Could Retailers And Publishers Reduce Game Prices In Australia?

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Could Retailers And Publishers Reduce Game Prices In Australia?


Game prices — in Australia it’s the ultimate taboo subject, but we managed to get hold of Ed Fong, Managing Director of Ubisoft and Paul Yardley, Managing Director of GAME, to talk game prices in Australia. Can we go lower? And how can the local industry compete with the rapid growth of online shopping?

“The exchange rate is the exchange rate,” says Ed Fong, with a shrug. “18 months ago it was a very different story. Should we peg our pricing to exchange rates? That gets messy.

“I think that if the exchange rate stays where it is, there’ll be a price correction.”

This is Ed Fong, Managing Director of Ubisoft in Australia. He’s talking about game pricing, in a refreshingly frank manner.

For years we’ve attempted to convince local publishers and retailers to discuss the issue of game prices in this country. It’s been a debate punctuated with off the record mumblings and long, awkward silences.

We’ve been asking the questions – but no-one has bothered answering.

Until now.

The Sea Change


We’re talking to Ed Fong at Game-Tech. Just under an hour ago Ed was on stage presenting, informing a group comprised of his peers and partners that retail was the greatest challenge facing the games industry today.

With the rapid growth of online shopping, and the dramatic shift in competition that comes with it, both publishers and retailers are starting to take notice. Previously publishers would point blank refuse to discuss pricing; now it’s a subject for discussion.

Previously retailers were keen to shift the blame on to distributors, but now outlets like GAME want to take responsibility.

“I think there are challenges that retail in this country has to deal with,” claims Paul Yardley, Managing Director of GAME. “One of them is a structurally higher market. Rents are high, the cost of employing people is high – running a business here is a cost high enterprise to begin with. That’s fine, we can deal with that but that’s partly why Australians pay slightly higher prices for a wide range of things.”

Of the specialist retailers in Australia, GAME has been one of the most open about the issues facing the Australian games industry today. Games are too expensive, consumers shop online, a lack of competition has left local retailers struggling to adapt. In short: things have to change – and fast.

“Gaming in Australia is priced much higher than it is anywhere else in the world,” continues Paul. “And that’s a real challenge for retailers here, because consumers – they want a cheap deal, and they’ll go and find one. We’re seeing a growing proportion of our customers – the very price sensitive end – going overseas.

“As I’ve said to you before, the industry has a lot to do in order to provide a price point that is really compelling. Retailers and distributors and suppliers all need to hold up their part of the bargain.

If local industry is to adapt to an increasingly savvy consumer base, publishers and retailers are going to have to work together.

The Price Is Wrong


“Most people are talking about pricing, which is a very contentious issue,” claims Michael Ephraim, Managing Director of SCEA, “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.”

This has been the stock standard response to most enquiries regarding Australian game prices, but does that answer hold water when consumers can easily import games from Europe at dramatically lower prices than we pay locally? And how long can the local market sustain the pressure of this competition?

“Ultimately the consumer is going to tell us what they want to pay for a product,” says Ed Fong, “because if we’re priced out of the market, we’ll see more people going online – the consumers will let us know. And consumers are as vocal as they have ever been, they have communication channels and we’ll hear what they have to say.”

It’s a frank admission, and testament to the power of the consumer. If we refuse to cough up for exorbitant local prices, publishers will have no choice but to reduce prices – adapt or die. Many retailers have claimed that they are already selling at just above cost price – are local publishers making more than they let on?

“Not being privy to the financials of distributors,” begins Paul Yardley of GAME, “I don’t know.

“I can only see what we make here locally compared to the UK and other territories and I can say – and I suppose I would say this – we are not the ones taking the cream.”

The Black Hole


So where is this extra money going?

“The only thing I can think of is that there is duty on importing games into Australia,” he continues, “and there is GST. But 15% doesn’t explain the huge mark-ups. I’m not sure I have the solution other than to say that we all have a case to answer for. I’d be keen to put the case to the publishers to hear what they have to say.

“It’s more than just a retail problem.”

We put it to Ed Fong of Ubisoft – is there a giant black hole sucking up the profits made by local publishers and retailers?

His answer is uncharacteristically frank.

“No no!” He laughs. “I wish! I wish I had the key to that black hole!

“If you’re talking about consoles, well, the console price is driven by the first parties, because the first party royalty structures are set up in a way that we buy goods from them. That’s the starting point. The only thing that really differs is whether a business is US based or European based. We’re primarily a European company so our price structure is done via head office. We generally find that European pricing – France, Germany, Spain – is more expensive than the US. That’s where our pricing is derived from.

“There’s no black hole – the retailers make their margin, obviously, but our business is absolutely focused on cutting all the other costs out. We have very efficient distribution, we have very efficient warehousing systems to make sure there is no extra cost in the market. That’s a real challenge for Australian distributors, because it is a huge country.”

Once again, it seems, we’re at an impasse.

The Odd Couple

According to GAME’s Paul Yardley, game prices are everyone’s responsibility – and if everyone played a part, we could be paying less.

“The industry needs to adapt.” Claims Paul. “The third parties have to look at their cost structures and their ability to adapt to that changing environment with overseas pricing. First parties have to look at royalties and their agreements with the thirds to make sure their business model is viable as well.”

Part of the problem is that, while tech savvy consumers are often happy to make purchases online, the vast majority feel more secure shopping in-store (at a premium) for a number of different reasons.

“Overseas websites won’t be able to get the product to consumers day one,” says Ed Fong. “That’s our number one advantage. There are a small percentage of consumers that are quite comfortable buying something online, but there’s still a bit of a risk with a $100 transaction. Unless you know what you’re doing, you’re going to think twice about it. Whether it’s a digital download or a physical product that’s going to take a week to get here – there’s still a risk.

“The whole PlayStation outage put a question mark towards that. For the consumer it’s an absolute deal breaker. If you don’t trust the online environment, you won’t go there. You might do your research online but you won’t buy online. We’re talking today about mass market consumers. Mass market consumers aren’t as tech savvy as those I would call ‘gamers’.”

