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The Curious Case Of Digital Video Game Prices

It took video games two decades to go from a brand new form of niche entertainment to a mainstream, multi-billion dollar global industry. Naturally, gamers have experienced a bewildering amount of change in that time. Controllers have gone from three or four buttons to dozens, and games have evolved from something like pixelated Expressionism to photorealistic simulators.

However, now that the video game industry is undergoing its most fundamental shift yet — that being the transition from physical to digital media — some parts of the world are being put to the screws.

Key to the issue of allegedly unfair pricing is Steam, the most popular digital content distribution platform in the world. While gamers can buy just about any game listed on Steam from anywhere in the world, the Valve-owned marketplace employs regional pricing to set differing rates based on consumers’ locations. SteamPrices.com lists some of the more egregious examples, adjusted for U.S. dollars:

  • “World of Zoo:” $14.99 in the U.S., $7.17 in the U.K. and $11.11 in the EU
  • “XCOM: Enemy Unknown:” $49.99 in the U.S., $35.89 in the U.K. and $33.35 in the EU
  • “The Evil Within:” $59.99 in the U.S., $50.25 in the U.K. and, somehow, $66.70 in the EU

There seems to be little rhyme or reason for which regions receive price increases or decreases, and PC Gamer explained that the way Valve goes about the business of selling digital games globally all but guarantees these fluctuations. First, Valve doesn’t set the price of games; publishers do. However, at the moment a developer in the U.S. decides to list his or her game on Steam, an initial price is locked in based on the exchange rate between the country of origin and all other regions where it’s available for purchase. Since games can stay up on Steam for years, this subjects them to a number of spikes and dips according to finicky currency valuations. Also, games sold in the EU are subject to value-added tax, which may explain a portion of the price increase for customers in Germany looking to buy “The Evil Within.”

While the intricacies of navigating foreign markets is going to put the kibosh on most plans for uniform global pricing, there might be a more fundamental issue underlying the video game industry’s pricing schizophrenia — namely, no one knows how much modern AAA digital games should cost. In the 1990s and 2000s, there were plenty of fixed costs associated with developing a top-flight title — designers must be paid, discs must be printed and stores must receive the right number of shipments. However, more and more gamers have taken to buying digital copies that are always available and ready for instant download, and as Wired pointed out, development has become a vastly more intense and prolonged process for employees at top studios. What video game publishers are left with is a new distribution platform that costs them a fraction of what it might have a decade ago but a path to market that essentially dumps money onto development teams in the vague promise of a popular game in return.

As Mark Cerny, a game designer and creator of pre-modern classics like “Marble Madness” and “Crash Bandicoot,” told Wired, “There’s no intrinsic value to a $50 million game.”

The dilemma that big-budget development studios find themselves in is that it’s becoming much rarer to strike it big with a project that costs tens of millions of dollars — a conservative figure in today’s industry. As smartphone-based gaming has taken off and the low development costs of games like “Angry Birds” mean that massive profits are all but assured, fewer and fewer companies are willing to front the funds necessary for several years of development.

Instead, it’s easier to punch some numbers and make some money off of an unfortunate global region on Steam.

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