When it comes to buying local, it's become very easy for angry gamers to turn their backs on the Australian market. Ask any Aussie gamer whether they think they're paying more for titles compared to other countries (particularly the US) and the answer will most probably be yes. The comparatively high prices of video games and delayed release dates in Australia has even started to push an increasing number of gamers to start importing their games from overseas. But sadly, concrete reasons as to why Australians are treated differently to the rest of the gaming world are pretty hard to come by, with game publishers and developers--for the most part--keeping quiet on the issue.
Despite the gap in solid information, the facts continue to speak for themselves: the recommended retail price (RRP) of video games in Australia continue to be significantly higher in comparison to the US and Japan, and slightly more than in Europe. A copy of Too Human on the Xbox 360-when all prices are converted to Australian dollars--is A$99.95 in Australia, compared to A$68.40 in the US, A$96.24 in the UK and A$65.71 in Japan; Fallout 3 Collector's Edition for the PlayStation 3 is A$129.95 in Australia, but only A$91.27 in the US, and A$106.92 in the UK; Saints Row 2 on the PlayStation 3 is A$109.95 in Australia, A$68.44 in the US, and A$106.92 in the UK; and finally, a copy of Super Smash Brothers Brawl for the Nintendo Wii comes to A$99.95 in Australia, while consumers are only paying A$57.02 in the US, A$85.48 in the UK, and A$71.26 in Japan.
With no other avenues left open, consumers have become restless. On one side there are the basic economic facts to consider: the high cost of doing business in Australia, profit margins, fluctuating exchange rate and our geographical isolation. The other side is less objective and more succinct: gamers are getting ripped off. In light of this, the question still remains: why are Australians paying so much for video games?
One man and a clipboard
One gamer who was determined to find an answer to this question was 34-year-old Melbournian James Dominguez. Fuelled by dissatisfaction and confusion over so many discrepancies, Dominguez decided to conduct his own research to find out what is the best way to buy games in Australia.
"I wasn't aware of how wide the price difference was until I visited the US in 2003," Dominguez says. "I bought some PC games to take home. They were brand new, but were the price of Platinum titles back in Australia."
However, it wasn't until the new generation of consoles hit the market, with A$100+ RRP games, that Dominguez began to notice just how unfair the pricing model had become.
"That's when I started to investigate and collect figures. I thought it was important to do something practical, to cut through the stonewalling and platitudes from corporate marketing. I wanted the real numbers from the places that real gamers make their purchases, and the only way I was going to get those numbers was to collect them myself."
Dominguez spent a month and a half researching and collecting data, comparing prices on the top games on each of the five current-generation consoles (Nintendo DS, Nintendo Wii, PlayStation 3, PSP and the Xbox 360). He recorded prices from local retail stores (JB Hi-Fi, EBGames, Harvey Norman and independent Dungeon Crawl), Australian online retail (GamesWarehouse, Aussie Gamer and Chaos), Hong Kong-based online retail (Play-Asia, Yes Asia and SuperUFO), and eBay. Regular pricing, not sale pricing, was recorded for consistency and Dominguez used the cheapest postage available when calculating online prices using automatic currency exchange. "At first I was worried the shop staff might find it weird that I was wandering around jotting down prices on a sheet of paper, but I was never approached or questioned about it. Once that was done I compiled them in a spreadsheet and calculated the best and worst prices overall."
The results are baffling. On every item surveyed, Hong Kong-based online stores had the best and second-best prices, with some items at more than half the price of those in local retail shops. For example, BioShock for the Xbox 360 was, at the time the survey was compiled, A$109.95 from EBGames and just A$48.57 from Play-Asia. On average, local and online retailers had the highest prices for all consoles, with some online outlets actually more expensive than local retailers.
"We've known for a long time how poorly treated Australian gamers are in comparison to the US and Asia, and now we have the figures to prove it," Dominguez says. "I think it is empowering for disgruntled gamers to be able to say confidently that Australian RRP in many cases is double what we can pay when importing ourselves."
Dominguez doesn't argue the fact that, given the high cost of distribution in Australia, video games should cost more here. It is how much more that's the problem.
"The distributors state that their prices fairly reflect such factors as Australia's geographical remoteness, shipping costs, the smaller Australian market and currency exchange. But when any person with a web browser can undercut local retailers by as much as 50 per cent by shopping online, carrying the financial burden of currency exchange and international shipping themselves, all of these excuses seem to be inadequate. Somewhere along the line, someone is making a killing, and Australian shoppers are expected to pay the price."
While the Australian video game industry statistics show that consumers are still loyal to the local retailers, Dominguez thinks it won't be long before more and more gamers turn to importing if nothing is done to make prices fairer. "It disappoints me that I have to send my retail dollars overseas, but I feel forced into it," he says.
"My hope is that Aussies turning in greater numbers to imports and digital distribution will start to bite into the distributors' bottom lines, and maybe then we will finally get some results."
The money game
Getting results may be easier said than done, more so when considering the economics of distribution in the Australian market. It's no secret that some things are more expensive in Australia than in other markets, especially in the case of overseas imports. This is due to a wide range of influencing factors--namely Australia's geographical location, size and population number.
Australia has a very small population spread out over a very large area, which means it is more expensive to move a product around in comparison to the US, Japan or Europe, where the number of consumers per square kilometre is higher; it's cheaper to move more units within a smaller space than fewer units within a bigger space. In the process of distribution and sale, the price of the product in consideration increases in relation to factors such as the current exchange rate, inflation, sales tax, and the domestic costs of distributing in Australia.
The same problems apply to the release date of a product in Australia. The distribution of one product across the whole country within one day is a huge feat. It's an unfortunate fact, but there are simply not enough people in Australia to warrant the same kind of immediacy that is granted to other countries with more consumers. It's a disparity that happens across the board, with all imported goods, from cars to jeans to electronics.
Credit analyst Michael Cowley says this is common. "We may start to see other items such as furniture, white goods and other electrical [appliances] increase even further," he says. "The rising inflation rate in Asia is starting to impact their local businesses and they will start to pass that strain on. Given Australia imports such a large amount of goods from that region we may see an increase in the price at the stores very soon. The rising Australian dollar can't shield us forever unfortunately."
Yet it's the Australian dollar's recent near-parity with the US dollar that's caused gamers to feel most cheated. With next-gen games selling for around the US$50 mark in the US, most Australian gamers have been waiting for video game prices to drop down to an equivalent price here. This hasn't happened. Consumers are still paying up and over A$100 for a video game in the Australian market. Cowley, an avid gamer himself, is not surprised. "If we pull back a few years, the current pricing seems about right. From the late 1990s to the early part of this decade the Australian dollar floated around 0.50-0.65 of the US dollar range."
With the current state of the Australian dollar, consumers are expecting the price of video games and other goods to reflect the shifts in the exchange rate. This is not happening, so that leaves the question: where is all the extra money going?
"The logical answer is that it's going to the bottom line profits of the company that's importing," Cowley says. "They need to make the decision to pass the savings on or boost their bottom lines. If you stop and look at Australia's own economic situation it's clear to see that the savings they're making can very easily be offset by the rising costs of doing business in Australia--rising fuel costs, rising energy costs, rising inflation and rising interest rates."
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Hard Sell
Why are Australians paying so much for video games? GameSpot AU checks out this vexing issue in this in-depth feature.
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