Online shoppers are in the minority. With the vast majority of consumers still willing to pay more, publishers have no real incentive to reduce prices. Yet.

For retailers, however, who are at the forefront of increasingly brutal price wars, the situation is a little different.

“As retailers, when it comes to pricing,” begins Paul Yardley, “we’re at the sharp end of the stick. We have to take some of the pressure from our customers about pricing. And quite rightly so – we wear that.”

We Fade To Gray

We ask Paul – as a primarily UK-based retailer, GAME are in the perfect position to simply import games from the UK, at a reduced cost – why not simply move the business to grey imports exclusively?

“We could do it tomorrow if we wanted,” claims Paul, confidently. “And that’s not a threat – it’s just a fact.

“But our position is that we support a local, thriving gaming industry and that, to me, has to involve local publishers because they have a key part to play in promoting product here in Australia.

“If we were to import all of our Sony products, for example, there would be no Sony presence in this country, because there’s no reason for them to exist here without distribution. If we broke the banks everyone would follow – therefore Sony wouldn’t market any of its products here.

“So actually we might shrink the market if we sold grey imports.”

The publisher/retailer relationship is a strange beast – and when you combine that relationship with the increasingly volatile gaming consumer, there’s potential for chaos. With the online shopping boom retailers have essentially gone from zero competition to more competition than they can handle – in the space of just a few years.

And both retailers and publishers are going to have to adapt. Eventually.

“If Australian customers spend their money overseas,” says Ed Fong, “we don’t have a business in Australia. Absolutely that is something we need to look at.”

Paul Yardley concurs.

“We have a bit of time, I think, but it doesn’t mean the pressures are not there,” says Paul Yardley. “I think it’s a case of people having to wake up and realise that margins are going to be lower; we’re all going to have to make less money.

“And that’s a pretty bitter pill to swallow. It’s hard for all of us.”

Comments

  • “I think that if the exchange rate stays where it is, there’ll be a price correction.”

    But it’s not like the Australian Dollar just became level with the US Dollar yesterday :/

    • Yes, BUT it’s widely accepted that the Aussie dollar is way overvalued at the moment, and will come crashing back down to a ‘normal’ comparable-to-historical-long-term value in the next 24 months.

      If prices go down now to chase exchange rates, they would go waaaay back up in 24 months. And if our economy hit the skids, then the price would skyrocket – as said in the article, very messy.

      Prefer a permanent solution.

      • Shane,

        It’s a bit more complicated than that. It’s not that the Aussie dollar has been going up all that much, its that the US dollar has been going down.

        There are ways to mitigate exchange risk so I don’t really beleive the exchange rate BS they feed us. Cars, fridges, flights etc all go up and down with the exchange rate!

      • Really? Where is your data? Do the futures, forwards and swap market indicate that the A$ will go down? Currency is largely driven by interest rates and pretty much all major economists in Aus are saying that our interests will go up, making A$ go up with it. Not that I trust any economist, but market participants listen to them.

        I work on a currency desk for a fund manager BTW.

      • I really don’t have any issue with fluctuating prices. I’d rather have the price drop when the dollar is high and have the price go up when the dollar is low, and at least know that I’m getting fair value for money on a given day.

        Lots of prices go up and down… look at things like petrol, meat, fruit & vegetables. They’re always moving around due to variations in the dollar, supply and demand etc and most people don’t seem to have much trouble understanding why. I’m not saying that absolutely everything should be priced on a day-by-day or hour-by-hour basis depending on the dollar, but certainly in a situation like we have now where the dollar has been very strong for an extended period of time then they could justify a significant drop in the price of new games, consoles etc even if it means prices go back up if/when the dollar drops again.

      • I understand it’s a complicated situation, and I definitely don’t have all the answers.

        Our dollar is better not just against the US dollar, but against most major currencies. Our dollar was overvalued before the US dollar plummeted, though of course that was a factor as well. Whether ours is going up or theirs is going down, this wonderful exchange rate won’t be the situation forever.

        I do know, however, that our economy is doing so well largely in part to the success of the mining industry.

        The productivity of the mining industry, however, is on a sharp decline (yes, there is data for this), as they have already removed all the easily obtainable minerals and now need to go deeper and use more expensive and time-consuming techniques to get the same amount of product.

        It stands to reason our economy will not be strong forever. Prices and things are already very interconnected with international monetary movements – I think it would be a nightmare to directly tie game prices (and other prices) to exchange rates.

        Not disputing any of the points you’ve raised, but I personally would like to see more stability in prices (in all things, not just games) so I know what I have to pay.

  • I just had an idea for digital retail. Basically exactly like retail in that there is import/storage of data to be accounted for, lots of different retailers selling the product; except it’s online and digital. Multiple local digital retailers would store the game data on fast servers here in Aus, and sell the right to download that data to local consumers.

  • I was under the impression that there was also only one company that actually distributes the games to retailers in Australia, and that made everything way more expensive than it should be.

    • If you’re too small to have a contract with the big companies than yes, there’s pretty much only one other place to get them. Apart from importing.

  • They are right. We as consumers are very lucky at the moment due to the extremely high Aussie Dollar. But when that shifts back to a strong Euro or US dollar , then importing the games will be more expensive than buying them here.

    Enjoy the ride whilst it lasts , cause it wont last forever.

    • Unless we suffer an extremely dramatic change in the dollar, imported game prices will at worst probably get to being on par with retail. O/seas importers costs will remain the same regardless of the strength of our dollar and they’ll still be able to pass on savings to some extent.

    • im sorry ive been importing since before the 360 and the PS3 came out.

      importing has always been cheaper no matter the dollar.

      and that was before you had site’s like zavvi and what not selling below their respective countries RRP as it is.

