The Australian Games Industry's Biggest Challenge? Retail And The Price Of Games

We're currently attending the first Game-Tech conference, a conference geared toward discussing the issues that affect the Australian Games Industry specifically. In a cross discussion, Sony's Michael Ephraim and Managing Director of Ubisoft Ed Fong were both asked about the challenges facing the Australian Games Industry today. The answer? Retail and the price of games specifically.

"I’m going to stick my neck out here and say that I think retail is a challenge," began Ed Fong. "There’s an opportunity for us to work better with them. We’ve seen the opportunity that this market represents and I think we need to stand side by side instead of going head to head.

"I’m not saying we have to hold hands and sing by the campfire, but there are instances where we can work well togetherand I know for a fact that there are retailers out there that want to embrace co-operation in the marketplace and I’d like to see that continue."

Following on from that point, Michael Ephraim, Managing Director of Sony Computer Entertainment Australia, discussed the issue of local pricing.

"The exchange rate is a real issue as well," he said. "Most people are talking about pricing which is a very contentious issue, but it’s not something we can control locally because we live in a country at least three quarters the size of America with a tenth of the population - so the cost of the business is high. There are challenges with digital and how we work with retail."

It's an interesting issue - we've just finished an extensive interview with Ubisoft's Ed Fong regarding the issue, which we'll post tomorrow. As Michael Ephraim stated, game pricing is a contentious issue, but with more and more gamers increasingly sending their dollars overseas, it's an issue that will ultimately have to be addressed.

Look for more discussion on this issue over the coming days.

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Comments

    The same tired old crap about Australia's small population and density. Simple fact if I can personally import something and get it cheaper then something is wrong with the system. As consumers get increasingly price aware and tech savvy then importing will only increase and hopefully the days of Australian price gouging will come to an end.

      Not to mention that the 'Cash Economy' is coming to an end.

      Thats a good point. If you game me the companies credit card and asked me to do their importing for their retail chain, I'd buy everything from ozgame, get free shipping. I'd likely be able to negotiate a better wholesale rate for bulk orders and then apply a decent mark up and would come in under their retils prices today.

      How about this. Allow every store manager to manage their own supply. Each of them would be able to source the most competitive wholesale then charge what they want. Im sure they'd make much more profit than what they are now.???

      Just a rant that may have flaws but Im working and TAY is not slowing down long enough for me to think this through. lol.

        You are forgetting that importing goods of more than $1000 value (something) requires a tax which would probably bring it up a whole lot. Like a LOT.

          You're referring to the GST threshold, that's +10%. That would make a $50 import game $55, not $110 that you regularly see in EB/GAME.

          There are undoubtedly other costs involved too of course.

          That is not the issue. Parallel import laws prevent Australian companies from sourcing goods from overseas to sell at a cheaper price. You have to go via the official distributor or you are breaking the law.

          What is hilarious about this is that it's supposed to protect industry but it creates a situation where distributors have a monopoly and can charge what they damn well please and do....

          So you have distributors chargeing wholesale rates to australian buisness that cost more per unit than the full retail price overseas because they can. We are seeing the business go overseas anyway as individuals just import the good themselves while local retailers see zero of that money.

            This is untrue. Parallel Import laws specifically *allow* buying of goods overseas to sell in Australia despite official distribution agreements. See music CDs and beer as examples. The laws were brought in by the Howard Government.

              Oops! I just had a look and yep, got that WAY wrong! :p

        Keep in mind that if that were to be the case, there would be a very chaotic marketplace. While that might work for a franchise (or independent retailer), for a chain like EB/GAME/etc, it's just impractical because there'd be no standardisation of stock list, arrival dates, pricing, trade quotes would need a radical overhaul and be different store-to-store, and obviously you'd need to retrain everyone, put safeguards in place, and develop new internal systems to account for this.

        Unfortunately, while a cool idea, it gets filed under "Too Hard".

        From what I've heard, the local distributors will refuse to do business with anyone who imports.

    I wouldn't bother interviewing Michael Ephraim, he's too busy with his head up his ass anyway.

    Can I say ass on Kotaku?

    I am sick of them using the Australian dollar as an excuse. If that is the case we should now be paying less than America. Or how we are a large country that may effect shipping costs but what about the jacked up prices we get with steam?

