother to stock the game, and all non-Steam purchases will cease. The publishers feel it’s better to require Steam to charge more (increasing profits) than to take the risk of limiting the market to download sales only.

  • we’ll im just going to keep importing from the uk, its a bit of a pain waiting 1-3 weeks for shipment but saving of around $30 a game is worth it in the long run.

  • Oh, also. To all people who buy from Target, K-Mart, etc, or ask specialist retailers to price match them:

    “It’s the nature of business – if there’s nothing to stop you from selling a product at a higher price, why sell the product for less?”

    When EB and GAME are out of business, and JB can’t afford to keep selling games, how much do you think they’ll be? $150? $200?

    • I think you’re being a wee bit melodramatic there mate.

      Games will never reach that price because people simply won’t pay that amount unless they have stupid amounts of disposable income, meaning the remaining retailers wouldn’t be passing through stock as quickly as they need to, which would mean a net loss for them across the board.

      If EB, JB and GAME all became defunct, at the worst it would mean that the big sellers would be more incluned to sell at the $100-$110 mark that they do for some titles once their release hype has calmed.

      • Console games used to cost 60 bucks, it was a joke if someone suggested they be priced in triple figures but now its the standard.

        $200 is an alarmist figure BUT the super duper special editions of games have sold at that price so I don’t doubt that the publishers/retailers/’cabal of evil price gouging monsters who specifically pick on australia’ will look upon this as a possibility to start jacking the price up just a little more. $115 for the latest COD is a good example of that

    • So I’m to understand that you would rather me pay more to keep them in business than pay less and benefit myself. Sorry, I’m not on the board or an investor, there is no benefit in me paying more, so if they wish to compete they need to comply with what the consumer wants.

    • Certain publishers such as THQ say to Steam “well hold on, we want to make more money off of Australians, so jack up the price for them”, and Steam have no choice but to comply.

      They might argue that “oh it’s because we want to be fair to the retailers” but that’s just bullshit, because digital distribution should not cost 150% different between countries.

      • Actually, to be fair to THQ, the steam price of Dead Rising 2 remained the same even when the game went to retail.

        • Pretty sure DR2 is a Capcom game and Capcom don’t seem to be up for the rampant price gouging like the others 2K and Activision lead the way there with DR2 priced at $39.99.

          • Well, I would imagine it would be a two way thing, since THQ has to sell the game to retailers here – a higher Steam price would make it easier to convince brick and mortar retailers to stock PC units of the game.

          • Yep sorry thats what I ment but I couldn’t correct it once I hit submit..

            Do THQ have a hand in the steam distibution or on the the box copy because it seams all of the capcom titles on steam are quite well priced.

      • US$89.99 for Call of Duty: Black Ops on Steam. ‘Stuff that’ I said, and picked it up for US$44.96 off of Direct2Drive. I just waited for Direct2Drive to give me the ‘CD-key’ for the game which I activated in Steam and let it download the game through there. So just how on earth did the publisher setting such a high price for us Aussies save the retailers there?

    • The reason Steam has similar pricing at times is purely to protect the retail relationship. Retailers will be much less inclined to buy PC versions of games if they know their customers can get the game on steam for 2/3s of the price. They know a lot less customers will buy the retail version if the steam version is much cheaper.

      • To be honest I couldn’t care less if places like EB stopped selling PC games if that means I can have it for the same price on steam as what US steam users pay for it for.

        Have you seen the crap they stock for the PC in those stores anyway most of the time is old over priced rubish.

        The first game I have actually purchased a disc copy of in years was starcraft 2 and well that because I couldnt get it off steam.

  • So the the answer to lower prices in retail is Internet downloads – which will drive the price down over time? Someone please tell that to Steam and D2D. 😛

    I’m guessing that’s a long term trend.

    • Steam and D2D are being forced by the publishers to charge the higher price.

      Steam and D2D would want to sell at a lower price, so that they get more of the Retail market. They don’t care if it is an Aussie, Yank or Uzbekistani who buys the game from them. But they do care when the Publisher say “You will not sell to these guys, or you will set the price to this. Otherwise we will stop letting you sell our games”.

