IT PRICING INQUIRY: The problems with pricing snapshots

Leigh Harris
IT PRICING INQUIRY: The problems with pricing snapshots

In detail, the pricing discrepancy between Australia and the US seems ubiquitous, but industry has argued mitigating factors.

The IT Pricing Inquiry notes several key submissions in outlining its findings concerning the price disparity:

  • A look at the EB Games Australia and US web sites, noting differences of between 40%-90% on Australian games, the sole exception being Skyrim, which was at parity.
  • Consumer report Choice noted that on Steam, the price differences can reach 200%-300%, with the average price being 232% higher for Australian products, significantly problematic considering the minimal costs in distributing additional digital copies of games.
  • One consumer submission noted that some games had been pulled from Steam only to be re-released at a higher price later on.
  • Another submission noted that the GST didn't apply to Steam, further reducing the need for the higher prices.
  • One price comparison noted that while Mass Effect 3 was available for AUD$79.99 via Origin, a physical copy from OzGameShop (based in the UK) could be purchased and delivered for AUD$38.99.
  • Steam is one digital service which assesses geographical location based on credit card information, meaning that logging in to purchase via Virtual Private Networks to disguise one's location are futile without also having an overseas credit card.
  • While most digital services will geo-target the pricing automatically, one consumer noted that when attempting to purchase Diablo III, they were presented with the US price of USD$60 (AUD$58), then redirected to the Australian page with the AUD$80 price tag.

Industry representatives from those called before the Inquiry were quick to attack such direct price comparisons, noting that they failed to take into account discounts from bundle deals, negotiations and haggling at a store level and many other factors which could render the spot comparisons inadequate.

The Committee fielding the Inquiry said in response:

While the Committee notes the concerns of industry groups that price comparisons may not capture elements of consumers’ experience in purchasing IT products, the Committee is of the view that the evidence before it is strongly indicative of a pattern of higher prices paid by Australian consumers. The Committee would have liked to have received more input from industry groups and IT providers in order to more effectively address the specific concerns expressed by consumers, however it notes that the evidence it received is consistent with other studies and inquiries where IT pricing has been considered. In particular the Committee notes Choice price comparisons conducted in 2008 and 2011, the Productivity Commission’s 2009 review of parallel import restrictions on books, and its 2011 report into the retail industry.

The committee is maintaining that the government ought to take measures to more freely allow grey importing and restrict measures to allow geo-blocking, which it acknowledges forces consumers to circumvent it using methods which violate their terms of service or even breach copyright.

You can read the full report here.



Tags: Microsoft , Retail , Apple , pricing , adobe , digital distribution , eb games , pricing inquiry , Autodesk , IT Pricing Inquiry

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