Vrach said:
thedoclc said:
Don't think you're understanding me here mate. I know a number of people here - personal friends, friends of friends, local forums, uni colleagues - none of them actually buy games beyond what they "have" to buy (ie. 1-2 MMOs and perhaps an online FPS).
I've done a quick calculation in another thread. The equivalent to buying a game that would normally cost about 60$ in Serbia would be paying over 300$ for it in UK/US, standard taken into consideration (which if you're still gonna be telling me is a price adaptation with a straight face, I'll only be able to assume you're trolling cause the poll here shows most people wouldn't even pay 120$ for one). Buying a 100$ game is to a lot of people a third of a month's salary or so around here.
I'm not claiming I know their business better than they do. I'm claiming they're ignoring the market entirely. Not adapting - ignoring. Simply deeming it not worth the bother and then still yammering on when they see a torrent and the number of people getting their hands on it. Throwing around claims like "30% of PC game sales are lost to pirates" when they're ignoring a huge part of their market.
Now if you think it's better to lose 30% (or whatever the real number is) to pirates but manage to sell a few of those overpriced games, well... kudos to you, hope you never end up handling any serious financial situations. I think most people on the other hand would agree that adapting the price to something reasonable (considering that your investment in extra copies for that market is virtually nonexistent, especially with the current availability of digital distribution), would net you a much higher profit.
It's not something unprecedented - to go to a movie theatre here, it'll cost you about 3.5 euros at most (there's deals to even cut that in half). In UK, you'd pay 12 euros for the same thing. Now, do you think the movie industry doesn't know what they're doing? Or could it be that the games industry is actually just ignoring a potential market?
I understand you. I just disagree. I'll discuss the points one at a time. By the way, the situation is similar here in Mexico. Most people can't afford video games; they're the purview of the rich and of foreigners (mostly Americans, like myself). The big companies don't ignore the market, but they treat it in a way to maximize their profits and charge $1000 MXN (about $83 USD) for a new game. Some of that is import tax.
The first problem is that your calculation is based on how much of a person's income the item costs, which is not how a company accounts. A company simply counts up how much currency they're getting for their product, not how much of a person's income that is. If the people of Serbia have to spend a third of an average worker's income for a game, then they're not the target market, not when there are others who will pay it. In other words, if I sell a product and can sell it for a fifty dollar profit to a person with more money, or lower the price to only twenty dollars so someone else can buy it, I'd sell it for more.
The average cost per unit of a product has a U-shaped curve, where at first economies of scale work for you to lower how much a unit costs, but then work against you when economies of scale turn against you. For example, if I build cars, my first car costs a damn fortune (factory, workers, design, research, etc, etc), but the more cars I build, the more I can spread out those costs. However, if I overproduce, I need to pay more for supplies (as I'm driving up demand for my raw materials), pay more managers, pay workers overtime, replace machines faster, etc. So eventually the average cost per unit goes up.
That means at some point, companies are going to see production of physical copies of their games start to cost them more on average. They'll cut off production of physical copies when they feel that they're going to wind up paying more than they'll make (or production capacities are met), while selling them where they think their margins will be best.
As for digital distribution, there's a big obstacle to charging less in Serbia. In the case of movie theaters, the theaters act as a physical outlet for the media. If it's profitable to sell a 3.5 Euro ticket for a movie, they will - it maximizes profit and digital distribution is indeed cheap. That 3.5 Euro ticket doesn't do -anything- to sales in France for 12 Euros or in New York for $9 USD because the theater in Serbia requires you are physically in Serbia to take advantage of the low price. The same is true here in Mexico; the theater I go to in Guadalajara costs me less than $5 USD after the exchange and is much, much nicer than the ones back in NYC. This doesn't hurt sales in NYC because only people in Guadalajara can take advantage of the cinema.
However, if I were buying software over the internet, and I could buy it dirt cheap in Serbia, how long do you think it would take me to get a proxy server in Serbia? Offering a cheap alternative to Serbians would open up a means by which consumers paying the higher price could dodge that high price. And they would. Hell, I'd do it. So while they may be opening up a new market with a much smaller margin, it would be creating a hole where their customers who -can- pay full price don't have to. It'd be sacrificing the high margin they make when charging Americans, Australians, Western Europeans, etc, a higher price on Steam. It would be as if I offered everyone from one side of town a seat at a restaurant for half price - and then asked you which side of town you were from.
"hope you never end up handling any serious financial situations." - please skip the insults.
If I were a company offering a digital product, I would not want to offer a cheaper digital distribution for a product to people in one region versus another. If I did, I'd lose my shirt when everyone and their brother online pretended to be from that region. I could charge less for a physical product or service in a different region, since only people in that region and a small group who are traveling internationally can take advantage of the price difference.