      Some Publishers are using their grunt to maintain ridculous prices.

  • I sure as heck rarely buy my games here anymore. Hopefully as the trend keeps leaning towards importing, someone will be forced to make a move lest they watch the whole games market down here crumble.

  • And of course, publishers take advantage of these reasons to jack our Steam prices up. Only reason I buy any of my games at EB these days is because a friend works there.

    -_-

  • Please stop using the phrase “at the end of the day.” It’s an AWFUL, way overused cliche, and you used it TWICE within the space of about 2 sentences.

    It just sounds very unprofessional to use it. Just a bit of hopefully helpful constructive criticism.

      • You expose your youth when surprised at paying $100+ for SNES and N64 games.

        I bought my first PS2 after its first major price drop in 2001(ish?)- to 400 DOLLARS! I have bought 2 copies- and had another bought for me- of Silent Hill 3 all at $100+ retail.

        Today we have the cheapest prices for 15 odd years… in actual terms of dollar to dollar comparison, not even adjusted ‘real terms’. But we have also had the games boom, where a big game sells 5+ million as opposed to 10% of that.

        Also, no-one makes mention of the fact that The Lucky Country has 2nd highest standard of living- meaning more cashed up bogans to blow on games games games as well as Bundy and Jaeger and Vortex for their Commodores. Notice anything else we price-bitch about? This is the perfect demonstration of inelastic demand. Oh lets not forget Huggies and Winfields.

        • Here’s the thing – I’m 34 – I even had an SNES straight outta high school – but I don’t remember paying $150 for All Stars! (Having said that the games were expensive because I rented way more SNES games than I bought)

          You don’t have to tell me about the cost of N64 games – they were routinely $100 with no discounting, I’m amazed I bought so many back in the day

      • Those were the bad old days, before major retail stores sold games early 90’s. I used to buy import and Aussie games out of a dudes garage! he had the whole thing set up with racks and everything. kids lined up on the road with bikes all over the place. I would ride my BMX there just to see what other kids bought. every now and then I would trade in an old game for 70 bucks, yeah he would give you you that much and then get a new one. Games would regularly be 100+ I remember saving like a mother fucker and getting sonic 3 and jungle strike in one hit, Kids lost their shit. good times, how shit’s changed.

  • What’s with the people asking “what’s with Steam?”? Seriously, that’s been covered a billion times. The local publishers set the price, and they don’t want to undercut the local retail stores, because then the retail stores would be pissed and not sell games from that publisher. We’ve discussed it ad nauseam, most recently in the Fallout:NV article comments…

    “Getting games rated in Australia is a substantial expense”

    Is it? Because I’ve heard from a friend in the industry that the price for reviewing DVDs is $700 for a 1 to 2 hour film. Surely it’s not outrageously over that…

  • Bring on the revolution – I’ve started to buy from the net and I’ll happily tell anyone who’ll listen that it’s the way to go.

    Interestingly parallel importing of CDs was finally allowed in 1998 (supported by Lib opposed by Labor and the US govt for the record) a legislative process started in 1990 after it was discovered that Australian were paying $12 more for new release CD’s than US consumers (even when taking into account exchange rates) by the time the government had deregulated that market everyone was probably ripping music off Kazaa or something anyway!

    I’m sure there’s a lesson in there somewhere for Games distributors

  • Thanks a lot for doing this article Mark! =D This is the first time I’ve seen anyone properly try to look into the issue and present actual possibilities which affect our prices.

  • Well, thanks for finally covering the issue in a tad more depth.
    If the publishers were being hard done by, we’d be hearing feel good stories about how they’re fighting the good fight for us in this country. Instead, we’re being fed obfuscation and obviously empty market-speak.
    What do we have to do? Get Consumer Affairs involved? Do they even have any power here? Publishers will only answer if there’s greater publicity, so maybe another petition or letters to newspapers and publications like Choice.
    Maybe slip an A Current Affair reporter $50 and let them run with it..

  • Since I recently got a decent paying job with little debts, I’ve bought nearly 40 games in about 3 months and played none of them due to finishing university. I bought 8 of them in Australia, the rest either Steam or eBay.