      At 60cents on the dollar. a 100AUD buys 60US. while a US game is 50US. cost about 85AUD for that US game. Which would match a JB at cost price.

      yet as i said plenty of site’s that sell below the 50USD RRP.

      • Alinos , so $85 AU for a game from the US if the exchange rate drops. Add your freight to that as well from the US and it would cost more. Just 18 months ago the dollar was at those rates so its not like it is too far from us.

        • There was a time when it became less profitable to import from the US, but I switched to european sites instead! And then there was a time when it was the same price no matter what and I bought from stores here. Not out to punish our retail industry. I just have absolutely no loyalty to it whatsoever and go with the price. And for the vast majority of my adult life that has been overseas (including having friends directly bring stuff in for me because pretty much the entire intelligentsia of Australia leave on a regular basis)

  • I think the biggest issue they’ll face is that it’s an industry that deals exclusively in something that is easy and stupid cheap to import from overseas. Games are not 1 tonne cars and they’re not huge awkward fridges and guitar amps where there are voltage concerns.

    Prices can go down to some extent but the problem remains that importing is very easy, very cheap and almost always problem free now that we have big names on that front. Plus, with the way release dates tend to work a lot of these places can get the game to you on day 1 of the Aussie release date.

    Brick and mortar stores will always be doing business with parents and such but even that market will gradually fade to a trickle as importing games becomes mainstream to those people as well. For me personally, EB is the only brick and mortar shop that concerns me because I love CE games and EB tend to get either the best CE’s out of the lot or have them exclusively and that will most likely always stay that way.

    It’s going to be one helluva uphill battle for these stores but it’s going to take a while before it gets anywhere. Whether that’s for better or worse remains to be seen.

  • “We generally find that European pricing – France, Germany, Spain – is more expensive than the US. That’s where our pricing is derived from”

    Which begs the question: why are we considered part of Europe? We are on the opposite side of the world. It’s harder to get further away from Europe than Australia. Why are we not considered part of the US or Asian markets? We speak English, we’re not like Europe where you have a massive pile of local languages to deal with. We gain absolutely nothing except higher prices from being part of the European region. Maybe it was justified back when we were using the same TV standards, but HDTV broke that argument, and it was never relevant for portables either.

    All that being in ‘Europe’ gives Australia is higher prices, slow or nonexistent releases and language localisations we don’t need.

    • because thats the DVD/VHS region we have been in since the dawn of time.

      so it was only logical that video games take up the same archaic rules.

    • I’d be saying that is because we are part of the UK Commonwealth, hence the ties to Euro release dates etc……though that would mean Canada would be too..

      all very strange

      • No, it’s nothing to do with that. It’s as mentioned in the comment above – Europe uses the PAL broadcast standard, the US uses NTSC. Because Australia also uses PAL we get lumped in with Europe. So we’re not really getting the “European” version, we’re getting the PAL version which happens to be the same one Europe gets.

        But now we’ve got HDTVs, the whole PAL/NTSC thing is gone, so there’s no longer any legitimate justification for it, just historical precedent.

    • Its because of the PAL television standard which is something we have in common with UK/Europe. Of course now in the days of HDTV that really bears little relevance to the current landscape.

  • ‘“The exchange rate is the exchange rate,” says Ed Fong, with a shrug. “18 months ago it was a very different story. Should we peg our pricing to exchange rates? That gets messy.’

    18 months ago we were hovering at 0.90 USD. Not that big a difference.

    “We’re primarily a European company so our price structure is done via head office. We generally find that European pricing – France, Germany, Spain – is more expensive than the US. That’s where our pricing is derived from.”

    That doesn’t explain why UK imports are so damn cheap compared to local games.

    I wonder if there’s a fixed corporate exchange rate here somewhere. I know some big businesses fix exchange rates over time for their international business arms, often at quite old rates.

  • Same old argument but who will take the profit cut when things get desperate? Personally I’m happy to wait a month for a game that’s 3/4 of the price (but that’s just me). Then I can order 3 instead of one! Maybe it is time to sacrifice some of our own aussie based branches (eg Sony Australia). New Zealand did it with cars and they don’t seem to dislike an abundance cheap turbo charged imports and our domestics. Whenever we have Australian branch of something (eg Hyundai Australia) it requires resources, staff etc and for what purpose in electronics and gaming? One example is there are no manufactures of LCD tvs in Australia, if your 50” LG is needs a warranty claim at the very least the parts have to be imported from china and the like. Where’s the benefit?!

  • While we’re complaining about stuff, how about purely virtual prices? Why is the price per $AUD for Microsoft Points still at the same rate it was at when the service launched? Our dollar’s worth nearly double what it was back then…

  • My sympathies for local retailers and even many distributors, who are stuck in a bad position. But even without internal knowledge of pricing along the chain, all available evidence points to the publishers as the responsible party.

    They set their wholesale pricing based on local RRP years ago, when the exchange rate was unfavourable, and now that they’re pulling in 40-50% more cash per sale they’re quite happy to keep it that way.

    Sorry SCEA and Ubisoft, but as the benefiting parties, your statements lack credibility. Perhaps you can answer why UK retail prices are so much lower, when their cost of business and tax levels are at least as high as ours?

    Customers are already flocking overseas in droves, but only rebellion from retailers and local distributors will change publishers’ minds. Props to GAME for mentioning a hypothetical switch to importing – I’m sure (I really hope) it’s much less hypothetical in their discussions with their wholesalers.

  • Consumer sovereignty is the ultimate arbiter of pricing anyway, despite the ridiculous complex relationship between distributors and stores.

    Like the article says, if people turn to cheaper overseas alternatives, the publishers and retailers have no choice but to come to some sort of compromise to lower prices.

    It’s either adapt – and find a way of dropping prices – or suffer reduced profits and a terminal decline.

  • “If we were to import all of our Sony products, for example, there would be no Sony presence in this country, because there’s no reason for them to exist here without distribution. If we broke the banks everyone would follow – therefore Sony wouldn’t market any of its products here.”

