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  1. #1
    Secondary Hivemind Nexus thegooseking's Avatar
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    Australian Game Prices

    I've seen a lot of people commenting on game prices in Australia being so high, so I thought I'd try to explain.

    You see, this isn't anything to do with the games industry; it's entirely to do with economics in general.

    Every country has two GDPs: a nominal GDP, measured in US dollars at the current exchange rate, and a PPP-adjusted (purchasing power parity) GDP, measured in theoretical "international dollars" (set at the 'normal' - as opposed to current - value of the US dollar).

    When a country's currency is strong (as Australia's is right now, due to Australia being one of the countries least badly hit by Moneygeddon), the nominal GDP per capita can seem high, but this is just a function of the US dollar's relative weakness.

    In a nutshell, a currency's strength doesn't affect the domestic purchasing power of that country's people (at least, not in any simple 1:1 direct way). Australia's PPP-adjusted GDP per capita is therefore far less than its nominal GDP per capita.

    Basically (and this is the short version), the purchasing-power-adjusted value of the Australian dollar (how much in terms of goods and services you can buy for it) is about 71% of the nominal value of the Australian dollar (how many US dollars you can buy for it) by 2010 figures*, which is, I don't need to tell you, a pretty huge difference.

    So if you're looking at how much you're paying for a game in terms of US dollars, then you're looking at how much it would cost an American to buy enough Australian dollars to buy the game, not how much it costs an Australian to buy that game in real terms (which would be currently less than 70% of that value).

    So my point is, don't blame Steam or retailers or publishers or whatever. Blame the way global economics works if you have to blame anything, though there are some rather good reasons for it to work that way. And please, if you understand what I just said, try to explain it to other people. I hope it's at least halfway understandable.

    (Also check out the data smuggling ring thread if you want to take advantage of the strong currency.)


    *Because the value of the AUD against the USD continues to climb while the intrinsic value of the AUD in purchasing power terms doesn't change much, it's even less than 71%, now.
    "Moronic cynicism is a kind of na´vetÚ. It's na´vetÚ turned inside-out. Na´vetÚ wearing a sneer." -Momus

  2. #2
    Secondary Hivemind Nexus Rii's Avatar
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    I don't complain about game prices in Australia so much as I simply don't, umm, buy games here. 90% of the games I buy retail are imported from the UK, with OzGameShop being my #1 source at this point in time.
    Last edited by Rii; 30-06-2011 at 02:14 AM.

  3. #3
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    Thanks for your post, but I'm afraid I still do not understand why this is the case.

    My question is, if a company can sell The Witcher 2 for US$50 in USA and make a profit then why can't they sell it for US$50 in Australia? Surely the company still makes its profit? These products are so often digital, removing any differences between US and AUS customers. Or does it have nothing to do with turning profits and is entirely a result of economic technicalities?

    I would really like to understand this so if you must go into a lengthy discussion - or link to lengthy explanations - then please do. I have no idea what is what in economics, so for gods sake, keep the jargon to a minimum.

    Thanks in advance.

  4. #4
    Secondary Hivemind Nexus Rii's Avatar
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    Well for one thing there's 10% GST (i.e. VAT for our UK readers) in Australia to be accounted for.

    Regardless of the technicalities involved, it is fundamentally retarded that it is consistently significantly cheaper to import a game from halfway around the world via aeroplane than to walk down the street and pick it up myself.
    Last edited by Rii; 30-06-2011 at 02:13 AM.

  5. #5
    Secondary Hivemind Nexus thegooseking's Avatar
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    The point of purchasing power parity is that, even though The Witcher 2 now costs the equivalent $94 USD in Australia, it costs the same in Australia relative to an Australian's ability to pay for it as it does in America relative to an American's ability to pay for it. The average Australian salary has risen from $86k to $94k (AUD) in the past year and a bit. $94k AUD is equivalent to $100k USD at the current exchange rate, but the average US salary is only about $50k USD (and in fact appears to be falling). So in both Australia and America, The Witcher 2 costs about 0.1% of the average salary (it's actually slightly less than that in Australia as an effect of people earning more in the strong economy).
    "Moronic cynicism is a kind of na´vetÚ. It's na´vetÚ turned inside-out. Na´vetÚ wearing a sneer." -Momus

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    So we really are paying more for our games - the argument being that we can afford to.

    I don't like it. Not one bit. I understand that we can afford to pay more (although I certainly can't) but it still feels like they're taking us for a ride. Especially so with the online market. It's like going out for dinner with friends and the restaurant asks for your salary and adjusts the prices accordingly - "The house red? It cost's $5 a glass for you, $12 a glass for you and $17 a glass for you. And no sharing!".

    Thanks for your responses Mr Goose.

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    Quote Originally Posted by sockeatsock View Post
    So we really are paying more for our games - the argument being that we can afford to.
    Whilst the argument doesn't apply quite as well to Steam; the reason that you pay "more" isn't that you can arbitarily afford more, but also because the "comparable" costs are also increased by exactly the same amount: to the retailer and any other part of the supply chain based in Aus.

    In the case of digital games, it's just the same situation as with the rest of the world: the local publisher wants digital prices to be broadly equivalent to retail prices; and the retail prices are determined by local costs and expenses.

  8. #8
    Network Hub Olero's Avatar
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    While your story makes (a little) sense when you look at housing/rent prices, salaries and fines, it stops making sense for digital products. Especially since they're not made in Australia and do not even require anything from the entire continent except a working internet connection to function.

