Australian Government Goes Ahead With Price Inquiry Into The Cost Of Tech/Games

Australian Government Goes Ahead With Price Inquiry Into The Cost Of Tech/Games

And yes, that inquiry will most likely include the price of video games.

All major computer and software publishers will be sent invitations to defend their pricing policies at a Federal Parliament inquiry. MP Ed Husic has been campaigning for fairer local prices, and he welcomed the inquiry.

“People here scratch their heads trying to work out why they get fleeced on software downloads,” said Husic, speaking to The Age. “When the Productivity Commission asked IT companies why they charge so much for downloads, even they found the answers were not persuasive.”

The strength of the Australian dollar has seen many gamers import video games from overseas, as local prices refuse to budge. We’ve spoken to Managing Directors from multiple local publishers about their pricing policies in Australia, including Ed Fong from Ubisoft.

“Ultimately the consumer is going to tell us what they want to pay for a product,” said Ed Fong, Managing Director of Ubisoft Australia when we spoke to him last year, “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.”

When we spoke to Activision’s Managing Director Ben Graetz late last year, he claimed video game pricing was more complicated than simply comparing exchange rates.

“Well, the cost of most things, when you benchmark overseas, tends to be a bit high here in Australia, and there are reasons for that,” said Ben. “Speaking specifically about games, there’s a number of factors — it’s not quite as simple as doing a match on exchange rates.

“I’m very proud of the fact that we manufacture locally, we’re helping to create and stimulate jobs. We have options on that, but we chose to do it locally for those reasons. We distribute locally as well as through our partners — so that’s two things already that are independent of exchange rates. In addition to that, the way we go to retail is different compared to overseas, and the cost structures are different. So it’s not quite as simple as looking at exchange rates.”

Graetz did concede, however, that local pricing was something Activision was looking at.

“The Aussie dollar has been on a real tear in the last 12 months, and that does give us reason to look at this,” said Ben. “So it is something that we’re looking at, and it’s something that’s important to consumers.

“We have to make sure that we’re delivering value.”

At the moment, video game publishers are content to maintain prices on account of the fact that most consumers are willing to pay that price. Most publishers have been notoriously cagey on game prices locally here in Australia. Hopefully this inquiry will help open up a serious, open dialogue on the issue.

IT giants in price probe [The Age]


  • Translation: “While most consumers don’t have any alternative and don’t know they can get things much cheaper we’ll keep ripping them off”

  • I can think of a few reason why we pay more.. our absurdly high minimal pay, compulsory working benefits(Super,maternity Leave etc.) our destination, tough laws on trade practices & Indemnity, Rent costs, Business tax(BAS,Audits,CGT,FBT,Yearly Business returns. etc) and to top it all off the expected profit up-marking that the retailers expect.

    Somehow I feel nothing is going to change.

    • One of the things that they are looking into as far as I’m aware of is the cost of downloadables.

      All of these excuses for higher cost can’t really be applied to downloadbles such as apps and music, because they aren’t really impacted by local things as they are just a region locked storefront thats on the same servers as the US counterpart.

    • If it gives people security and benefits in their jobs then I don’t mind paying a bit more for my games. I’d rather that than see my friends in retail living on USA-dian style minimum wage. Plus remember that in the end these are luxury products, if there’s somebody out there who truly believes they need games to live then I think they need some counselling.
      Still expecting to find price gouging somewhere along the line, the part of my brain that enjoys big business conspiracy theories won’t let me believe otherwise and the rest of my brain says it’s probably right.

        • Yes they are. They are not required for anything, Just because they’re not priced so highly that only the rich can afford them doesn’t mean they’re not a luxury. It’s not a negative thing but it’s silly to suggest that gaming is anything other than a luxury.

        • A non-essential entertainment toy that facilitates your ability to sit around on your ass and does not provide you with either shelter or sustenance. Fits my definition of luxury product. Don’t get your panties in a bunch, technically most of the stuff we buy could be classed as a luxury. I’m just trying to point out that in the larger scheme of things only being able to afford 2 games on pay day instead of 3 is not something worth going to war over.