    If the marketing increases sales of Sony products, then someone will do it. Whether it is done by an Australian division of Sony or it will be done by some foreign division. If Sony Australia is not adding any value on the distribution side (separate from the marketing and classification side), why is that business worth protecting?

  • Exchange rate was different 18 months ago sure.

    but it still doesn’t explain the 50cent(or less) exchange rate we currently seem to live on.

    Personally i think that our pricing should adjust to the exchange rate. At least it should adjust to the average exchange rate for the previous fiscal year(july 1st -june 30th)

  • What it really comes down to, and what it always will come down to is that I, one person, can privately import for half the price a retailer, who sells hundreds or thousands of copies, can offer.

    I refuse to believe that operating costs/overheads and GST make something I can import for $40AUD incl. shipping cost $99.95. Or rather, until someone has the guts to put out solid figures, I won’t believe it.

    You know what, Mr. Yardley? If you need to shrink the market, then DO IT. Because it’ll shrink without you. All Sony/etc pulling out will do is drop off conventional advertising and warranty support. But the 40% drop in pricing should account for that, shouldn’t it? In-store advertising works well enough, if you need to, you’re capable to running tv or radio ads, and email campaigns to raise awareness, you could more effectively leverage Facebook, etc.

    So I’m not convinced that games need to cost what they do. And even if you do convince me, it’s still -so much- more expensive that I won’t care. Realistic prices from now on, please.

  • Licensers/Publishers/Distributors/Retailers all in unison, ‘It’s not us making a profit. The money just disappears into the mystery Australian blackhole. Where ever could it be going!’

    Jokers all round.

    The licensers don’t care as they get their money either way, same for the publishers. Distributors and retailers have to play the game the big fish give them and since they’re making money right now there is no point risking what they do have by making a big fight out of it.

    Ed Fong’s comment made me laugh. ‘… and we’ll hear what they have to say.’ To that all I can say is if you haven’t heard it yet you must be deaf, and as for us commenters, we’re all flogging a dead horse. Just buy overseas. Sure local the retailers will suffer or even die out but they make it clear that they won’t change until they are forced to. If you’re feeling patriotic about not buying Australian think about all the posties you employ or invest your savings in some other home grown business.

  • I’ll continue to import from now and until someone figures out a way to slash prices in Australia. I would have felt sorry for Aussie retailers and distributors back in the day but then regional pricing on digital copies happened. That was the last straw for me. It’s harsh but I couldn’t give a stuff what happens to local businesses now. The continuing BS from the industry over the past couple of years has driven me over the edge. EVERYONE can see that something doesn’t add up and yet the only thing they’ve decided to do was impose extra costs on digital copies.

    They need to adapt now, not later, NOW. It’s one thing to start worrying about a change in the market, it’s another thing entirely to start acting to address those concerns. Even if it is a publisher issue – retailers and distributors must look to push publishers, not twiddle their thumbs. Its their own livelihood at stake. Successful businesses adapt and adapt early. Businesses here are fast running out of time. In the end, it doesn’t concern me or consumers in general so long as we can import games – the industry is only hurting themselves right now.

  • The other part of this is digital pricing – which was not touched on but is absolutely ridiculously overpriced in this country.
    I also have no problem paying market $ rates for games…at least you know your not getting ripped off.

  • This whole issue continues to piss me off, yet i have never imported a single video game.

    I think its the only way to bring retail to its knees.

  • I wish I could remember the names of the speakers at Gametech so I could properly post this comment. But at the seminar I put a question to the Microsoft guy and he seemed absolutely confident that people would stick to retail for the experience of being able to ask for recommendations, opinions, etc from the clerks instore. And then one of the retailers stood up and said anecdotally the average clerks know little about what the sell – and I think this is an experience mirrored by most semi-tech savvy plus people that go into stores (not just for games) with a bit of an idea of what they want, only to find that the staff instore can’t supplment their questions with any useful contributions.

    TLDR: although nice marketing spin, there’s little to gain from an instore experience these days and first and second parties are still too caught up in their own PR to see any different.

      • What a lot of comments here are overlooking is that the average retail video game customer is not a 21 year old male gamer. They are kids with gift vouchers, they are adults who want something for after work, they are grandparents who want card games. They don’t have the time/desire/ability to do their own research and find out exactly what they’d like to play.

        Now the average video game store clerk sure as hell isn’t a massive video game encyclopaedia. But we do a decent job at recommending like titles.

        – a video game store clerk

        • You also have to remember that there was a time that those people or in the case of children, the parents, would shy away from services like eBay. Now you’ll find those people are the majority users of such services.

          As importing games becomes more common practice for gamers so to shall it become common for other people.

  • Retailers’ solution to Steam and cheap digital purchases was not to adapt or become more competitive, but to extort publishers into raising their prices on the Australian versions of those platforms or not sell them to us at all.

    Likewise, the retailers’ solution to importing won’t be to adapt or become more competitive either, but will be the same as Gerry Harvey’s proposed “solution” – make customers pay tax on imported items.

    They have no interest in competing but in just price-gouging the customers.

  • The last time I bought a physical copy of a game for my pc was in 2005. Ever since then I have been 100% digital, and saved hundreds because of it.

    Nothing would please me more than to see game retail curl up and die after the shit the have put Australian gamers through for 20 years.

    • Considering that retail accounts for a lot of jobs, especially even a lot of the young people that make up this site’s patronage, as well as 3 years of my own working life, it’s good to see you wishing so many out of employment.

      I’ll continue to buy retail, even PC, so I have my own actual copy, rather than a ticket to play somebody elses data.

      Also: “Gaming in Australia is priced much higher than it is anywhere else in the world”

      Brazil isn’t a part of the world?

      • How many of those are in retail that specifically involves games? They’re the only ones who face redundancy if things get out of hand.

        Also your point on buying retail with games is moot. The article is specifically referring to the importation of physical copies of games not digital distribution.