    You can add tax and import costs, sure (however dubious that still is with the internet, just as the phone companies here are trying to charge people extra money for calling over the internet, with much higher rates/mb then regular internet...). But all the other, theoretical (all economics is based on theories, people just don't stick with it, being the unpredictable beings they are) higher pricing is strange at least. Who gets this money? Who makes profit of this increased prices? Steam Australia? Game developer X Australia? What if they don't even exist?
    Last edited by Olero; 30-06-2011 at 11:37 AM.
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    Quote Originally Posted by Estel View Post
    Whilst the argument doesn't apply quite as well to Steam; the reason that you pay "more" isn't that you can arbitarily afford more, but also because the "comparable" costs are also increased by exactly the same amount: to the retailer and any other part of the supply chain based in Aus.
    I think you're underestimating how absurd Australian prices are. New games retail at close to double the American price. I assure you that our retailers don't get payed double.

  10. #10
    Network Hub tomeoftom's Avatar
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    There's absolutely no reason to buy from Australian retail, thass fo sure.

    EDIT: But can we stop the complaining about prices? If a product's too expensive, don't buy it. That's how the system works. You want to haggle, talk to the dealer, don't turn it into some issue of wrongdoing/entitlement - unless they've been dishonest, in which case by all means do so.
    Last edited by tomeoftom; 30-06-2011 at 11:48 AM.

  11. #11
    Secondary Hivemind Nexus Rii's Avatar
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    Quote Originally Posted by tomeoftom View Post
    There's absolutely no reason to buy from Australian retail, thass fo sure.
    Well there is in the case of SC2 given its regional divisions. The local price gave me a shock now that I've become accustomed to paying UK prices for games. =/

  12. #12
    Secondary Hivemind Nexus thegooseking's Avatar
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    Quote Originally Posted by sockeatsock View Post
    So we really are paying more for our games - the argument being that we can afford to.
    Well, no, you're not "really" paying more. This is the point I'm trying to make. The exchange rate is a terrible indicator of how much a dollar is really worth. That's the reason we need PPP-adjustment in the first place. It's not only equivalent in terms of percentage of the average salary; it's also roughly equivalent in terms of what else you can buy for that money. And that's the real worth of a currency: what you can buy with it, not how it compares to other currencies.

    You are paying more than a country like Russia because you can afford to. But that's different: I think that's more to do with encouraging Russians to buy rather than pirate than it is to do with global economics.
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  13. #13
    Activated Node Ansob's Avatar
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    Quote Originally Posted by thegooseking View Post
    So in both Australia and America, The Witcher 2 costs about 0.1% of the average salary (it's actually slightly less than that in Australia as an effect of people earning more in the strong economy).
    So can you repeat the analysis for the UK and for every European country out there to demonstrate that UK and European game prices are similarly "fair?"

  14. #14
    Secondary Hivemind Nexus thegooseking's Avatar
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    Quote Originally Posted by Ansob View Post
    So can you repeat the analysis for the UK and for every European country out there to demonstrate that UK and European game prices are similarly "fair?"
    Well, the average UK salary is about ú27k. The Witcher 2 is ú30. That's slightly more than 0.1%, but it's about right.

    Europe is complicated.
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    The most annoying thing, is that most games at retail stores are just around $80 - $90, but with a few exceptions (mostly the CoDs, also Brink and some others) cost about a $50 on steam.

    Still, better than the $120 they hit you for an xbox/ps3 game

  16. #16
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    How can you explain the way that games can be pre-ordered at US prices until closer to their release. For example, Deus Ex HR was $45 last month but when I checked during the "sales" it had actually increased in price (to $63). This could actually be taken as falsely advertising something as discounted. Also Portal 2 from steam was $50 whereas in stores it was $120. This shows that they can sell it at the lower price so it seems that most publishers are just plain greedy.

    At least indie games never have the regional pricing issue. (that I am aware of)
    Last edited by Wunce; 02-07-2011 at 06:36 AM.

  17. #17
    Secondary Hivemind Nexus thegooseking's Avatar
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    Of course they can sell at a lower price sometimes; that's how Steam sales like the one that's currently on can happen. That doesn't mean setting that price as standard is a good idea.

    Look, you can get twice as many USD for AUD as you could ten years ago. It's right here: http://www.xe.com/currencycharts/?fr...o=USD&view=10Y. Has the price of everything else halved over the past ten years? No. You know why? Because, as I keep saying, the exchange rate doesn't set the purchasing-power value of the currency. I don't see the reasoning behind the argument that games should be a special case.
    "Moronic cynicism is a kind of na´vetÚ. It's na´vetÚ turned inside-out. Na´vetÚ wearing a sneer." -Momus

  18. #18
    Secondary Hivemind Nexus soldant's Avatar
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    The most annoying thing, is that most games at retail stores are just around $80 - $90, but with a few exceptions (mostly the CoDs, also Brink and some others) cost about a $50 on steam.
    That's another issue I'd like explained; digital distribution being equal to the price of retail in some cases. By "explained" I mean a rationale other than "publishers want retail prices for digital distribution" which is simple greed.

    Back when COD4's price was jacked up and 1 AUD was worth about 0.60 USD, they put the Steam price up around $100USD, which when put into AUD was even more than a retail boxed copy! You can argue about average sallaries and economic factors but there's something wrong when a digitally distributed copy of the game (no box, no printed manual, hosted on 3rd party content servers operated and maintained by others) is priced the same as a retail copy.

  19. #19
    Secondary Hivemind Nexus thegooseking's Avatar
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    Digital prices are usually higher than retail here, too. I agree it doesn't make sense, but it's the same everywhere.
    "Moronic cynicism is a kind of na´vetÚ. It's na´vetÚ turned inside-out. Na´vetÚ wearing a sneer." -Momus

  20. #20
    Network Hub alset85's Avatar
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    thegooseking can you tell me why Europe is complicated? I'm genuinely curious. I suspected Australian pricing was largely due to their strong economy, but that really isn't the case in Central/Eastern Europe.

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