      • I’d agree with that sentiment, if it were Australian jobs that we were giving greater security – but it’s not. Very little software is developed in Australia. If we look at who the fingers are pointed at, it’s Apple and Adobe and Microsoft, so it’s more likely that it’s American jobs we’d be protecting.

        Also, it’s not just games they’re looking- it’s all kinds of software, the sort that is widely used throughout Australian industry: Windows, Office, Photoshop, that kind of thing. It includes things like music and movie prices on iTunes, which are always higher regardless of the enchange rate.

        • So it’s alright to support jobs within the country, but purchasing a product and say, perhaps providing more jobs in other countries is bad?? I’d rather support a few people in a chinese warehouse sending me a game, or people managing servers elsewhere, than a few overpriced white australian teenagers working in retail.

          Additionally the cheaper games are, the more i can buy, and the more jobs that are supported. So no, buying more expensive but local is an economically flawed argument, in fact it does more damage.

          Personally i’ll go with whatever is cheaper, because in the long-run that will provide more jobs and greater competition and economic activity.

        • Yes of course, I agree with you pretty much completely and fully expect them to find that we are being ripped off hugely by overseas companies. My point is more that if it turns out 10% of that overcharge is going to paying employees at bricks and mortar retailers in Australia then I’m willing to forgive them that 10% because it means some of my friends who work in IT stores and games retailers are getting that extra cash.
          Sorry if I was a bit unclear in my original post – although I make no apologies to Andrak who was just plain rude in his reply.

          • Having worked at three different retailers in the past five years, and all in the entertainment sections, I can say that the extra charged by the publishers/wholesalers is NOT going to cover retail wages. Basically, the cost price for a $100 retail game here is normally at an absolute minimum of $78. So most games are sold at a loss on release.

            So basically, the WHOLESALE price is higher than the retail price of the US. None of that goes to retail workers here, that is purely to line the pockets of the publishers. It’s even worse because a lot of publishers simply send in stock from the UK, where are cheaper as well, and aren’t published here.

    • That’s an element, but it doesn’t account for all of it. In terms of physical sales retailers get stooged by the distributors who offer them tiny margins on their products. It’s like the cost of fuel – we get stooged pretty hard by the distributers. My parents own a independent servo in a touristy area in country WA. There’s basically a kind of invisible line you cross where the cost price of fuel jumps by about 10c/L for the region, where as you can drive half an hour in the other direction and it’s cheaper. You can’t negotiate with the company because you’d don’t have any other choice.

      • So basically we are a captive market? “Oh it’s the Australians, charge’em an extra $30; it’s not like they have the strength in numbers to fight back. Copying your regional servo metaphor does this make the government inquiry Today Tonight’s in depth investigation?

        • He’s actually right, the wholesale price charged to retailers here is actually higher than US RRP. Even including additional GST and freight costs (which generally aren’t very high per unit due to the deals they get for sending massive volumes) on top of the US retail, Australian retailers still pay an additional amount. It’s now referred to as the ‘Australia tax’ by people in retail, and publishers try to justify it by saying we’re a smaller market.

  • Looking forward to them justifying the almost-if-not-the-same-as-retail digital download prices. “Dems intertoob pipes ain’t cheap!”

    • I agree that the prices of digital content is the main concern. Most of the data is stored on overseas servers. I can only assume that the price difference is to not complete with boxed copies otherwise they will stop stocking their products. Remember PSP go having issues as it was all digital content and retailers not wanting to stock it.

  • Well here is to hoping something changes as a result of the inquiry, if not I’ll continue to import and buy digitally.

  • About bloody time! The article gave another great example, Adobe software package (I think the Master Collection) in Australia they tacked on an extra $1400!! WHY?! That’s just stupid and makes no sense.
    I’m also glad they are looking into digital downloads! Hopefully it might mean Steam will be forced to lower the prices back? I don’t accept their justification for increasing digital download prices! And I can’t see how it can affect retail sales LOL
    Only people with really fast internet can get any big benefit from downloading all their games (and I mean people who can easily get ADSL2 connection).
    If the retailers are so worried about digital downloads eating into their profits, then why aren’t they campaigning against the publishers/distributors to lower their prices so that retailers can take advantage of a lower RRP???? It seems retailers are happy with current RRPs (that’s the impression I get)

    • Steam doesn’t set the regional pricing, the Publishers do.

