GOG ending rebates for regional pricing differences
To stay competitive, they say
Digital games store GOG will soon stop offering customers store credit equivalent to how much less their purchase would cost in North America, a scheme they call Fair Price Package. It's GOG's solution to the prickly problem of regional pricing, which often means people outside North America end up paying a higher price in their native currency. GOG have themselves been paying for these rebates, which they claim average 12% of the game's price and go up to 37%, but say they can no longer afford to do that. This is a mite concerning given rumours surrounding GOG's recent layoffs, though GOG say it's to help them secure more releases by giving developers a better cut of sales.
Like largely not using DRM and mostly making its GOG Galaxy client optional for downloading and playing games, offering refunds on regional pricing inconsistencies is a policy that makes GOG feel more fair in ways than some other stores. Alas, the end is nigh.
GOG intend to end the Fair Price Package program on March 31st. Until then, you'll still receive GOG Wallet store credit on applicable purchases. Credit will last for one year before vanishing into the cyberaether.
"In the past, we were able to cover these extra costs from our cut and still turn a small profit. Unfortunately, this is not the case anymore," GOG said in yesterday's announcement. "With an increasing share paid to developers, our cut gets smaller. However, we look at it, at the end of the day we are a store and need to make sure we sell games without a loss."
They say this change "is not a decision we make lightly." It sounds like they're not just cutting costs, mind, and intend to pass some of the freed funds onto developers.
GOG claim that with more cash in their pocket, they "will be able to offer better conditions to game creators" to remain a competitive and attractive option to devs who are now seeking a bigger share of sales. They haven't announced any firm plans yet.
Store cuts are a hot topic in the industry right now. 30% has been the standard cut for big stores to take from each sale for years, then things started to change in December 2018. Valve's Steam started taking a smaller cut from big-selling games, going down to 25% after $10 million (£8m) in sales then 20% after $50 million (£40m). That was a pretty small change to placate big publishers, and evidently was too small. Mere days later, Fortnite and Unreal Engine mob Epic Games announced they were launching their own store and would only take a flat 12% of sales. Epic backed this up by flashing megabucks to fund giveaways and exclusives, leading to the Epic Games Store taking big-budget games like The Division 2 and Metro Exodus away from Steam.
GOG being a smaller store than Steam in numerous ways, trying to stay competitive by cutting their take is perhaps sensible. It's still bad news for people in regions with shonky regional pricing. Perhaps GOG are counting on customers believing in the company's DRM-free mission and wanting them to thrive, enough that this is accepted as a necessary evil. Which, given that people who use GOG tend to very intently shop at GOG rather than rival stores, may prove right.
This is a little concerning coming so soon after last week's layoffs. GOG said that only "around a dozen" people were let go as part of reorganisation and that they were actually hiring for many more positions. However, one of the laid-off employees whispered to Kotaku that "GOG's revenue couldn't keep up with growth" and the company have been "dangerously close to being in the red." Mysteries.