    Waiting a week or so for a game can be annoying, but I’m not going to be held ransom when I don’t have to. Viva la internets.

  • I’m looking at importing and buying online more and more now; when the US pays $60 for a game, and we pay $90+ in today’s market, something is very wrong. Might’ve made sense when we were 0.7x:1, but most certainly not now.

    Wait 1-2 weeks for shipping or save potentially $30 or more? I know which one I’m taking.

  • While it’s certainly ridiculous the Australians were charged around $90 for Fallout New Vegas and Civilization V, on the retail side of things, there’s a much bigger issue: income.

    Let’s say you’re on the minimum wage in one of 31 American states – yes, more than half – in which the minimum wage is $7.25.

    http://en.wikipedia.org/wiki/List_of_U.S._minimum_wages

    And say you want to buy a copy of Black Ops, new, from EB Games – it’ll cost you $60US.

    http://www.ebgames.com/

    You’ll have to work just over 8 and a quarter hours to afford that.

    Now say you’re an Australian and you earn the minimum wage of $15 an hour.

    http://www.abc.net.au/news/stories/2010/06/03/2917094.htm

    And you want to buy a copy of Black Ops from EB here. It’s gonna cost you $118. That’s less than 8 hours of work.

    I know it’s not as clear cut and not everyone earns the minimum wage – average wage statistics are harder to find – and I know it’s also not an argument against us importing, but when you take into account wages and living standards, it’s not as clear cut as it may seem, and we’re not as bad off as you may think.

    • I brought that up with my mate the other day when I was commenting on how awesome it is to import from the UK websites ie, zavvi, dvd.co.uk, ozgameshop. Partly because their prices are cheap for us, whereas for those living in the UK, maybe those prices may seem a bit too pricey for them?
      I don’t know. I’m not aware of how much the average person earns in the UK. or the US.

    • It’s an interesting point you make, and I’m sure certainly true to some extent, but I think it’s also more expensive to live here than the US – definitely Sydney, which I recall from earlier this year was about 8-10% more expensive than New York.

      As you point out, it’s not clear cut and it probably is a factor, but I really wouldn’t want them using something like this as an excuse – exchange rates should already be reflective of a regional economy and market.

    • lol, you sir stole my argument!!! :p

      I’ve posted something like that here a few times… glad there is someone else that sees the merit of it

      • Someone earning the US minimum wage is on the poverty line there, and would be concerned with finding something to eat rather than play videogames. The US having a fucked up minimum wage means the US has a fucked up minimum wage. It doesn’t at all justify ridiculous prices here.

  • Good article Boris, and I feel like I’m not the only one who’s more irritated by having the process (seemingly) become more transparent… yet nothing becomes clearer at all.

    Someone’s making a killing off us, and they’re going to suffer in the end as people look to external sources – they don’t owe us ‘loyalty’ by any means, but I tend to think it’s in their best interests to be part of a fairer pricing scheme.

    …actually, a group of faceless videogame journalists who require a constant source of attenion grabbing news are probably responsible. 😛

  • Would have been nice to follow the money trail a bit more.

    Considering Sony even have a blu-ray production line in NSW. Surely freightage cant be that expensive from NSW to the rest of the Capital cities ? Why is it still cheaper to import the same region games from UK ?

    As for Steam vs Retailers, technically its called price fixing, when the manufacturer tells resellers to stick within a certain price. No matter whether its a bricks and mortar store or webstore. As far as ACCC is concerned they will eventually go the local branch of the multinational.

  • I feel a little bad for retailers, but if game companies want to keep setting the higher prices for Australia, it’s really the big wigs in these companies that are making the local industry hurt the most. I got Fallout New Vegas for $40 delivered (free shipping) from ozgameshop in the UK

    On steam it’s still $90US plus credit card exchange rate fee. Same for EB games. Crazy! Why would I pay $50 more? More will cotton on and consumers vote best with their wallets. That can have bad consequences for our local retailers.

    I really hope for their sakes the games companies can find a way to bridge the gap. I for one would buy more games if they weren’t so damn expensive here.