        • Who are you talking to?

          the last part of my comment was on the article but the main part was in reply to Doraiya, who was talking about the demise of retail in favour of digital, so I wasn’t talking about imports at all.

          “How many of those are in retail that specifically involves games?”

          Not only is there enough in games, but it doesn’t really matter. If retail games dissolved for the sake of digital = loss of jobs. If people import and buy direct from overseas or online distributors instead of retail = loss of jobs.

          I have no problem with industry needing to wake up and change with the world as it should, I just have a problem with people calling for the downfall of others who were just doing their job, people effectively saying, “I DON’T CARE ABOUT WHAT HAPPENS TO THEM,I JUST WANT CHEAP GAMES.”

          • I don’t have the link, but there was a report released that I’m pretty sure was linked in a Kotaku story that says Mr Harvey’s job loss line was total lies. For every job lost in retail through importing, 2.5 jobs were created in the sectors that make the importing industry run. When one industry shrinks, another usually expands. Saying that the sky is falling when it’s your particular industry is simple you worrying about your business.

            Direct download is another matter, but importing is doing excellent things for the industry. i work in transport and i can tell you that even despite fuel prices, business is booming and a lot more people are being employed.

          • When you drive to work, do you care about the people who sell horses that your car put out of business?
            Jobs are only necessary if there is work to be done.

  • Just another example of when people realise there is a better way, and start doing something about it, things will eventually change.

  • Simply put, if we all start importing our games, publishers will see lower sales in our region and immediately attribute it to piracy. This has 2 possible consequences.

    1. We get extra intrusive DRM on our versions of games as publishers seem to think that the solution to piracy is more DRM.
    2. We get less releases (or no releases at all) in our region because publishers don’t like taking risks on selling to regions that they perceive as having piracy problems (and they can afford to do this too as Australia is a small market that won’t mean much in the grand scheme of things).

    The reason for this line of thinking is that importers don’t report sales figures to the local publishers/distributors and retail sales trackers. For instance, if I imported a game from, say, the UK, the sale would get credited to the UK instead of Australia because publishers/distributors and retail trackers only count where the sale originated, not where the destination is.

    • There are no DRM ramifications for console gamers.

      This most important part of this article is the admission that pricing is ultimately left to the consumers. As an expat here, it never ceases to amaze me just how dim Australian consumers are. I mean, our wives and girlfriends are happy to spend 150% more for shoes and jeans over US and UK pricing — but we electronic gaming brothers should be much more aware of the overt rent seeking (thats an economic term, fellas) and price collusion going on in this country. The only way to manage this is to get organized and start boycotting. Stop buying Xbox and PS3 add-on content from the Aussie store.

      50-100% markups are just ridiculous. $90 retail for titles is ABSURD.

    • That sounds like something that would be a real problem for those of us that didn’t import, and no problem at all for the importers. Rather self-defeating.

  • It’s a funny scenario isn’t it?

    As frank as Ed Fong was, no-one (retailer or publisher) is to willing to give the real reason why they maintain the prices at the level they do here.

    It’s because they’re still bleeding the suckers dry. Ed hints at this a number of times without explicitly stating so, eg. “If Australian customers spend their money overseas …” “We have a bit of time …”.

    I read those comments as, “It’s happening, but there are still a lot of people out there willing to pay RRP, and until they “wake up”, distributors and retailers don’t have to”.

  • What a bunch of tossers. I would be happier if they just came out and Admitted it. “yes we are screwing you because your isolated an what are you gonna do?”
    This PR bullshit that no one understands why it’s so expensive is just insulting. Please next rime the spew this BS in an interview, tell em to STFU.

  • Greedy pigs sucking on the tests of the consumer, why should they change?

    Maybe we should start a mass education campaign to educate customers that they can import or use digital download.

  • is it just me, or has GAME really been cool lately?

    i mean, breaking the street date of ocarina, and now they are saying in here they want the prices down….

  • Ice Delivery Man: You’ve got to start charging more than a dollar a bag. We lost four more men on this expedition!

    Apu: If you can think of a better way to get ice, I’d like to hear it.

  • Sorry big retail chains, but unless if you lower ur price I, like all my friends who own a credit card will not buy from you unless if you have some fantastic deal… I mean seriously, I could save up to $30 by buying from zavvi or ozgameshop…

  • yo mark, next time you speak to one of those guys, ask them this.

    Why is it then that if i were to by COD6 or Battlefield 3 or whatever for the PC from an online store such as Steam, Origin, Gamersgate etc that im charge the same price that i would of been charge had i just drove to the local EB/JBhifi/etc.

    I should not be paying the same amount on a digital download when i do not have a physical copy.

    • There’s actually quite a lot pieces discussing digital downloads on the site – there’s one where I spoke to GOG.com about it. That’s probably the most informative.

  • *sigh

    I forget that not everyone here has the ability to see the bigger picture. Some of these people that wish bad on us ‘retail clerks’ and want us out of the job must be the same people i don’t want in my shop and can go f*ck themselves.

    Make up your own opinion dont spew the ignorance that you where taught.

  • I dislike digital downloads and much prefer to have a physical copy in my hands.

    I also love the joy I experience when I go into a games store, wondering what treasure I will uncover at this time.

    However games have been vastly overpriced for the longest time(since I was a wee lad and I’m in my 30’s now!) and something should be done about it and it is kind of annoying that it has taken the threat of digital downloads and the rise of ebay to get the price gouging retailers worried about their crimes against gamers. There is no reason for them to have been this bloody expensive in the first place!

  • Great article. As usual the people we look to for answers pass the buck and cry poor, sorry Game smart consumers will vote with their dollar, Australia Post aren’t going away, I could care less if I can no longer buy games at retail if it means I have to pay double, crying about distributors, GST and cost of business overheads won’t change this.

    Steam is the harder pill to swallow, with Square Enix and Warner Bros recently joining the Austrlia tax bandwagon, the few holdouts will be soon to follow I’m sure. I’d love to see some statistics on Austrlian Steam Sales, I’d be interested to know how many support this horseshit.

