But now think about the consequences of this: everybody in the EU has to pay the same price for the games. There's an income difference of 5-10 times between different EU countries. The poorest ones will have to now pay the same price as the richest ones. A game costing >€60 when you have less than €300 disposable income per month is crazy expensive.
Such coupons could in theory be usable anywhere even they could just be single use codes and only mailed to addresses in a given country.
Also blocking would be not allowing someone to buy from your store or not use their purchase in a portable fashion not giving different users a different individualized price break.
Example many retailers send out individualized coupons to customers already, presumably some customers who appear more likely to respond to such coupons by spending more are more likely to be given coupons.
Sure but residents in the poorer country can still exploit this by purchasing games on behalf of residents in the richer country, for a fee. Not everyone games so it's not like they're losing out on anything.
Maybe not in EU but is used for CIS countries and other regions, and it is not just currency conversion.
I heard people buy those cheaper games and activate using VPN which will be dealt with sooner or later I suppose. If you really really stretch it, can go as far as tax evasion I suppose as you virtually "import" a good into EU and don't pay VAT which you are supposed to pay here but no in other regions.
Buying in the cheaper store is the desired rational behaviour of a customer in free market capitalism. Why do you want to block that? Who does it benefit?
Because if most people do it they wont offer it for the lower price anymore they will just sent one profit maximizing price.
If its something few people do then those few can profit maximally from being savvy by paying poor nation prices on games while enjoying the benefits of being citizens of rich nation.
Well you can't just "not do it anymore" in those countries, might as well close shop there.
Imagine prices of games would increase 3 times, i.e. one 60$ AAA game would cost 180$. It would be the equivalent raising prices to us/eu level in those countries.
There will be a fraction of people able to buy it and you will get gray/black market with dvds or flash drives where you would get a bootleg copy or just piracy.
Well, maybe this will lead to prices based on cost of development rather than "provided utility". If they are able to sell to a lower price to a given country, why would they not sell at that price to everyone else ?
Remember that the marginal cost of one more digital copy of a game is really low; most of the cost is in the fixed development costs, which means that what matters is their total sales income. So the whole reason they can sell at a lower price to some countries is precisely because they're selling at a higher price elsewhere and making back their development costs that way. If they can't do that, they're almost certainly going to have to sell at the higher price everywhere.
Say you have 5 workers making 10 units of value each year. The cost of a product is 1 unit of value but you spent 100 units getting set up to sell said product, designing it and so forth.
In theory if you want default on all your bills and go live in the woods you can afford to always sell your product at 1 or 2 units until you go out of business but in reality you are out 150 units before you start.
So in insert rich market you sell 30 units at 5 units each
in not so rich market you sell 20 units at 4 units each
in poor market you sell 20 units at 2 units each.
You come out with 200 units or 50 units profit!
So if you can sell for 2 units in the cheapest market why can't you sell it to everyone at that price? Because it wouldn't pay for the sunk cost of developing the product in the first place.
Nothing is priced based on the cost to create its just the lowest possible floor for the price in the absence of other costs.
Software has a floor so close to zero it might as well be zero but a high cost to create the initial copy.
- there are also poor people in rich countries, but they are offered a price based on a country global metric
- smartphone applications in app stores are also software development, but they are not priced according to geolocalization as far as I know (correct me if I'm wrong)
This is discrimination based on countries, and it's unfair and economically unsound from my point of view. This definitively looks like a shady scheme to make more money justified by a biased reasoning.
> there are also poor people in rich countries, but they are offered a price based on a country global metric
Those are expetions rather than the rule. I don't see any way of getting rid of them other than requiring you to submit your tax return when you buy a game. For a $60 purchase, country of residence is a good enough metric.
> smartphone applications in app stores are also software development, but they are not priced according to geolocalization as far as I know (correct me if I'm wrong)
Apps are also mostly < $10, so affordability is less of an issue.
> Those are expetions rather than the rule. I don't see any way of getting rid of them other than requiring you to submit your tax return when you buy a game. For a $60 purchase, country of residence is a good enough metric.