  • Heh. I just filled in a survey on one of those paid survey sites about the price of games (mainly), so it looks like someone (im taking a guess at activision, since EVERY example was from them) wants peoples opinions on the current pricing of games.

    Unfortunately I feel that nothing is going to get done about it, because there will always be the people willing to pay however much for them. More power to us though! I’ll keep on importing 🙂

  • No one has brought up taxes. We pay a 10% tax on nearly everything, and that is included in the price.
    Americans pay different taxes depending on what state they are in, and it isn’t included in the price.

    So our AU$100 game is actually ~US$91 plus tax, which is another big step towards explaining price differences.

    • I guess EBgames aren’t content with making $91 minus tax so they jack up the retail price to $119.95 so that they can keep ~$108 of the sale.

      • That’s ignorant, mate. EBGames, selling a game for $100, is probably making about $30. Tops. Compare with anywhere which sells books. They sell a book for $30, make something like $25, iirc. There’s no money in games compared to clothes, books, and other cheap-to-produce things.

        • I didn’t say how much profit they were making, I pointed out how much of the sale they receive minus tax. Thought that was fairly obvious.

        • You’re actually wrong on this. Working in the publishing industry myself, I can tell you than a store selling books will typically only be making 30% of what they’re selling the book for, even the larger chains.

  • It doesn’t take a background in economics to figure this one out. The reason games (and just about everything else) are so hopelessly expensive is because of the isolation of the Aussie market. I lived in Switzerland and Japan before moving here last year (both are among the statistical most expensive countries in the world for consumer products) but as far as I have seen, absolutely everything including food, clothing, electronics, housing, and ofc games are far more expensive here than anywhere else. Coming from outside the country, it was immediately apparent that just about everyone who has access to the outside world is corrupt as sin and exploitation goes unchecked. Its simply a geographical matter, and naturally while domestic retailers are charging several times any given products value, services such as steam will match.

  • Great article, thanks! I think that everything really revolves around the ending idea: we’ve already talked with our money, telling them that we’re more than happy to pay more for these products. As long as demand is high, prices needn’t to go down, in fact they’re likely to be raised until it affects the demand for a bigger amount than the bonus gain.

    In other words, let us make our money sing a different rhyme by importing! Having said that, could you veteran importers here hand down some tips and tricks to better do so?

  • Gotta laugh at the people that imported Medal of Honor day 1… I returned mine to EB and pre-ordered Fable 3. So glad, I’m still playing Fable 3.

  • So the TL;DR on this is that it’s bad, it’s because of a bunch of bullshit reasons, it isn’t likely to change, and it IS likely to kill video game retail in Australia, because everyone with a credit card will be importing/buying off steam in the near future.

    Good riddance. I’ve been fucked around too long by ‘specialist’ retailers like EB and Game, who actually know very little about the games they sell, and try to tell me otherwise.

  • Parallel import restrictions aren’t about keeping retailers afloat. If a retailer could source stock cheaper then they would do so – higher potential margins for them, plus at a lower price they’d likely see somewhat more demand. The laws are in place to protect publishers and distributors. The idea is that locally produced material should be given an edge in the market over foreign stuff, keep the jobs in Australia etc. The idea is that locally produced material should be cheaper. Problem is that the country doesn’t actually produce enough of the stuff to satisfy demand and so much of our popular culture is driven by overseas media that there just isn’t the actual demand for local stuff, except maybe for music. But music hasn’t had these restrictions for a while now. 😐

  • They charge that much because they think they can. They think Australians are used to paying that price, so they charge that price. They would charge 100 dollars or 200 dollars a game if they thought they could get away with it.

    There’s nothing immoral about that – they’re business folk, and business folk charge as much as they think they can, and that’s what a good business person does, if they want to make a lot of money.

    I don’t have a problem with them charging me 80 dollars for a game. What I have a problem with is with retailers trying to pressure the government into increasing the tariff on imported games so they can keep the price artificially high.