      Only some games on Steam are priced in the “Australians will pay more” category, most notably Zenimax, who hold Bethesda and iD in their stable, but there are certainly others (like Ubisoft) that adhere to this pricing model.

  • I’m waiting for the prices to increase when the dollar weakens, even though they haven’t really dropped the price to begin with!
    All these people that say “it’s more complicated than comparing exchange rates, local wages are higher, wank, wank, wank etc” – where has the money gone? The dollar has gone from buying 60c to buying over US$1. If the price hasn’t changed in Australia – where’s the extra 40c my dollar bought? Tell you one thing, it hasn’t gone into raising the wage of the “Aussie jobs”. Some corporate bugger has got it!

  • (That’s not saying game prices aren’t a ripoff, but not nearly as bad or annoying to get around as Adobe’s shit)

  • I’m not really sure about the price of most things anymore. I can look on Steam and Origin and see something like Assassin’s Creed Rev or Crysis 2 for around $80 and then walk into my local Gametraders and see both for $49 or at on point AssRev was $19. I’m not sure if they are seeing at a loss to gain people buying stock but it sure seems risky given the small PC catalog they have there.

  • We’ve been getting piledrived by retailers on game prices for a while now good to see they finaly going to do somthing about it.

  • this really has been Ed Husic’s push. I’m glad he is looking at it. While kotaku didn’t really highlight this point, its for all digital software – not just games. I’m sure this will pull up a few interesting things in regards to app stores and similar.

  • I just want a cheap place to get music from, digitally..

  • No matter what the marketing managers say, we are over charged. And I really think that they target the casual buyers as they often dont know they are being ripped off!

  • Doesn’t the government understand that it’s GST and import tax that is the reason for inflated pricing? It’s their own fault.. Why do you think Apple charges more in Australia than the US still with the dollar so low? GST and other taxes! GG Government for not even understanding that YOUR the one causing the inflation!

    • Taxes don’t even come close to closing the gap between pricing.

      Quite simply, when our dollar was worth less, companies charged more to compensate (overcompensating in many cases due to laziness and weird distribution deals that meant that our wholesalers had to by indirectly through Europe instead of direct from Asia/America). The dollar gained value but the market showed that it could afford to pay those inflated prices.

      A lack of competition for distribution (people can’t set up new, more direct agreements because of the current ones in place and the reasonably small market makes the cost of entry seem rather high compared to the expected returns) means that there is insufficient incentive for companies to lower their prices.

      So yeah, it’s the government’s fault. Damned taxes!

  • I hope this review acknowledges the difference between selling a product at retail, and selling a product digitally. There are very good reasons why a product *may* cost more at a retail level when sold in Australia, that doesn’t mean it shouldn’t be examined, the costs faced by Australian companies doing business are unique in some situations, sure, but that doesn’t mean there aren’t unique costs of business elsewhere.

    On a digital product point of view, I really do hope this is examined more closely. The only compelling arguments I’ve seen so far as to why a digital product is sold for more to Australians is “Because we can” and “To provide price parity with physical retail goods”. The only thing wrong with the first on is it’s a pretty scummy thing to do, hopefully this inquiry will name and shame companies that do that. The second excuse however could be illegal. It will be interesting to watch that space to see if that crops up at all (either as an admission or an allegation).

    • It’s not technically illegal, I think it’s actually been sanctioned by the government (could be wrong) with LPG prices. For a while lpg had to be within 2/3 of petrol prices, this was removed but servos keep it up. (like I said, could be entirely mistaken, but this is what I read and have been told)

      • That’s not really like what I was talking about I don’t think. I think they artificially inflate the price of digital goods to be the same level as retail goods, in order to help the retailers trade on a “level playing field”. I suspect that could be illegal due to laws on price collusion possibly.