    It’s gone from my primary store for new releases almost to sales only in the space of six months.

  • There’s a SH*T load of people on here who obviously have no clue how much of this works that’s for damn sure!

    See fellas… There’s a lovely function at all gaming retail stores that will give you the cost price on every item we sell…

    You’ll find most AAA titles that retail at $119 will generally cost a comPany anywhere between $75 and $85 depending on the chain/ buy rates etc. You’ll also find most will seek it between $85-$95. So we are talking 25% profit at FULL rrp for a retailer, who, in the end never sells for that much. I know at my store most games new will fetch us $5-$10 profit… Maybe.

    You can’t throw as much as you are on the retail level because when you buy ffrom that store, you are paying all the price attatchments up until that point. But instead of saying F*CK off, here’s the game rrp, they don’t. The retailer takes the wrap, drops the price, loses sales margin and you get the ge as cheap as possible before it becomes a loss…

    And yet all those thousands of emplyees putting on a smile and helping out are the ones who are at the receiving end of, “who cares of they lose their jobs”…

    Fantastic community we got going on here… Please go on…

    • I honestly sympathise, but this is the merry-go-round in action.

      Either work out a way to give a recent real world example (game names, price numbers, actual dollar values, names of the distributors/publishers – go all out) without getting yourself or your employer f*cked over, and do it either today or before this article drops back to Page 4 or 5.

      Those hard-working men and women at the point of sale never ever deserve the crap that is thrown at their employer when this sort of story crops up, full stop. Anybody who feels differently probably wishes they were 9 again when their mummy and daddy bought all the cool games for them.

    • It doesn’t COST $75 to physically produce and ship a game to stores, the vast majority of this cost is made up with royalties and production costs. If it actually COST the distributors $75 to produce a disc and case and ship it to a store they would not be able to offer sale or return terms with retailers. I’d hazard a guess of the actual product cost being around the $2 mark, depending on platform and number of discs and booklet sizes/qualities ect. Shipping will naturally vary, but most large retailers don’t pay that anyway, it goes back to the distributor, thus being incorporated into the cost of goods, but again, would be very unlikely if on average it would be more than a couple of dollars per game. So you can see there is plenty of room to move the the price of games, most of the “cost” goes into very flexible areas.

      • I can probably answer that.

        No of course it doesn’t cost that much to make the cd… But by the time everything is accounted for thats what that single game will cost a store to have in the store. Yours missing that that most retailers pay a high premium anyway. And therefore can’t as a retailer say, “hey.. This isn’t fair, charge them $70…” they’d effectively be paying YOU to leave the store with the game, that’s the reality of it.

        Oh real price point of a game? The aggregate cost on La Noire was about 80-85 at rrp of $119. You’d be hard pressed to find it sold at that… Some have it at $88, $89, $99 and hell, JB and some others used it to draw people in store at $79 at one point, knowing full well they were selling it at a loss.

        That doesn’t mean those games physically should cost that much, but again, by the time they hit the store that’s the price they incur from every cost and charge previous…

        • The problem is that we can’t go on saying “I feel sorry for retailers at the bottom end”. If the system is fundamentally broken, we can’t continue using it just because “it’d be nice”. That’s just making things seem all rosy when they aren’t, and eventually when things break down we’ll go “mm, wonder how that happened”.

          Compare overly protected industries like at the beginning of many communist countries with capitalist countries, for a similar comparison. Sometimes we have to move on. Sure, I want retailers to stay alive, but they might have to take a little bit of a shove so we can get through them, the human shield, and give the big game publishers a poke they can notice. Hopefully though it won’t come to that.

  • “Overseas websites won’t be able to get the product to consumers day one”

    It’s been my experience that buying locally you won’t get it day 1 either. Seems to me the local distributors are either completely inept in gauging demand for titles or they’re trying to create demand by limiting supply, in any case I feel much more “relaxed” in buying online, not having to call and drive around to half a dozen stores to find a copy of a new game, I’d prefer to get it a few days late delivered to me for cheaper than all the stress in chasing down a copy locally (this completely ignores the fact that in some cases international releases are before ours as well, potentially making online purchases arrive BEFORE they are released here).

  • What I want to know is why are we paying more money for PSN games on the Australian store compared to other stores? How can you justify charging Australians in some occassions $6-$10 more for exactly the same product? This especially does not make sense seeing as there is no physical distribution of a game disk/packaging involved. I’d be happy if someone could give me an answer to this.

  • I’ve got a question next time you get a chance to interview some developers or publishers on this topic.

    “Why is it that when it comes to digital distribution Australians are expected to pay twice as much than everyone else when there are none of the usual extra costs involved, shipping, distribution, retail rents/wages? Sometimes paying the same if not more than they would when buying at retail.”

    I’m sure their usual BS excuses about the Austrlian retail sector won’t work on that one.

    Don’t get me wrong I don’t hate Australian retailers and do what I can to continue supporting them even if I have strong grievences with the business practises and pricing models of some of those companies. But when I can make savings of more than 50% with the minor inconvinence of waiting a week to get the product it becomes harder and harder to justify spending my money in australia.

    I also don’t agree with the point that online shoppers are only the minority, if it were only a minority we wouldn’t have Australia’s biggest retailers banding together and complaining to the government to stop online shopping.

  • It truly is a double edged sword.

    On the one edge, you have seemingly-inflated games prices for Australia. Retailers try to co-manage this by dropping sell price below RRP and getting hammered on margin (sometimes taking a loss) AND praying you a) buy attachments and b) come back again next time.

    Internets and importing can seem to solve this. But by purchasing your titles OUTSIDE of the region, you contribute to lower sales here, leading the distributors to devalue the region as a market. And keep prices hiked to recover their investment. Classification and shipping are not cheap. Sometimes it may contribute to a decision NOT to bring a game out at all. In the long run this will no doubt snowball and cripple the ‘local’ market.