  • this higher pricing should only affect physical copies of games which require all the expenses mentioned above.

    digitally distributed games however piss me off so much.

    a $10US PSN/XBLA game costs ~$16AU here. I pay for my own internet bandwidth to download these games yet I have to pay so much more compared to americans – and really, there is no way to get competative pricing on these kinds of games.

    its all just [email protected]#$ed up in the end.

  • Absolutely fantastic work, Mark.

    Although, i feel like it’s al lstuff we’ve been told before. It seems as though when it comes to asking why we pay so much, we’re still being given the run around.

    None of this is your doing, of course, but rather the people who remain tight lipped about the whole thing. Understandably, as people would probably start losing their jobs when they proclaim that it’s because ‘we need to fill Kotick’s money pool and then start work on his marital aids made from $100 notes coated in platinum high-class hooker-spit.’

    Unfortunately, getting hung up on price isn’t really going to help Australian consumers get anywhere and will only lead to more frustration. The best way to combat the isssue, in my mind, is to no pay the horrific prices some games are charged at. Alas, some people are just too impatient or ignorant (see parents) and will pay whatever price people tell them too, and possibly hock any children they may have…

    Also, everyone who is concerned about stores like EB and Game going out of business and causing the price of games to rise, i have one simple solution. Buy only pre-owned games from these people. You’ll save a couple of dollars and maximise the profits they receive. The downside is that the publishes don’t see a cent of this money so you may be putting them at risk, meaning that you may not see certain titles get released as it may not be seen as ‘profitable’ or ‘worth it’.

  • Parallel import laws aren’t there to protect retailers, they are there to protect local distributors. Recently the book industry has been campaigning to get these laws relaxed fro book imports as they can’t compete with the likes of Amazon or Book Depository. The government needs to take a good look at these laws, they are from a different time and no longer have the intended effect. Instead of protecting the local economy they are driving consumer purchases to direct overseas sources, harming retailers and distributors in the process.

    • I think this should be clarified to be that its the book retailers that are campaigning for it (and with good reason), but it’s a bad thing for Australian Publishers who’ve purchased the rights to locally publish titles (but then I’m biased!).

      • But is that a business worth protecting? The vast majority of books you find over here are identical to the UK editions, right down to having the RRP listed in Pounds on the back. It isn’t like they’re printing special Australian editions of the books.

        If these approved importers are the only people who benefit from the parallel import restrictions, then perhaps the import restrictions should go.

  • We even get shafted on xbox points in oz. With current parity in the states they get 4000 points compared to 3000 in aus!

    there’s just no sense in it….

  • Everyone should start importing everything it will save them a lot of cash. The publishers will drop their prices eventually if sales suddenly drop. Since they don’t want to be responsible for killing the Australian games retailers with their price gouging.

    I love how the guy from Sony makes all these excuses about why prices are high. Fact of the matter is the publishers are gouging and that’s all their is to it.

  • just read this on wikipedia:
    “In 2000 the Australian Government resolved to remove parallel import restrictions from a range of products except cars, and followed this up with legislation making it legal to source music and software CDs from overseas and import them into Australia. An Australian Productivity Commission report recommended in July 2009 that legislation be extended to legalise the parallel importing of books, with three years notice for publishers.”

    • Yeah, that legislation on parallel import of books has a lot of Australian book publishers pretty worried about what the market is going to do. I think they also campaigned against as much as they can too(seems like it was announced much more recently than July last year to me!)

  • Working at a small Australian book publisher, the Parallel import restrictions were a big thing earlier in the year, with the government proposing to reduce the ‘lock out’ period on imports.

    Some of our titles are books to which we’ve bought the rights to publish locally in Australia, now if these parallel import restrictions were reduced, the timeframe with which we have local ‘exclusivity’, so to speak, to make a profit on those book rights would be greatly limited before cheaper imports can be brought in (essentially the same title, but maybe published for cheaper or lower quality overseas by a different publisher). Same goes for if we sell rights for one of our titles to an overseas publisher, that produces a cheap version of it, which is then imported back into Australia to compete with our own version.

    Long story short, the Parallel Import Restrictions definitely keeps local prices higher by reducing pricing competition. Problem is that I’m stuck with hating local game prices because of it, but then having it help support my employer!