    • Obviously you haven’t read articles regarding why these companies like Apple (from a hardware perspective) do what they do, it does come solely down to taxes that they get charged in Australia compared to the US.

      • Like I said, there are certain costs of doing business in every territory, you can’t really change that, this enquiry should examine what those costs are in some sample territories and see if the price increase are justified.

        As for you example of taxes in Australia, would you care to list every tax that applies to, say, an Apple MacBook Pro here in Australia versus one sold in the USA?

        • Base model MacBook Pro 13″:

          Australia (10%GST): AU$1399
          Birmingham, AL (10% sales tax, highest I could find): AU$1261.87
          There are some places in America with no sales tax, making the price: AU$1,147.16

          Apple hardware is actually a pretty terrible example in this case because they changed their pricing with one of the recent hardware refreshes, so that current exchange rates were taken into account.

          They also lowered iTunes pricing at about the same time.

          Now compare to the prices on Steam or direct download pricing for Windows 7 or any Adobe product and it’s obvious that the difference covers much more than just sales tax, because the prices are nearly double.

          • Figured I’d check the Adobe pricing from their online store.

            Photoshop CS5:
            Australian price: AU$1168
            American price: AU$668.73 (US$699)

            Fairly sure that $500 is a bit more than a 10% sales tax.

  • At least with video games there is an alternative (importing), which isn’t legally possible with a lot of software, like the sort we use at work. Adobe has been used as an example of rip-off pricing because it’s widely used, which is true. But even specialist software like the sort we use at work (in the examples I’m thinking of, less than 500 sold world wide over 10 years) are subject to ridiculous markup because we’re in Australia. And there we have no alternative.

    • I would believe specialist software used at a corporate level is very much different circumstances. Especially considering that this software is most likely developed by a much smaller team than large R&D teams that you would see in the games industry. These programs are also most likely tailored to suit the clients needs and are therefore always changing.
      There are reasons for specialised software to be more expensive than software that is sold to the masses, such as video games, etc.

      The above reason is also why Adobe is more expensive than other software such as anti-virus programs, games etc. It might be used by more people, but it’s still considered specialised.

    • To an extent, I’m OK with this. We use some very specialist software, but the fact is, part of the licensing cost is the additional local support we get. Adobe doesn’t offer that, so people understandably get pretty annoyed.

  • It’s all well and good for a publisher/distributor like ubisoft/activision to say they are looking into prices, but they don’t affect the final decision made by the retailer. To use a different product as an example, (this is a simplified example) if coke decided to sell their product to Coles & woolworths for $1, this is no guarantee Coles or Woolworths will sell for $1.50, it is up to them how they price their product, so if it costs $3.00 from Coles/woolies, coke dropping their price to 50c doesn’t mean coles/woolies will drop their price.
    That being said, hopefully game retailers will recognize sales are dropping, but this is unlikely, as someone above pointed out, retailers are getting most of their sales from ‘casuals’ who don’t know about online stores or parents who want to get their kids to be quiet now as opposed to in a week or so when the game shows up in the mail.

  • When the dollar weakens, the prices go up. Which means more profits.
    When the dollar strengthens, prices stay the same because profits fly up.
    Australia gets screwed over time and time again due to greed…. There, I just saved the Government thousands of dollars in working out why the pricing sucks here

  • “The Aussie dollar has been on a real tear in the last 12 months, and that does give us reason to look at this,” said Ben.

    Yeah, they’re looking at it. After 12 months. Looking at it very, very slowly while enjoying the extra profits rolling in…

    I hope they have a nice long chat to Adobe, too. Almost twice the price for a digital download of their software? What the hell is up with that? Any Adobe products I want, I ask a friend in the States to buy for me and ship over – even with exorbitant shipping I save hundreds of dollars.

    • Got to remember – companies generally forecast income annually and establish predicted exchange rates when doing their initial forecasts. If the dollar goes up, they still need to hit their targets based on what they reported the exchange rate as at the beginning of the forecast period. Essentially there is always going to be a delay before a company can adjust to a new exchange rate (in all industries not just gaming).