Beside the fact that I find your formulation dangerous ("getting ride of them [poor people]"), what I am suggesting is to base the price on the production cost + a margin for that specific good, which is a way to not discriminate between purchasers. This would better respect everyone's privacy.
> Apps are also mostly < $10, so affordability is less of an issue.
>Beside the fact that I find your formulation dangerous ("getting ride of them [poor people]"),
"getting rid of" was referring to "exceptions", which include both rich people in poor countries and poor people in rich countries.
>what I am suggesting is to base the price on the production cost + a margin for that specific good, which is a way to not discriminate between purchasers. This would better respect everyone's privacy.
Isn't this against the spirit of globalization and free/open markets? Or is that just meant for companies to benefit from cheap labor but not for consumers to be able to shop around?
(These are general questions, I don't necessarily mean that you are pro-globalization.)
The right price is optimization problem that depends on income distribution in the whole region (same price for the whole region increases purchasing power for low income population in high income countries as well).
example:
If there are five potential customers and the maximum sums they are willing to pay are: 60€, 50€, 30€, 30€, 25€, what is the single price that maximizes revenue and profit for games?
For practical purposes You capture the most at launch and progressively discount over time capturing the most revenue by forcing those who want the game closer to launch to pay more. In theory you lose some buyers who prefer to have a competitors product right now but 60 50 30 30 is still better than 25 x 5.
Why would everyone have to pay the same price for games? Where does this logic come from?
Just because you can buy a car in Iowa and drive it to California, it doesn't mean people in Iowa have pay the exact same price for it than in Cali.
Same goes here - EU doesn't force you to price thing the same across all countries. But you are just not allowed to ban people from buying a thing in one EU country and take it to another - this is the CORE tenement of EU's single market and without this limitation, the EU single market cannot exist.
Banning customers from being able to shop around for lower price of a good they want is also an egregious voilation of core benefit of free market capitalism.
Imagine that based on local income a digital product that has virtually no marginal cost is $25 in one market and $50 in another for whatever currency you please.
If someone in market B can by clicking over to a different storefront for market A then logically the vendor will no longer offer the good at the lessor rate in market A.
They will have to figure out what price maximizes revenue in both and it will surely disadvantage buyers in market A because the vendor gains as much for one market B buyer as two market A buyers.
If 40% of your buyers are from poor land then losing every one of them is as costly as dropping richland users prices by 1/3.
What if the vendor offered coupons available only locally to make it more feasible to differentiate prices while keeping stuff portable?
Because this isn't what happens. Price discrimination, if done perfectly, minimises the value the consumer can get and maximises the value the seller can extract from them. Overall it is a negative for consumers.
Companies can get away with price differences for physical goods, for a bunch of obvious reasons which don't apply to digital goods.
Charge different prices for a downloadable digital good and allow customers to shop around, and you have a de-facto one price for everyone scheme: the lowest price of all the regions.
If someone voluntarily pays a "France" price rather than an "Estonia" price, you could achieve the same thing by setting up a pay-what-you-want cart with the Estonia price as the minimum. There are many sales tricks that can be used to persuade people to pay more (up to their willingness to pay), that would cost you nothing or next-to-nothing, to get more money out of customers even if they are only required to pay the Estonia price.
The reason why people in Iowa don't pay the same price than in Cali is because it is impractical, and possibly even prevented by some regulations, to buy the car in Iowa and drive it to California.
With digital downloads, and even physical games, that's not the case: I can buy my game in Czech Republic and have it mailed to Denmark (to stick with the example someone else posted) with minimal friction.
I have very limited knowledge of how car registration in the US works, but AFAIK some states, particularly California, have stricter emission limits. Does every car sold anywhere in the US meet them, or do manufacturers make cheaper "non-Cali" models that lack some emission controls but can't be registered in California?
Even if there is no regulatory hurdle, there's a significant practical one, which is getting the car over.
Even with the different emission standards, you're allowed to own the vehicle. However, if it does not pass inspection (if the state has inspections) then it won't be legal to drive as it didn't pass inspection. However, you're still allowed to own the car.