    It's pretty simple. Drop the RRPs of games by 40% and we'll stop importing them.

      Completely agree... If I can buy a game for $50 instead of $90, then something is wrong with the system...

    they need to stop region pricing and locking games out of the Austtralian market - now everyone knows it's up to $50 cheaper to buy a game (including Del cost) from overseas why the hll would we want to pay the stupid local brick and mortar prices? Worse part is they the distributers have just been now caught out ripping the Australia gamers off and yet the will defend the higher pricing with BS excuses ... no wonder More Australian dollars are going overseas ...

    Hmm I think that everytime these issues about pricing i'n Australia come up people get worked up. Yes currently i'n Australia we are not paying a ideal price for games. But at the moment there is nothing that can be done or said that has not already been done. So there really is no point i'n getting overly angry about nothing.

      There's plenty of point. I, for one, enjoy a good rant.

        I am always good for a rant. It's just this particular rant is kinda like hitting your head against a brick wall. There is no progress to be made.

          Yeah theres no point. We should all be patient like Rocketman.

          and I think its gonna be a long long time...

            I'm Not really being patient. I too import games at a considerably less cost and i don't feel bad about it. What i am saying is that it is hard for anything to be done when there are so many factors involved.

              how bout this...

              She packed my Games last night pre-flight
              Zero hour nine a.m.
              And I’m gonna be high as a kite by then
              I miss the stores so much I miss Eb games
              It’s lonely out online
              On such a timeless domain

              And I think it’s gonna be a long long time
              Till EB games brings me round again to find
              I’m not the man they think I am at home
              Oh no no no I’m a Import man
              Import man burning out his fuse up here alone

              EB ain’t the kind of place to buy your shit
              In fact it’s cold as hell
              And they wont price match them there if you did
              And all this commerce I don’t understand
              It’s just my gaming five days a week
              A import man, a Import man

              And I think it’s gonna be a long long time...

      People get worked up because they don't like getting ripped off. We don't have to though, not really. You can just import and pay half price (including free delivery).

      Even if they somehow made it illegal to import games from overseas I'd probably still do it as civil disobedience against hypocrisy. Retailers have been gouging Australians for a long time (and not just with video games), its about time they caught the shit they've been shoveling.

    I can understand why costs are higher in Australia but they have to do something to compete in what has become a global market.

    Will be interesting to see what solutions they come up with (if any).

    Personally, I don't mind paying a little extra. A game that's retailing online for around $50 selling in stores for maybe $65? I'll happily pay the extra to have the game there and then. No longer being at the mercy of Australia Post is an added incentive.

      I buy most of my games from play-asia. Not only are they released earlier than the Aus games, they offer fex ex shipping for around $10 per order. So a game that's $90 in store I get for around $50 - sometimes up to a week earlier

    Kill retail and go all-digital distribution. It's not videogame makers' responsibility to prop up an outdated business model.

      Do this, and I'll never game again.

      I like to buy, play, then sell on sometimes. Digital distribution nixes that option, meaning that the overall net cost per game skyrockets for me.

    As soon as Sony announced the Vita was region free, that sold a nice US edition for me. Why pay $350 (estimate) in Australia, when you can get the same thing for over a hundred dollars cheaper from America? The system doesn't make sense at the moment. I think the people who make these decisions are hoping noone realises how much the global economy has changed in the last five years.

    I work in distribution for IT hardware, and this often happens in this market too. Especially when brands distribute themselves within a company, they deliberately price themselves out of the market not because it costs more, but to look after their more profitable markets around the world. ultimately EA and whoever else make more money out of selling a game for $50bucks in a large European market than they would selling it for even 80 bucks in aus.

    They can use every excuse they want, i stopped listening to them a long time ago.
    Here's one example: Game (UK) are selling MW3 pre-order for 45GBP ($70AU). Game Aus are charging $98. Postage does not $28 for a single DVD case.

    Cost of business my arse; that's tiny for online sales and virtually irrelevant for online distribution like Steam, yet prices are the same.

    What's actually going on is that publishers are happy to milk the rewards of a favourable exchange rate, and are forcing digital distributors to fix prices accordingly so as not to jeopardise that. That's not going to change so long as people keep buying regardless.

