Valve's Silence: One Year Later

On December 17th, it will have been one year since Valve introduced regional pricing to the Steam service. The decision to alter the pricing method for European consumers has generated an endless amount of controversy and frustration.  As we approach the first anniversary of these changes, I feel it is important we take a look back at what changed, the controversy it created, and the progress that has since been made.

Overview
Regional pricing is nothing new to companies and consumers. However, it came as a surprise when Valve converted the prices within their digital distribution service to British Pounds (£) and Euros (€) practically overnight.  Consumers based in Europe were greeted with quite a shock as they woke up the next day, and found games priced significantly higher than normal due to odd currency conversion rates.

With Valve taking the plunge into regional pricing, publishers began demanding other services follow suit.  According to multiple statements made throughout the Impulse forums, Stardock simply does not have a choice as to how games will be priced regionally, and must comply with publisher demands.   If a distributor does not agree to publisher terms, they lose rights to the game and fall behind their competitors, putting them in a difficult spot and at risk of losing more marketshare to the Steam service. All major digital distribution services have now implemented regional pricing in some form on their website, excluding Good Old Games.  This is likely due to the company’s focus on older games over newer ones, allowing them to avoid the pressure other services are under.

Controversy
There is nothing wrong with the idea of regional pricing, and I imagine few can truly argue against it.  However, the problem lies in how this pricing method was implemented.  Valve made these changes overnight and with little warning.  More importantly, Valve took the liberty of changing these prices as they saw fit, which meant ignoring currency exchange rates and equating 1€ to $1.  This resulted in an extreme price jump for many games, and European gamers found themselves being charged far more than those in North America and other popular regions.

After the prices were altered at Steam’s discretion, the company contacted publishers to inform them of the changes and to reply back with any adjustments that need to be made.  Some publishers adjusted prices accordingly, but many did not and left games overpriced.  European consumers demanded answers, but only received silence in return.  As gamers compared prices on the forum, it became apparent Valve also grouped European countries into different tiers, and charged completely different prices between them.

More importantly, Valve failed to consider some significant differences between countries. Instead of learning which countries were part of the European Union and which were not, Valve lumped them all together and used the corresponding Euro currency to price games.  However, this becomes puzzling as the United Kingdom, a European Union member who retains the use of their local currency, received a special store with games priced in British Pounds (£).   Meanwhile, gamers in non-European Union countries, such as Norway, were unclear why they were being forced to use the Euro.

Another source of tension is Valve’s decision to include Value Added Tax (VAT) in the price of the game itself.  Previously, gamers would add a game to their shopping cart and see how much VAT was required upon checkout.  Now the product price gamers see is the price they pay.  This sounds like an easier and more simplified system, but it still poses some problems.

Countries each have their own percentage of VAT that is applied to products and services, typically ranging from 5% to 25%.  By creating a unified price for multiple countries and hiding VAT inside of that price, consumers in some countries are likely paying more than what is required. This is no doubt a boost for Valve, as Valve can pocket the overcharge for certain countries after the required VAT percentage is deducted.

Current Situation
As we approach the one year anniversary for the changes Valve implemented, one would imagine many of these problems have since been rectified.  Sadly, this is not the case.  Steam has remained tight lipped about the price changes, and has left European consumers with more questions than answers.  After nearly a year of posting and asking for help via the official forum thread dedicated to the topic, no answers have been provided.  In regards to other digital distribution companies, Stardock appears to be the only one providing any sort of transparency by communicating with forum users about regional pricing.

Prices for European consumers still remain excessively high.  As I recently reported in the Price Debate section, games on Steam run approximately 43% higher than they do in popular online retail stores.  Some publishers have taken the time to adjust prices accordingly, but a majority have not and have decided to keep inflated prices using the 1€ to $1 ratio.   Some publishers have even inflated the price more so, as with Colin McRae DiRT 2 ($39.99 USD / 49.99€).  Countries which are not part of the European Union have not fared any better, as they are still forced to pay in an alternate currency that is not their own.

Overall, the move to regional pricing has been detrimental to European gamers.  They no longer have any viable options for digital distribution.  Publishers continue to pressure these services to comply with their demands, and have the ability to influence the prices games are sold at.  This creates a market with very little competition, forcing European gamers to pay excessive prices for games, or return to the retail market.

The only sign of progress we have since the implementation of regional pricing is more services being created to specifically cater to the European demographic.  Eurogamer recently launched its new Get Games digital distribution service.  Although this service is still in its infancy, many have high hopes it will grow into a consumer friendly service.  However, if Get Games allows publishers to influence prices as they already do with other services, then I fear little change will come.

There seems to be little change or progress on the horizon as we hit the one year mark.  There is also a constant debate about who is to blame for the current situation regarding regional pricing.  Personally, I feel both the publisher and digital distributor are equally guilty.  The publisher has a great deal of influence regarding the price games are sold for through these services.  Digital distributors are to blame as they allowed this behavior to happen, and preferred to gain a larger product catalog instead challenging publishers on their tactics.

I understand companies must comply with regional requirements by publishers, but when prices average more than 40% higher than retail, something is clearly wrong. While it would have meant a somewhat smaller catalog, I know my loyalty would have gone to the company that took a stand for consumer rights over rights to a bigger catalog.

Conclusion
As someone who does not live in Europe, I must admit I gave little thought to regional pricing before Valve implemented it within their service.  Yet, over the past year, I have constantly been amazed at how this was handled by the major digital distribution services.  There is simply no excuse in my opinion for not communicating and working with consumers to create a better service.  Instead, European gamers are being pushed away from these services to the cheaper retail market, or are reliant upon American friends to purchase these games at a cheaper price and gift them back.

Despite there being little to no progress since this time last year, I implore consumers from all parts of the world to continue contacting publishers and distributors, expressing concerns about the price structure they are currently using.  Even if this situation does not affect you personally, I feel it is important we stand up for each other as gamers.  Who is to say publishers will not target other regions next, and inflate prices more so?

Post in the comments below how you feel things have changed, for better or worse, since regional pricing was introduced.