    Personally I think that higher operational costs in AU have a large part to do with it. It may not be feasible to charge the same amount as an overseas company that has a lower operational cost. It could send you broke (this is where the Parallel Import Restrictions help)

  • The biggest thing that screams foul to me is that digital distribution prices are marked up for Australia – drastically. New games across steam are also double – we can count out employee, shipping, distribution costs and higher operational costs.

    For example – go to adobe’s store, approx 2.5k usd if you buy in america, 4 grand down here.

  • I am really surprised no one has mentioned the Big Mac index.

    Essentially, the same product should cost the same everywhere. The minimum wage in the USA is $7.25 (US), so a $60 game would take about 8 hours 20 minutes to earn. (Wikipedia)

    The minimum wage in Australia is $15/hour (for an adult, before scaling for age, which I personally think is ridiculous). For the same amount of time it would take an American to earn enough for the $60 game, an Australian earns $124. (http://www.abc.net.au/news/stories/2010/06/03/2917094.htm)

    I agree in that there is a market failure, but I’m not sure we should be complaining as much.(Unless the publishers take extreme profits)

    • It’s a good start but you ignore some key factors. Income and sales taxes particularly. You also might be better taking the average or median wage, rather than minimum.

  • Interesting comments, but I fail to understand how does raising the prices in Australia help cull all of that where as making the same affordably cheap in the East Asian countries around it? So I am supposed to get games, etc from these online stores, further hampering the local retailers.

    As I see it the money is always siphoned out of Australia, either to the Western Countries to pay for their overheads or slightly cheaper to the East Asian countries to cover their overheads.

    The other problem that I personally see is the absence of MRP, Economists that subscribe to the fact that the markets shall achieve equilibrium, etc, please that is all [email protected]… There should be MRP so that there is no overcharging, however that gives the retailers the option to have specials and sell at a lower cost, benefit to the consumers.

    Show me one consumer that is UNHAPPY to pay a fixed price for Coke, for example as compared to any amount as deemed appropriate by the establishment higher than the fixed price?

    Currently the major markets in Australia are Exports and Tourism, internally it is Trading. There is hardly any manufacturing, so if the internal economy lies on trading this should be scaffolded to provide it the support and ensure that it does not go turtle.

    As for the American Companies that charge us the Aussie Tax, like Apple, iTunes was 1.19 AUD = 0.99 USD, now that the AUD has got parity, they need to instantly revise that, I cannot see someone buying the apps from there and selling on other stores.

    THere can be several theories and hypothesis’ that economists or professors can come up with, the bottom line of all that is neither of those but just PLAIN GREED, like the Australian Banks, that have moved from serving the community to Looting the community.

    ta,

    J

  • It would be so much easier if no one paid for anything.

    Also if we were ruled by monkeys who forced us to compete in gladiatorial tournaments for their bloodthirsty simian amusement.

  • Australian wage rates are around 2-3 times higher than the US and UK , thus the people making the games , people distributing them , publishing them and retailing them cost more to employ so the unit price has to therefore be higher.

    Its not rocket science.

  • Sorry if this point has been posted before but it is obviously a HOT topic and I have found too many responses to read thorough. My point is; I have been looking at the history of the value of the Australian dollar against the green back since March 2006 (when the Xbox 360 launched in Australia). It was worth 72.65 US cents then and excepting in early 2009 when it dropped to its lowest value (64.83 US cents) for the period of March 2006 till now, the dollar has constantly risen. I remember when the console launched the game prices were the same as today. Even through the dreaded GFC. We have had a rise in the value of our dollar since then of roughly 27.35 US cents (working on parity between the currancies). Are you trying to tell me that since early 2006, when the games were the same price to the Australian consumer as they are today, that they didn’t have all of these “costs” such as rating games and such? Our Dollar has risen over 25% in value against the US dollar over this period. Does this mean that they want us to believe that they are not price gouging the Australian games buying public??? I don’t think so. It’s sheer greed.

    It’s interesting to note as an asside, I was looking at the games on demand on XBL Marketplace the other day. Microsoft is somehow expecting to sell Splinter Cell Conviction for $109.95!!