    On the other edge, Australia historically pays high prices for games. One thing that pisses me off, is that games prices are actually CHEAPER now in dollar terms, than they were 10 years ago- never mind taking inflation into account. Many ppl will recall SNES Mario All-Stars at $160, N64 games for $100+… I personally have owned 3 copies of Silent Hill 3 for PS2 all bought for over $100. We are inarguably better off. It is only recently that we have realised that we are still paying more in real terms, than many places overseas. The tipping point is that a game is just a disc, non-perishable and easily transportable.. We dont think of importing a cheeseburger that is cheaper overseas. We dont think of importing a fridge that costs as much to ship as to purchase. In our minds there is no reason NOT to save money by importing.

    It is a fact that we buy more games now than before. This year an average ‘core gamer’ might expect to buy 10+ games. Hell many people will buy 4 or more games in November alone this year. Even the despised ‘casual’ will buy 5 or more. But no market survives long term by running at a skinny margin, never mind a loss. $50 million dollars taken in tills is nothing if it cost $52 million to earn it.

    Overall the Australian/foreign pricing disparity is not unique to games- it affects many consumer products, entertainment wares more than most- but the higher unit price does make for more dramatic statistics. The apparent impasse will not be fixed by any single one of the parties involved. Distributors, retailers and customers all need to give a little, to get a little. If we want a local games industry and local stores, we need to continue supporting them, at least sometimes. Otherwise get used to getting your gear from the wonderfully informed AV staff at Big W and Kmart, or buying games online with bizarre Singaporean covers.

  • I love how people say that “when the $Aus goes under parity we’ll be back to paying more for games from overseas than we can locally”.

    The problem with this is a fundamental fact – from the US and Europe we can buy games that are half the price of the same game on a shelf at a local retail store. Not 10% cheaper, but often 50%. We’re talking significant savings.

    It’s sort of like Jerry Harvey arguing for a 10% tax on all goods purchased online. Sure, it’ll make it more expensive than it is now, but it doesn’t remove the fact that the items are still substantially cheaper than what we can get in a retail store

  • These guys know that they can continue to make larger profits by slugging the nieve Australian consumer with high prices at local stores.
    By all means continue to purchase the cheapest way you know how.
    Do you really think that the games publishers care about Australian consumers; i mean other than that they are a cash cow?
    Market forces will rule.
    If you can import a game cheaper go ahead and do it!
    Digital distributors are probably contracted to price goods according to head publishers wishes and are unlikely to be the cheapest option for Australians.
    I guess the biggest problem we face is that if publishers go purely digital distribution, how will we get our games then, without being ripped off?
    Downloads through proxy servers suck!

  • It’s only the PHYSICAL costs associated with games that are dependent on regional differences. It costs X amount to ship a disc from the warehouse to the store in the USA, but it costs Y in Australia, that’s where the price differences should be taken from.

    If it costs $5 or even $10 to get a game from scratch to in-store, why does it still cost the retail $75 to buy wholesale? Because of the royalties. This is where people are being gouged.

    You want some easy ways to reduce the Aussie price for games? First up, ensure royalties are payable on actual WSP paid by retailers, not RRP. Second ensure all game discs/cases/booklets/anything else are manufactured in Australia, we have the technology, it can be done. Third, pass these savings onto the retailers, there’s heaps of competition out there, especially form the mass merchants, most of these guys are selling near cost or as loss leaders, passing these savings onto retailers WILL flow through to end consumers.

    If the distributors aren’t willing to do this then it’s time for the retailers to dump them and just import them. When I can buy a game and have it delivered from OS for cheaper then a retailer can clearly something is wrong, and it’s got nothing to do with the costs of operating in Australia.

  • From my experience (prev worked as a store manager for 3 years with an aussie games dealer), the majority of the price hiking is due to the publishers. Typical margin for retailers is 10-15% on software, best case. Worst case, they sell under cost and recoup the money with cross selling or pre-owned.

    The fact that Digital DL online distributors have risen thier pricing to match once the method really took off is evidence of this.

  • If we can privately import a game for half price or less, then clearly local retailers are either incompetent or lieing. I think the real question is can they afford NOT to lower prices.

  • After reading all the comments there are a couple of recurring points I’d like to address.

    1. In our mixed market economy I have one, and only one responsibility as a consumer and that is to purchase any product for the lowest possible price. This goes for retailers too when they buy stock from their suppliers and so on along the chain. Contrary to what many are led to believe it is not a responsibility to choose Australian over foreign, South Australian over Victorian, or Adelaide made over Port Lincoln made – that is a choice, and one made by individuals for many reasons, both right and wrong.

    2. Whether one chooses to purchase a copy of a game online from the UK at $50 or locally from say EB Games at $109 a significant proportion of each cost will leave Australia. It’s a fallacy to believe that the $109 you give to EB Games is all going into the Australian economy. Arguably one could say the the $50 spent on getting the game from the UK actually minimises the loss to the local economy as $59 is being kept onshore while some proportion of the $50 is helping the local post and delivery industry.

    Well all know it’s not only video games that are over priced in Australia. Also I’m noticing that more and more products that were once purchasable overseas for delivery to Australia are being stopped at the point of origin. I suspect that foreign manufactures are increasingly aware of the strength of our economy, the aussie dollar and the willingness of Australian to pay over the odds and are using us to prop up their bottom line.

    In the current global economy Australia is a beautifully bright spot.

  • I think I’ve stopped buying local about a year and a half ago, though I think the major turning point for me related to Civilization V. When I saw the exorbitant high price on Steam, I felt really ripped off, and saw no “competitive” price in local shops. I came across the ozgameshop site and it had Civ V for $39 – which was a boxed Steam version of Civ V!! And it worked without a hitch.
    So from that point onward, I’ve only been looking online and importing games. I don’t mind waiting up to 2 weeks and lot of these websites offer free postage or postage just under $5.
    But I have bought locally for some games, and that was with help of trade ins and taking advantage of special sales (like the Zelda 3DS offer by JB Hifi – I wanted the CD soundtrack too).

