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Australian government report tears apart "unjustifiable" games pricing

Australian government report tears apart "unjustifiable" games pricing

Tue 30 Jul 2013 8:42am GMT / 4:42am EDT / 1:42am PDT
Politics

Digital downloads worst offenders, Steam, Origin, PSN, XBL named

A report, published by the Australian government, has examined the pricing disparity of IT products in the region compared to other nations, coming to the conclusion that the overly-inflated cost of IT products, including games, are "unjustifiable."

The paper, from the House Standing Committee on Infrastructure and Communications, is entitled "At what cost? IT pricing and the Australia tax." It investigates a long-held Australian belief that large corporations are unfairly hiking equipment and content prices to the market, even when that content is delivered digitally.

"Particularly when it comes to digitally delivered content," says the report, "the Committee concluded that many IT products are more expensive in Australia because of regional pricing strategies implemented by major vendors and copyright holders. Consumers often refer to these pricing strategies as the Australia tax'.

"While the Committee recognises that businesses must remain free to set their own prices in a market economy, it has nonetheless made a range of recommendations that are intended to sharpen competition in Australian IT markets. The Committee hopes that these measures will increase downward pressure on IT prices and improve the access of Australian businesses and consumers to cheaper IT products."

Specifically naming games as one of the products under scrutiny, the paper looks at the effects of high pricing both on the consumers and the producers of games. The differences in cost are extreme.

"Games: submissions compared the prices of more than 70 products," the report notes. "The average price difference was 84 per cent, while the median difference was 61 per cent."

Speaking to Mr Nic Watt, Creative Director of local studio Nnooo, the report's authors find that Australians are expected to pay around 45 per cent more for a Maya 3D licence from Autodesk than users in other countries.

"As a games developer for PlayStation (Sony), Wii U (Nintendo) and Nintendo 3DS we have to use one of these packages to be able to create and export our 3D artwork into our games," said Watt in reference to products from Adobe and Autodesk.

Further investigation revealed that, not only are boxed products much more expensive, with one major exception, but digital games actually show an even greater disparity.

"Choice compared the prices for a number of computer games, again finding substantial price differentials. The submission compared the price of 20 recent and new-release games sold on EB Games' Australian website against the same company's US website. Only one game - The Elder Scrolls V: Skyrim - was at parity with the US, while the majority of games were between 40 per cent to 90 per cent more expensive on the Australian website.

"Digitally distributed games showed even larger price differences. The Choice submission highlighted price differentials for games sold through 'Steam', a popular online-only games platform, and showed consistently higher prices in Australia compared to the US for substantially identical digitally delivered content. The worst price differentials on Steam can be 200 to 300 per cent more expensive in Australia. Choice highlighted the ten products with the biggest price differences: The average price difference for these 10 games is 232 per cent, even though, like the iTunes products, they can be delivered with minimal rental, labour and distribution costs."

Whilst Steam, Origin, PSN and XBL were highlighted as being particularly gouging of consumers in the region, it was noted that, on Steam at least, prices were set by the publisher and not Valve itself. In fact, those games published by Valve on Steam tended to show parity with global pricing.

Incredibly, in some cases, it's actually cheaper for an Australian gamer to buy a boxed copy of a game from the UK and have it shipped to the other side of the world than it is to buy it online. The report notes:

"In some cases price disparities in relation to digitally delivered games are so large that it can be substantially cheaper for Australian consumers to purchase a physical copy of new release games from a UK-based online store and have it shipped 15,000km to Australia. Mr Scott Nelson, for example, recounts finding a then new-release game, Mass Effect 3, on sale at Electronic Arts' 'Origin' digital store for A$79.99, while a physical copy could be purchased and shipped to Australia from the UK-based ozgameshop.com for A$38.99."

Interestingly, one of the findings of the report seems to recommend that consumers are entitled to ignore and circumvent mechanisms which enforce geographical boundaries on distribution, which would presumably include staggered global releases.

"The Committee recommends that the Australian Government amend Copyright Act's section 10(1) anti-circumvention provisions to clarify and secure consumers' rights to circumvent technological protection measures that control geographic market segmentation."

