Why Regional Pricing Remains Essential for Game Distribution

A visit to a local Amsterdam supermarket reveals significant price variations for everyday items like rice, depending on the region and factors such as production costs, distribution, demand, and supply. This concept of purchasing power parity is also relevant in the digital sphere, including gaming. The Economist's Big Mac Index, which measures currency values by comparing the price of a McDonald's burger across different locations, highlights the disparities. For instance, the Euro is overvalued by 4.3% against the US dollar, while the Argentine peso is overvalued by 33% due to inflation and currency devaluation. Services like Netflix and Spotify adjust their prices regionally to maintain accessibility. When working with Valve to introduce local pricing for games outside major currencies, applying similar logic led to reasonable discounts in countries like Argentina and Brazil. However, the current solution of switching to US dollar-denominated prices has resulted in significant price hikes, sometimes up to 4,298%. This approach fails to address the root cause of the issue. Instead, the gaming industry could learn from other digital media sectors, such as the free-to-play model, which has successfully handled regional pricing for decades. Solutions like analyzing payment methods and access details to adjust pricing, or requiring local tax IDs for specific regional offers, could be applied. It is crucial for publishers to collaborate with strong local partners to cater to regional gamers, provide accessible payment methods, and generate additional revenue streams without impacting other markets. In light of Valve's recent decision, publishers must diversify their distribution channels to remain competitive.