    I kinda felt for the retailers in a way, yes they have high rents, salaries to pay etc. But then I think, why aren’t they protesting against the high prices?? (EB took a stand against the recent Res Evil 3DS game, why don’t they take a stand on pricing??) I’ve yet to see a good explanation why a new release game deserves a $100 – $120 RRP price, that is NOT a special edition!

    I think we gamers should be telling our friends and family not to buy locally, and to get it imported. The message needs to be sent.

    I remember when Windows 7 came out, and MS had their “opening” conference and someone asked them why their price was so high for Win 7 – they came up with some bull line that it was the MARKET that was setting the price, not Microsoft!!
    From this article, I’m hearing the same rubbish excuse – “Oh we don’t set the price”.

    If these guys were seriously listening to customers, they would’ve heard the complaints about high prices – it seems they choose to ignore those complaints. They simply don’t care.

    • Good example; MS’s pricing of Win 7 ultimate was almost 3X the pricing of purchase in US, I emailed MS about this and got that laughable reply; that the costs were “..set by local marketing concerns, and other regional factors..” I have always read that as meaning, as we all know, that we are just getting ripped because we have always been. If you go to Call of Duty’s website for preorder now, check the ludicrous price difference when you change the region to AU!!

  • This is just pretty much more smoke blowing on behalf of the local industry mouth pieces. The gentleman from GAME is alluding to it, but not outright saying it – the real reason for the artificial price hike in Australia is the distribution contracts signed with the publishers at fixed rates.

    I reckon the retailers aren’t seeing any of the windfall in the exchange rate, and it’s likely that the distributors haven’t gotten nearly as much out of it as people would think, and that the vast majority of the “bonzana” has gotten to the publishers – which of course means that there is no real reason to “fix” the issue.

    You see, the publishers will make their bones on the cost of software (their margin) regardless of where the purchase is sourced from. If it happens to come from a physical Autralian distributor – then it’s just cream for them over normal margin right now.

    This is why the price hasn’t moved, and why it will not significantly move in the future. It’s also the reason why we keep seeing game retailers downsizing and closing shops.

    The really big retailers here, like JB HI-FI are already selling most games at either cost or below cost (their cost) just to keep people out of stores like Big-W or K-Mart, so we’ll not get any relief on that front, and the end result is that the specialty stores that count on game sales are going to wither and die.

    It’s an unhappy picture I suppose for consumers and retailers, but it wont change much unless the dollar to dollar imbalance goes back to it’s historical levels. Even then, there’s a good chance that by the time this happens that the publishers will have cannibalized enough of the market with direct digitial distribution that it won’t ever recover.

    Ultimately it doesn’t really matter much – people will keep importing and downloading. If anything this has just hastened an activity that people were doing already. The only issue I think, is if we see an uptake in piracy as a result of this. I think that’s really the only thing that concerns the publishers, because right now they have everyone over a barrel.

  • As a Canadian that just started living in Melbourne six months ago, the prices of games here shock and anger me, even with the higher minimum wage and salaries compared to Canada, prices are still absolutely ridiculous. Gamers are getting the screw in this country, between prices, later release dates/no release at all, censorship etc. And with it’s basically zero appeal abroad, we’ll never get an aussie rules game with the production level of a Madden/NHL…if I decide to stay here long term I’ll be bringing my north american consoles down, buying an NTSC TV and importing my games. It will probably be cheaper and I won’t have to deal with any of the other issues associated with being an Aussie gamer.

  • Regardless of current retail pricing, it still angers me that places like EB Games and GAME can charge sometimes $20-$30 more for a game than say…at JB HI FI. For example….the latest releases for PC are usually priced around $79 at JB….yet at EB games and GAME they are around $95-$99 for the exact same game. It’s just ludicrous and I actually feel like yelling it out to the people buying a game in either of those stores when I go past.

  • Quotes like this make me crazy: “50-100% markups are just ridiculous. $90 retail for titles is ABSURD.”

    To sell a game in Aus we need to start with an importer/distributor, it’s not always one business but for simplicity lets say it is.

    So X imports needs to pay all duties and taxes, they also need to pay frieght and the staff in thier distribution centre, not to mention the facility itself(priced up any commercial property recently?)and it’s the real world they need to make some cash. So the price has jumped, then it heads off to the retailer. They need to pay frieght(alot), recieving staff, warehouse and retail space(anyone have half a clue what it costs to rent space in a shopping centre?) retail staff and admin staff. As an ex retailer of 12 years let me be clear on 2 things.

    1. Most day 1 deal at the $80-$90 range are loss leaders to get bums in the door.

    2. The current retail model for gaming is outdated and does not work for anyone. Digital distribution, either at a store level or direct to user is the future and already being trialed in a number of Sydney stores.

  • Hi Mark,

    I think in reality the consumer has very little power to influence the prices, as all the majority of us can do, is not buy, and wait for pricing discounts if they ever happen at all.

    We need an organised movement where enough consumers agree not to buy games at more than $60 day 1.

    for e.g I’d be more willing to pay $40 for a game like red dead, and then pay $20 for all their dlc and the inevitable patches.
    single player games like batman arkham, that last only 2 weeks should be $30.

    I normally wait for all these discounts and play other games. We’d all be better off if we all waited until they change their current practices, or told them they would get more sales and impulse buys if they set more reasonable prices.

    Sales by volume, good will, and a more diverse customer base, always beats high profit margins from a few dedicated buyers, in the long run

    • how about some collective bargaining group for consumers so we could all combine our purchasing power and make some deals.

  • The only way im not going to buy games online and bother going down to the store is if they attempt there part first, i don’t enjoy paying 100 bucks fo a new release game while over in america there paying 60 bucks, it’s bullshizzle.

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