10 Comments

Morville O'Driscoll
Blogger & Critic

1,536 1,339 0.9
Well, that's just telling us what we already know (even those who don't live in Australia). I do hope that it'll be a kick in the behind for publishers who think that price differences based on geography are fair... But I doubt it.
"The Committee recommends that the Australian Government amend Copyright Act's section 10(1) anti-circumvention provisions to clarify and secure consumers' rights to circumvent technological protection measures that control geographic market segmentation."
But what happens when this circumvention allows uncensored games (or games that have been rejected for classification entirely) to be played?

Edited 3 times. Last edit by Morville O'Driscoll on 30th July 2013 10:32am

Posted:A year ago

#1

Sam Brown
Programmer

235 164 0.7
Is Mass Effect 3 even legal in Australia? It does have sex in it, after all. Maybe the extra money is required to ensure that all drugs and purple implements are removed before it crosses the country's borders. ^__~

All joking aside through, the telling line for me is this:
While the Committee recognises that businesses must remain free to set their own prices in a market economy
We all know that the market will charge what the market will support. Unless a case can be made for the existence of a price-fixing cartel (which I doubt exists, I hasten to add) then the only thing that will lower prices is a drop in sales. And that's up to the consumers.

Edited 2 times. Last edit by Sam Brown on 30th July 2013 11:13am

Posted:A year ago

#2

Adam Campbell
Associate Producer

1,169 953 0.8
Good!

Posted:A year ago

#3

Klaus Preisinger
Freelance Writing

1,104 1,073 1.0
Isn't everybody buying 16 digit codes from some odd website in the Caribbean these days?

Posted:A year ago

#4

Andrew Wafer
CEO

21 17 0.8
Popular Comment
"It investigates a long-held Australian belief that large corporations are unfairly hiking equipment and content prices to the market, even when that content is delivered digitally."
"digital games actually show an even greater disparity."
"PSN and XBL were highlighted as being particularly gouging of consumers in the region"

Cost of ESRB age ratings approval process for a small downloadable game released across North America = Free.

Cost of government ACB age ratings approval process for a small downloadable game released across Australia = Thousands.

Not to suggest that's the only reason or justification for the digital price disparity, and I haven't read the full report, but based on this article it makes me question why they don't look at WHY prices are higher.

Posted:A year ago

#5

Gareth Eckley
Commercial Analyst

88 67 0.8
Finally Yahtzee might stop whining about pricing.

Posted:A year ago

#6

Morville O'Driscoll
Blogger & Critic

1,536 1,339 0.9
@ Andrew

True, they should have examined the reasons more closely. But on the other hand, if Valve can absorb various costs (like the age-rating approval process) without hiking their prices up, then why can't other multi-national publishers? Smaller publisher/developers and those based in Australia don't have the luxury of doing that, but EA, Capcom, Activision, etc?

Posted:A year ago

#7

Andrew Wafer
CEO

21 17 0.8
@ Morville,

I expect it's more complex than companies simply trying to overcharge Australian consumers, as it makes little sense. There's been a lot of fluctuation in the value of the Australian dollar over the last 3 years which may also be playing a part. My point is simply that the government is making it more expensive to release some digital download games in their country than in other countries. That could be a contributing factor as to why the cost to the consumer is more specifically in XBL, PSN, Steam etc cases. And it could also have a knock on affect to the pricing of other premium games too.

Some smaller indie games are not released in Australia at all because of the expense.

Posted:A year ago

#8

Dave Knudson
Sr. Technology Manager

42 7 0.2
I don't have any first hand knowledge, but could there be some retail protection being built in? Meaning if it costs x percent more to distribute to Australian retail, then that same cost gets passed on digitally.

Andrew mentioned currency as well. My guess is that there isn't a want to outright screw Aussies, but the price may be set in such a way to hedge against being on the wrong side of a currency swing.

Posted:A year ago

#9

Dominic Jakube
Student

92 13 0.1
It used to be worse I remember paying $140 for Streetfighter II on the SNES and $135 for Turok on the Nintendo 64, oh and Neo-Geo games $400.

Posted:A year ago

#10

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