    Importing from unskewed markets is our only way out, but unfortunately it's not a metric that shows up on their sales charts. All we can do is point loudly at the success of businesses like ozgameshop as evidence that local sales aren't failing, they're just moving overseas.

    Game shops would sell more games if they did more than sell games - hold tournaments, etc.

    We can get games on the internet; we can't see rage quits in person on the internet. I'd say do the math, but it's obvious at this point that it's not your strong point.

      I've often thought about this. I hardly ever buy games from stores anymore, but I still go and visit my local gametraders every so often to look at all the retro games/peripherals and other game related paraphernalia, or play some old games they have set up for a few minutes. I never even look in EB or Game.
      But they need to take it to the next level. Get some sort of try-before-you-buy rooms for hire where you can book out a few hours of game play of a new release for a few bucks. Get some tournaments going. Give people a reason to enter the store other than buying games. For sure a fraction of those people will walk out with purchases they wouldn't have otherwise made.

      But that takes a lot of time, money and effort. It's not impossible, Games Workshop and other hobby shops do it, but it's a lot to ask of the small independant games shops.

      You're basically asking to be wined and dined for what sums up to pretty small widely spaced purchases while everyone demands they charge less money for the products they sell.

    Retailers will have to soon take notice that their profits are decreasing due to more and more gamers importing. They will want to survive, it's only natural. I've started noticing that some new release games at JB Hi-Fi are being sold at $79 instead of their normal $89. still to rich for my blood, but I'd they eventually get down to the $60 - $70 for new releases I might just stop importing my games.

      I'm happy to fork out $79 for a new release game. Maybe its just JB or a psychological point (compared to 109 or 119)

      To completely rule out importing though, it would need to be an awful lot lower ($65). The big draw for retail for me is the box, and also (because I solely shop at jb) the fact I can browse, sometimes pick up some dvds too.

    Really the RRP of games needs to drop in Australia -- even a small drop to $90 or $85 would net some good will from consumers and retailers like JB Hi-Fi willing to take losses on software to get you into the store would actually get a chance to compete with online retailers.

    Good luck. Retailers ARE NOT going to budge at all. These retailers are the same people that have price-gouged the country for years and years and refuse to be competitive.

    If these people are already crying foul and calling for government intervention because of the PROSPECT of competition, then there is absolutely no way in hell they will drop their prices at all.

    All you suckers whinging now about getting games cheaper online are idiots. Buy it now while the sun shines and enjoy the savings. as soon as our dollar falls again the cost to import from places like ozgames will come back to parity. All that will happen now by whinging is the publishers will find a way to jack the import costs up so Ozgames are more expensive , they wont drop pricing here. Your shooting yourselves in the foot.

    Enjoy the bargains and STFU about it.

      I don't think the AU $ is going to be less than the US $ for long time.
      The US is an empire in decline.

      I think even if the dollar did fall it would still be cheaper to import, that underscores just how much the aussie consumer is getting reamed.

      Just keep importing and encourage people you know to do that same. I think if we send a clear enough message they'll soon catch on and work out how to give us a more reasonable price range for games.

    Big places that sell games are already working at a loss with most titles. They're just there to get people in the door. They make money on other products that they know sell and see often. And not all retailers are raising the prices on games. It's not as if they're buying a game for $40 and raising it to $90. Most the time they're paying around $5 to $10 less for what it sells for. I myself have been selling games for 3 years now and only make around a $7 profit per major title. It's not as easy as consumers say it is to just lower the price.

      Agreed. Ppl need to realise it has nothing to do with the retailers. They are forced to sell games at a certain price because of what the distributer charges. Until distributers agree to charge less, the retailers hands are pretty much tied and they will have to start closing stores.

    Thousand-dollar PlayStation. 'Nuff said.

    It is not the retailers jacking up the price (though i am sure its not a slim margin they are making) You'll find its the distributors in this case causing the stupid prices. Almost like racism. They jack the prices based on what market you are in. Record industry does the exact same thing. As to clothing labels.

      Indeed! Look at what Steam and Games for Windows Live (cough) (or rather the publishers to Steam) does all the time to Aussies and yet the new EA Origin has NFS: Hot Pursuit for $19.99!