  • An interesting article but I feel the part about game classification is quite off the mark and shows a basic lack of understanding.

    Overall, you’ll be hard pressed to find a more lenient game classification system than Australia.

    Let’s ignore banned titles for a moment (there aren’t many anyway).

    In the overwhelming majority, games that are meant for adults and rated M17+ (US ESRB) or 18 (UK) are only MA15+ here.

    The lack of an R rating in this country has actually meant MORE people can get access to those games in Australia, not less. Is that a good thing? Probably not, but that’s a different discussion.

    Also, how many PG rated games (in other countries) are given an MA here??? Off the top of my head I can’t even think of one.

  • Though I live in the UK, I’m actually off to Australia on holiday next week to visit my family and I’m getting them Christmas presents early.

    My nephew out there recently bought Kingdom Hearts on the DS. He normally pirates all his games to save money but apparently they couldn’t find a good version of it on the net. He forked out $50 for it.

    His mother was quite surprised when I told her I saw it on the play.com sale recently for £10.

    Needless to say, his PS2 Kingdom Hearts (that should be arriving today) is a UK one that cost probably a lot less than the Aussie version.

  • If you think only Australia has this problem, you don’t know Brazil…this country has the highest tax in the world. If you had been living here, you would realize that a game here costs almost 3 times more than EUA! Sad… =(

  • Parallel importation of software is quite legal. The real question is: why don’t more retailers take advantage of it?

  • I’m sick of high prices on games too. I’ve come across http://www.ozgameshop.com recently (its based in the UK) where I picked up Civ5 for $39AUD!! (it turns out to the be the US Steam version on DVD, and I linked up without a problem to my Steam account)
    When I saw the absolutely ridiculous price of $79USD on Steam, I started looking around and came across that UK site. $39AUD was an appropriate middle finger to the 2K for their blatant price gouge.
    And I don’t buy the argument that they do it to protect their relationship with physical shops. The internet is not that great in Australia. A game can take anywhere from 3 hours to 12 hours to fully download because of crappy internet (meaning, it is not an almost instant “get”), and I don’t think there are enough gamers out there with excellent net connections to do any “damage” to physical shop sales with Steam (or other download services).
    Perhaps when almost everyone has 25Mbps or higher (thanks to NBN), then the argument of digital versions competing with physical box versions, would be much more valid.

  • Even when buying online (without receiving a hard copy) Aussies are getting ripped off. Take Call of Duty – Black Ops for example – $90US to an Aussie but $60US to Americans.

    They’re not importing to Australia, they don’t have a call center to pay for and I can bet they don’t pay GST. In this case it’s not even feasible to claim crap excuses like import costs, staff costs, or a smaller market. It’s profiteering plain and simple, and I laugh every time publishers cry about piracy. Sucked in, fellas.

  • I believe this is merely indicative of a much more pervasive cultural problem in Australia – Australians in general expect to make a million bucks tomorrow on a single sale, with as little effort as possible. If there’s an ‘Australian Dream’ it’s being a millionaire, usually overnight. You want a new sink installed? Sure, that’s $500 for a two hour job. You need your car serviced? No problem, for $800. You need a new ceiling light installed? Sure, if you wait a month I can do that for the bargain price of a grand!

    When it comes to products, every single step of the chain wants to make a killing on every sale. Ingram Micro were a large game distributor several years ago (no idea on whether this has changed) and the markup from their wholesale prices to retail was typically 30%. That’s ludicrously high, and it’s why electronic stores such as Cheap Games Australia (no affiliation) have done so well – they’re charging close to a 5% markup, because they’re not greedy [email protected]#!$, but it’s adequate to make a good profit with a low overhead business and customers are still buying from somewhere reputable that is inside the Australian channel.

    So if you want the prices of games and other goods in Australia to come down, we need a cultural shift away from everyone trying to [email protected]#% everyone else for the own short-term gain. Either that, or some pretty substantial changes in anticompetitive and anticorruption law, but given how damaging that will be to the personal interests of politicians in this country, that’s not going to be high on anyone’s agenda.

