Is there room for regional pricing in the digital future?

Steam’s annual summer sale is underway. It’s an event celebrated by PC gamers the world over, but Indians don’t quite get the full magnitude of what these sales represent. After all, why would Sleeping Dogs dropping down to $7 (Rs 540) for a day during the sale be of much significance when you can order a copy off Flipkart at Rs 599 whenever you want? But with EA’s rising PC prices and the possibility of other publishers following suit, we might soon come to value these sales a lot more and adopt the many bargain-hunting tactics PC gamers in the West follow.

Pretty much any PC game you buy these days is tied to a digital service in some way. From Square Enix, Sega, Codemasters and 2K titles that require Steam integration, to EA’s mandatory Origin activation, to Ubisoft’s games that force Uplay, you will be pushed into a digital distribution platform no matter how or where you buy your PC games. We’re all one giant audience now, transcending geographical and cultural barriers. So it seems like it’s only a matter of time before publishers begin approaching us as one market as well.

PC gaming is moving rapidly towards a digital future. Many of these digital distribution platforms haven’t completely wrapped their heads around the concept of the global digital marketplace just yet, what with users able to use VPNs to bypass regional restrictions or activate retail codes bought from one country in the online store of another. Steam seems to have got a lot right, but it’s also had a lot more time in this space than the likes of Origin. Let’s not forget the gamer outrage at having the frustratingly obtuse Steam application forced on to them at the launch of Half Life 2 way back in 2004. Similar grievances are now being heard against Origin and Uplay now, and unfortunately for them, gamers aren’t as patient as we were around ten years ago.

One global market?

The whole idea of one unified audience does bring up an interesting debate from an Indian perspective. If publishers do start to look at this massive audience as one global market, does that mean the end of regional pricing? Will gamers in countries like India, who had the benefit of paying Rs 999 ($20 ) for brand new triple-A games, soon be required to pay over Rs 3,000 ($60) like gamers in the US or UK?

Anand Khemani is one of the staunchest supporters of lower local prices for PC games. His distribution company, E-xpress Interactive, represents publishers like Ubisoft, Square Enix, Bethesda, Sega and Take-Two, and managed to launch the PC version of Grand Theft Auto IV in India at a market disrupting Rs 499 ($8). Khemani remains adamant that lower prices are the way to go.

India is still a major PC market and the numbers are good. At the same time, the purchasing power of the Indian consumer is quite low in comparison to those in developed markets. We cannot demand the same SRPs (suggested retail price) as in the US, UK or other European countries from the Indian customer. To achieve the numbers and grow the gaming market locally, we need to have local pricing,” says Khemani.

Milestone Interactive distributes games for EA, Sony and Capcom, and it’s EA that has been in the news of late for raising PC game prices by up to 133% over last year. CEO Jayont R Sharma believes higher prices in India are inevitable if the PC market doesn’t grow as expected.

For a long time, pricing in India was subsidised for PC games as it was considered a mass market platform. However, the uptake at these price points has not grown as per expectations. Today, an Indian consumer has a lot of other options for gaming, which include mobile, tablet and free-to-play. So let’s look at it this way – a premium experience will now be at a premium price,” Sharma said.

Contradicting this stance is Milestone’s recent lowering of prices for Capcom’s PC games in India. From Resident Evil 5 and Street Fighter IV being released at Rs 2,499, Resident Evil 6 and Remember Me were launched at just Rs 999. The change was probably thanks to Capcom deciding to package its PC games in India rather than having them fully imported, but if there wasn’t a drastic increase in sales expected, it wouldn’t make sense to drop prices.

We argued about the possible lack of growth in India’s PC market too last week, but as for premium experiences demanding premium pricing, even at Rs 999, PC games are already at a premium compared to mobile or tablet games, which usually retail for Rs 55 to Rs 110. The one game that does provide an identical experience across PC and mobile – XCOM: Enemy Unknown – actually costs more on iOS (Rs 1,100) than it does on PC (Rs 999) in India.

Up until now, EA charged higher prices on Origin, whilst maintaining the Rs 1,499 price point at retail

India, and the big picture

Chris Stanton-Jones brings a unique perspective to this debate. He spent 14 years at Sony Computer Entertainment Europe, where he focussed on distributor markets like India. His UK-based consultancy business – Catapult Business Solutions – now helps companies expand their operations into developing markets like India. He believes that game pricing in India is a difficult balancing act, but one that’s important to get right.

In a world of differing VAT levels, import duties and retailer margins, the discussions around fixing local price points is quite normal, and it is accepted that some countries will have trade prices lower (or higher) than others,” says Stanton-Jones, adding, Then, of course, there are ‘special case’ markets like India, where publishers will be balancing their desire to support a (relatively) small but rapidly expanding market with the need to protect their main revenue streams from the larger territories.”

Most publishers, I think, get the big picture with India – its longer term potential with growing living standards, etc – and therefore try to support it. Certainly on the console software side, their supply prices are lower than in any other country that I have ever worked with (in the PAL world). Most seem happy to work off very marginal profit on the basis they are investing for the future,” he adds.

Despite its many challenges, Stanton-Jones believes that India still makes a strong case for lower local prices.

On the physical product, this is certainly easier to argue for. I personally think India has huge potential. Its software market growth has consistently been one of the highest of all world markets. It is, however, one of the most price sensitive markets anywhere and does indeed need to be handled differently. Apart from lower income levels, there is piracy to compete with, import duties, and of course, Indians have been used to super low-priced home entertainment on the film side for many years.” he says.

I think the format holders and larger publishers also see the broader need to try and establish gaming as a mainstream activity in India. It is undoubtedly still very niche though; PS2, the console with the highest installed base, is still in less than 0.5% of households. Getting affordable prices for the masses is therefore a key factor in changing attitudes”.