      Vote with your wallet. Maybe when a 5% swing from Steam to OzGameShop for example they might take notice of PC gamers. If it ever comes to 360 like it has for PS3?

        Need for speed hot pursuit is also 20dollars on Steam so you picked a rather poor example

        duke is a better one 50US or 80US on the AU steam store

        or brink which is 50US or 90US on the AU steam

        And it's always the big 5 publishers that consistently seek to rip us off.

        And the most annoying part of it is unlike namco which bumped up the steam price in the region because no portion of the steam sales actually go to them so they wanted to be able to fairly sell the game on a level playing field.

        When companies like 2k,Acti,EA,Beth,Ubi distribute their wares worldwide. Meaning sale whether on steam or at retail all the money goes to them. :(

    I see the video game retail stores about 5 years behind book stores. Stores like borders and Angus and robertson they failed to match the prices of their competitors like amazon or even embrace the technology and go online (competitively) themselves.

    Now look at the result these stores are going broke and closing down. Now is the time these distributors need to see the way it is heading and act before businesses have gone too far into the red to survive.

      its rather ironic that to me that's not why border's failed. A&R were just a ripoff subdivision.

      When borders first arrived they imported so many quality titles they were the amazon that was local you might have paid a couple of cups of coffee more for them. But then once you account for amazon shipping it wasn't that much more expensive.

      They defined themselves because the books and cd's they imported were high quality stuff that no one else in australia even tried stocking.

      Problem is after 5 years they stopped getting the good stuff and instead went to just stocking the Big name authors. They started selling the same stuff that the stores they had put out of business years earlier. And for the sake of convienience they were selling the more expensive australian copies.

      Oh and they had a uselessly overpriced DvD department no point selling DvD's in this day and age unless again your selling specialty. JB or BigW will sell it cheaper.

    http://www.sonydadc.com.au/

    Sony has no leg to stand on for RRP in this country they have their own printing and production line available to use. There is no need for Sony's supply chain to involve anything from overseas except for the master files.

      sure and i bet those printing and production line workers cost more than the entire operation in china would.

      you have to remember that we have high wages. and most likely in order to prevent content leaks those workers get paid well

    Y'know, a shop that did imports only would make a killing. They'd probably be able to negotiate good deals with some importers due to the amounts they'd want, they'd be able to decide how much on top they want to charge for profit, and customers would still be getting the same product cheaper.

    When you can say this then you know that something's wrong.

    Phil & Ed SAVE US!!!

    God bless Sheffield UK! Home of OzGameShop.com.

    My latest purchases from them, all on or about the same day, I had no bills to pay for once so spoiled myself... (all XBox 360)?

    Order #1 (in shipment)
    ========

    Just Cause 2
    Half-Life 2: Orange Box
    Darksiders
    Lego Star Wars: Complete Saga

    Total: $89.46 - free delivery

    Order #2
    ========

    Duke Nukem Forever (I know!)

    Total: $59.99 - free delivery

    Order #3
    ========

    Fallout 3 GOTY
    Gears of War 2 Complete Edition
    Gears of War 3 [preorder]

    Total: $113.97 - first 2 delivered

    Order #4 - the big one
    ========

    Batman: Arkham City [preorder]
    LA Noire
    Dragon Age Ultimate Edition
    Need For Speed: Hot Pursuit
    Tomb Raider: Legend
    Tomb Raider: Underworld
    Splinter Cell: Conviction
    Alpha Protocol

    Total: $261.92

    Batman and LA Noire account for $120 of that order - LA Noire is great and if Arkham Asylum is anything to go by City will eat nails.

    So... Another reason I don't by local anymore.

    From Oz? Nil

      Amen to that! I only discovered this site today, luckily just before I was going to do a batch pre-order at EB.

      Here in the UK a lot of those games will now be able to be found for probably £10-£20 each (pretty sure all of order 1 and most of order 4). Play.com has some ridiculously good sales (of course, don't think they deliver to Australia) as titles age.

      Do titles decrease that fast in Australia? For instance, I think some places would have Tomb Raider: Legend and Alpha Protocol now for less than £10 (new, not pre-owned - they'll just be clearing some back stock). Do they ever come down to such low prices there (less than $20)?

        Rarely if ever for a physical product for a console. PC maybe or downloads via sites like Steam.

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