  • I don’t think I’ve bought a game locally this year. I buy all my region-encoded games from the UK, and all region-free games from whomever in America/Asia/Europe can give me the cheapest price online.

    I think Aussie game distributors are in for a rude shock in the next few years/months if the Aussie dollar stays so strong (or conversely, the US dollar and Euro so weak).

  • prime example of price gouging is eb games ( suprise suprise ) went into there on Thursday to grab nba jam after i had walked the 50 metres from big w to buy gran turismo 5 for $78, looked at the eb games price which was $119 how in the name of hell can they justify a $40+ increase in price for the same freaking thing, im just glad of the big stores like big w etc that sell the games at a reasonable price unlike those price gouging a’holes at places like eb games.

  • Great article, but to be honest I think all the focus on economics has narrowed our view to the point that I think we’re overlooking a bigger, simpler and, I think, a far more logical reason:

    They are just greedy bastards screwing us for as much money as possible.

    amirite?

  • I guess not as many Aussies as I thought have moved over to NTSC Consoles..

    I made the change this Gen and haven’t looked back.

  • I disagree with this article. There aren’t 10,000 reasons why games cost so much here.

    Fact is, games have been expensive here for a long time, the consumer is used to it, thus, we haven’t questioned it. So, the retailers are happy to keep charging their amounts.

    However, with the AUD and USD getting even, we’re seeing through the internet that we’ve been getting ripped off.

    So now we have Steam charging $89.99USD for New Vegas, only for Australians.

  • OH! So no one is sure?

    Great, screw you Australian retailers, I have been, and will continue to import.

    Sort your shit out or expect more of us to jump ship. Theres no good reason for these prices, and then they wonder why people pirate.

    Why shouldnt we? When the rest of the world gets a better, uncensored product, for sometimes 1/3 the price.

    NOT GOOD ENOUGH.

  • interesting article. really wish the prices were lower.

    haha i had Melatos as my lecturer…if only he talked more about games..however it is related…i wouldve paid more attention and do well in that unit. xP

  • I saved $56 on Fallout New Vegas (EB price $89)since it was only $33 with free postage from UK outfit Ozgameshop.com Btw, I used a pre-paid visa gift card which charges 3.5 % currency conversion, but Ozgameshop price in aussie dollars so i dodged that fee. 🙂

  • Hopefully our website (www.vgprices.com) can guide you all in the right direction in regard to the best prices.

    We have many prices listed from Oz Game Shop, aswell as CD Wow. They are also UK based.

    Another place to that has cheap online prices is Play Asia.

    Also, there is going to be a new tax (apparently) coming into effect soon, which may increase international online prices, because retailers are worried about losing sales to online stores.

  • So the obvious solution is to rent a vpn in both UK and USA (some services will offer many exit nodes for a yearly subscription), VPN in, purchase the game in that countries money at the discounted rate and then proceed to download it. While your there be sure to checkout Hulu and Pandora, another thing they seem unwilling to share with us Aussies, its discrimination based on your IP!

  • Games cost more in Australia because we’re a smaller country then the US or UK. Because of that advertising and distribution costs would be higher so they have to charge more?

  • As of the 25th of April 2011 the price of Fallout: Las Vegas at gamestop.com in the U.S is $19.99 USD. The price at it’s Australian counterpart, EBgames.com, is $88.00 AUD.

    Combined with the fact that the AUD is stronger than the USD atm it would be cheaper to buy it in the U.S somewhere willing to post it to you and have it mailed as the combined cost of game and postage to the other side of the world is cheaper than what every aussie retailer is asking for.

    Where is the justice in that? If this continues more and more aussies are going to turn to illegal downloading both because the games cost approx 1/5 of the average weekly wage per game and because people will get tired of feeling like they are getting singled out for over pricing.

  • Found this kotaku post after googling the recent hike in prices on Steam for AU games and found amusing the posit regarding local game prices decreasing to compete with importing overseas, but the largest online games digital distribution system has shown a trend of simply doubling their prices to AU consumers. What a laugh! I smell massive collusion between AU distributors and overseas publishers. It would be nice if we could actually find out what is going on, so far folks can only speculate.

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