      Agree that they’ve still taken their sweet time though…

  • Happy to see this.

    What about the stuff the publishers do right, though? Delays between overseas and local releases shortening, etc? What areas are we happy with thus far, and more importantly what are the reasons for them?

  • Question: Why are we paying double the amount for games, subscription to software, software itself and other digital materials?

    Answer: Because we don’t have nuclear weapons

    It’s so … simple …

  • there’s no excuse for our dlc prices being so much higher e.g $15.95 aud psn dlc vs $10 usd. The idiot who is setting the prices is limiting their potential income. Me and my mates now hold off buying early or wait for goty versions as we refuse to buy dlc at ripoff prices.
    Waiting for the market to set the price is idiotic, as they will never know how much more sales they could make, by actually listening to consumers and setting prices that more people are willing to pay, thus growing their market.

  • The Ten News report on it last night implied it was more about digital downloads…? Why we pay more for songs on iTunes etc.

    Regardless, pleased to hear it.

  • one of the reasons is that australia is sparcely populated, its descrimination by the look of the country

  • We don’t need an inquiry, the results are already known.
    What we need is for more public awareness of purchasing games (and other stuff) online.
    Retail sales still account for 80% of games sales in Australia, so publishers will continue to to charge retail prices.
    That will only change when they are forced too adapt. And they will only be forced to adapt when the customers say “enough is enough”.

  • Good, $100 for a new game is insane, bring us down to around 60 like in the states, money conversion isn’t an excuse anymore.

  • The real reason why we pay more is in the last paragraph:

    “At the moment, video game publishers are content to maintain prices on account of the fact that most consumers are willing to pay that price.”

  • I love how Mr Activision didn’t even come close to answering the question. Typical money-grubbing douchebag. They are the worst offenders for ridiculous prices. The MW series remains upwards of $70 for years after a sequel has been released (and that’s including digital download!).

  • Our market is TINY compared to those overseas, so I’d be more interested in keeping overseas publishers happy and exporting to us than trying to wring every dollar out of them that we can.

    • Some of them manufacture here. There is no importation.

      Ultimately, local pricing isn’t something I worry about too much. I appreciate that prices here are too high, so I import almost 100% of my games.

  • So, Ubisoft wonders why people pirate their games, it’s because companies like them slap another $40 onto the price tag, just for us. And for years now we’ve told everyone, we have had enough of this crap.

  • If your still buying games from EB or Game, your getting ripped off, i now buy all my games online (from an Australian Company) an have not paired more than $70 to pre order any new game and with free shipping you can’t go wrong.

    how do Game retails still get away with such a price difference.?

  • Yay! Soon retail will have the same price as Ozgameshop!

    And I’ll still continue to shop at Ozgameshop because I’m sure the retailers won’t be happy that they are losing out on profits and will be getting their casual drones to act 50 times more desperate to push their KPIs up.

  • We Aussies have been getting ripped off for some time now which is a tragedy. What we should have done is banded together and close out places like EB by shopping online exclusively for all our gaming needs.

  • If they’re waiting until they see profits in Australia go down, then we just need to get more people on board with bypassing the Australian market – no wait, that screws us over in the long run. (again)

    Its a catch-22. For now though, don’t buy anything on the first page here:

    have a great day

  • The problem is that we still pay the inflated prices. Nothing will change in the short term unless we all stop buying the products.

    But it’s Australia. We will still buy it anyway/

  • So last night, EA/Dice announced Battlefield Premium – a subscription to get all the upcoming (and previous) DLC for Battlefield 3.

    Aside from having already spent $20 buying the Back To Karkand DLC, they want us to spend $79.99 to buy the Premium pack. US price, $49.99, UK price 39.99 pounts, or 49.99 Euro.

    No clear reason as to why they think we’ll pay that price. Personally I’ll be buying it from overseas, since it’s just a download code anyway.

  • Simple solution is to stay away from the obvious places. Instead of buying games for 108 on release at EB Games buy them from JB HiFi who charge 78 on release. I find allot of mates get ripped of by buying things from the most obvious place, after all, that’s what EB games are hoping you do.

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