(Also, I wish I hadn't been down voted without a response. If I'm wrong, correct me.)
We see these consequences all the time. Many items sold in sold in Bay Area are also sold for same price in Detroit for example. I'm not sure that trying to fudge it by restricting sales is the best way to fix.
It's absolutely retarded how the EU pretends the average salary in all countries is the same. This "unique market" thing is, as always, used to screw the poor countries of the EU. But I suppose that as long as it works fine for Germany and France, who cares about the rest, right?
Not at all. Many factories are build in the poorest countries because of the cheap labor and quickly, they become less poor. This has prove to work well and the differences are reducing. Maybe not fast enough.
So what you're saying is that the single market is also used to siphon jobs out of all but the poorest countries so companies can get away with paying peanuts. And that's supposed to be good?
Consider this: a salary of €500 in Romania would net you the same purchasing power as someone who earns €1500 in Denmark. How would that work in a capitalist economy?
I don't think Steam ever had lower prices for some EU countries, I am from Romania and the prices on Steam were always high. I could not find any source to confirm this but I think that all EU countries have same prices and it is not a recent thing.
Remember that Norway and Switzerland are part of the EEA, so geoblocking affects them too. Although I am somewhat skeptical of those lower numbers, but the difference is there.
That makes it impractical and useless to sell for different prices; if a digital good costs 50€ in Germany and 20€ in Italy, both Germans and Italians will buy it in Italy. Companies are therefore forced to sell it for 50€ to everybody. That hurts Italian customers.
Someone posted Valve's response to this on /r/steam. Basically, they don't agree with it, but stopped doing it years ago since they knew the EU was going to give them problems with it. They also said that it only applied to physical copies of games that included a code to redeem on steam, so they weren't making any money off of this, and it was only done at the request of some publishers.
> In a true Digital Single Market, European consumers should have the right to buy and play video games of their choice regardless of where they live in the EU.
They still have the right. The seller ought to have the right to not sell it to them if they so choose.
Worst case for Valve is to set one price - which would be close to their current price in their largest EU market - and simply price out most East Europeans.
The morons from Brussels know what's best, trust them!
57 comments
[ 3.1 ms ] story [ 113 ms ] threadTime for geoblocking to go away
Also blocking would be not allowing someone to buy from your store or not use their purchase in a portable fashion not giving different users a different individualized price break.
Example many retailers send out individualized coupons to customers already, presumably some customers who appear more likely to respond to such coupons by spending more are more likely to be given coupons.
I heard people buy those cheaper games and activate using VPN which will be dealt with sooner or later I suppose. If you really really stretch it, can go as far as tax evasion I suppose as you virtually "import" a good into EU and don't pay VAT which you are supposed to pay here but no in other regions.
If its something few people do then those few can profit maximally from being savvy by paying poor nation prices on games while enjoying the benefits of being citizens of rich nation.
Imagine prices of games would increase 3 times, i.e. one 60$ AAA game would cost 180$. It would be the equivalent raising prices to us/eu level in those countries.
There will be a fraction of people able to buy it and you will get gray/black market with dvds or flash drives where you would get a bootleg copy or just piracy.
Tech is literally the land of provided utility, it doesn’t cost much of anything to shift some bits around.
> If they are able to sell to a lower price to a given country, why would they not sell at that price to everyone else ?
Because they'd make less money
In theory if you want default on all your bills and go live in the woods you can afford to always sell your product at 1 or 2 units until you go out of business but in reality you are out 150 units before you start.
So in insert rich market you sell 30 units at 5 units each
in not so rich market you sell 20 units at 4 units each
in poor market you sell 20 units at 2 units each.
You come out with 200 units or 50 units profit!
So if you can sell for 2 units in the cheapest market why can't you sell it to everyone at that price? Because it wouldn't pay for the sunk cost of developing the product in the first place.
Nothing is priced based on the cost to create its just the lowest possible floor for the price in the absence of other costs.
