Thanks for raising this point! We looked into it, and it turns out the issue in the Eurozone isn’t that developers aren’t allowed to set different prices. In fact, they absolutely can.
What EU law forbids is geo-blocking. What it means is that Steam can’t stop someone in an EU country from buying the game at a lower price in another EU country.
Steam clearly doesn’t want cross-border arbitrage inside the EU, and since they can’t legally block it, their “solution” is to just enforce a single price for the whole Eurozone. However, from a developer’s perspective, it results in overpricing (=underselling) in several EU markets.
For South America, there’s no equivalent regulatory constraint that we could find.
A fun side note: Netflix does manage to charge different prices across Europe, but their defense is that they offer different catalogs, which legally counts as different products. We might wonder if these regional catalogs serve as a little trick for being able to do regional pricing. We don't have time to investigate that, but there you go, haha.
Thanks for that! I tried to do this in 2017 when releasing Narcosis, using OECD metrics.
I'll probably take inspiration from your tool but something to consider as well is number psychology (99.99 beats 101.13 by a large margin), price points when discounted ("games under 10$"), and more importantly maybe, factoring inequalities with something like Gini coefficient? Because for instance, India has low purchasing power, but probably the poorest people in India don't even have a Steam account.
Imo, the ideal solution would be to compute the PPP conversion using sub-components of the basket used to build it. For instance, Eurostat provides PPP conversions by product categories, which yields a much better conversion factor for cultural goods and services (https://ec.europa.eu/eurostat/databrowser/view/prc_ppp_ind__custom_19101903/default/map?lang=en). This would already capture the fact that culture can be a luxury good in some countries, and thus should have a higher price than a simple average PPP conversion.
Unfortunately, the World Bank - the only organization that really provides international PPP conversion factors - does not publish category-level breakdowns.
This is why we provide Netflix-based pricing: Netflix is a cultural good, almost identical everywhere, available worldwide, and it distributes video games. It also has a clear per-country pricing strategy.
Another possible approach would be to use Steam’s hardware statistics as a proxy for Steam consumers’ income, but Valve does not provide (yet?) this data on a per-country basis :'(
Yes! This is exactly the kind of conversation that needs to be had. I’m from South-Africa and the premium we end up paying on software and hardware as a result of import duties on top of weakened purchasing power kills us.
> Steam made a questionable choice by grouping multiple countries under a single price.
That's probably to respect the single market laws in the E.U. If you remember, Nintendo got heavily fined for not respecting those.
https://www.theguardian.com/business/2002/oct/31/games.technology
Is it possible that Mercosur has similar laws?
Thanks for raising this point! We looked into it, and it turns out the issue in the Eurozone isn’t that developers aren’t allowed to set different prices. In fact, they absolutely can.
What EU law forbids is geo-blocking. What it means is that Steam can’t stop someone in an EU country from buying the game at a lower price in another EU country.
Steam clearly doesn’t want cross-border arbitrage inside the EU, and since they can’t legally block it, their “solution” is to just enforce a single price for the whole Eurozone. However, from a developer’s perspective, it results in overpricing (=underselling) in several EU markets.
For South America, there’s no equivalent regulatory constraint that we could find.
A fun side note: Netflix does manage to charge different prices across Europe, but their defense is that they offer different catalogs, which legally counts as different products. We might wonder if these regional catalogs serve as a little trick for being able to do regional pricing. We don't have time to investigate that, but there you go, haha.
Thank you for looking into that point!
Thanks for that! I tried to do this in 2017 when releasing Narcosis, using OECD metrics.
I'll probably take inspiration from your tool but something to consider as well is number psychology (99.99 beats 101.13 by a large margin), price points when discounted ("games under 10$"), and more importantly maybe, factoring inequalities with something like Gini coefficient? Because for instance, India has low purchasing power, but probably the poorest people in India don't even have a Steam account.
Regards,
Quentin De Beukelaer
Ok je viens de voir le bouton "psyghological pricing" bien joué :D
Mais curieux d'avoir votre avis sur la question du pricing vs la répartition de la richesse au sein d'un pays !
Hi Quentin, thanks for your comment!
I’m answering in English in case others read this. I completely agree with you on adjusting pricing even further. Gini may not be the best metric (and is not easy to compute or compare. For instance India and the Netherlands almost have the same Gini coefficient: https://ourworldindata.org/grapher/economic-inequality-gini-index?tab=line&country=FRAINDNLD~IDN).
Imo, the ideal solution would be to compute the PPP conversion using sub-components of the basket used to build it. For instance, Eurostat provides PPP conversions by product categories, which yields a much better conversion factor for cultural goods and services (https://ec.europa.eu/eurostat/databrowser/view/prc_ppp_ind__custom_19101903/default/map?lang=en). This would already capture the fact that culture can be a luxury good in some countries, and thus should have a higher price than a simple average PPP conversion.
Unfortunately, the World Bank - the only organization that really provides international PPP conversion factors - does not publish category-level breakdowns.
This is why we provide Netflix-based pricing: Netflix is a cultural good, almost identical everywhere, available worldwide, and it distributes video games. It also has a clear per-country pricing strategy.
Another possible approach would be to use Steam’s hardware statistics as a proxy for Steam consumers’ income, but Valve does not provide (yet?) this data on a per-country basis :'(
Thanks for the answer. I actually enjoyed the Netflix index, reminding me the good ol Big Mac index :D
Pole here, you know data behind my pain LOL
Yes! This is exactly the kind of conversation that needs to be had. I’m from South-Africa and the premium we end up paying on software and hardware as a result of import duties on top of weakened purchasing power kills us.