Software has a floor so close to zero it might as well be zero but a high cost to create the initial copy.
- there are also poor people in rich countries, but they are offered a price based on a country global metric
- smartphone applications in app stores are also software development, but they are not priced according to geolocalization as far as I know (correct me if I'm wrong)
This is discrimination based on countries, and it's unfair and economically unsound from my point of view. This definitively looks like a shady scheme to make more money justified by a biased reasoning.
Those are expetions rather than the rule. I don't see any way of getting rid of them other than requiring you to submit your tax return when you buy a game. For a $60 purchase, country of residence is a good enough metric.
> smartphone applications in app stores are also software development, but they are not priced according to geolocalization as far as I know (correct me if I'm wrong)
Apps are also mostly < $10, so affordability is less of an issue.
Beside the fact that I find your formulation dangerous ("getting ride of them [poor people]"), what I am suggesting is to base the price on the production cost + a margin for that specific good, which is a way to not discriminate between purchasers. This would better respect everyone's privacy.
> Apps are also mostly < $10, so affordability is less of an issue.
Maybe that's the future
"getting rid of" was referring to "exceptions", which include both rich people in poor countries and poor people in rich countries.
>what I am suggesting is to base the price on the production cost + a margin for that specific good, which is a way to not discriminate between purchasers. This would better respect everyone's privacy.
So basically, "everybody pays the same price"?
(These are general questions, I don't necessarily mean that you are pro-globalization.)
example:
If there are five potential customers and the maximum sums they are willing to pay are: 60€, 50€, 30€, 30€, 25€, what is the single price that maximizes revenue and profit for games?
Just because you can buy a car in Iowa and drive it to California, it doesn't mean people in Iowa have pay the exact same price for it than in Cali.
Same goes here - EU doesn't force you to price thing the same across all countries. But you are just not allowed to ban people from buying a thing in one EU country and take it to another - this is the CORE tenement of EU's single market and without this limitation, the EU single market cannot exist.
Banning customers from being able to shop around for lower price of a good they want is also an egregious voilation of core benefit of free market capitalism.
If someone in market B can by clicking over to a different storefront for market A then logically the vendor will no longer offer the good at the lessor rate in market A.
They will have to figure out what price maximizes revenue in both and it will surely disadvantage buyers in market A because the vendor gains as much for one market B buyer as two market A buyers.
If 40% of your buyers are from poor land then losing every one of them is as costly as dropping richland users prices by 1/3.
What if the vendor offered coupons available only locally to make it more feasible to differentiate prices while keeping stuff portable?
'Student discount' is the same sort of thing, and common across Europe.
Charge different prices for a downloadable digital good and allow customers to shop around, and you have a de-facto one price for everyone scheme: the lowest price of all the regions.
If someone voluntarily pays a "France" price rather than an "Estonia" price, you could achieve the same thing by setting up a pay-what-you-want cart with the Estonia price as the minimum. There are many sales tricks that can be used to persuade people to pay more (up to their willingness to pay), that would cost you nothing or next-to-nothing, to get more money out of customers even if they are only required to pay the Estonia price.
With digital downloads, and even physical games, that's not the case: I can buy my game in Czech Republic and have it mailed to Denmark (to stick with the example someone else posted) with minimal friction.
I have no idea what's you're talking about. Interstate travel is legal, and interstate purchases or transfers for cars is very common.
Even if there is no regulatory hurdle, there's a significant practical one, which is getting the car over.
(Also, I wish I hadn't been down voted without a response. If I'm wrong, correct me.)
Remember that Norway and Switzerland are part of the EEA, so geoblocking affects them too. Although I am somewhat skeptical of those lower numbers, but the difference is there.
Hear hear, mister big shot.
> In a true Digital Single Market, European consumers should have the right to buy and play video games of their choice regardless of where they live in the EU.
They still have the right. The seller ought to have the right to not sell it to them if they so choose.
Worst case for Valve is to set one price - which would be close to their current price in their largest EU market - and simply price out most East Europeans.
The morons from Brussels know what's best, trust them!