With our recent poll (Found HERE) about the price of games today and how the exchange rate is affecting our hobby, it became clear that perhaps people have varied opinions on gaming pricing, digital product and how retail actually works in SA. So we thought it best to give our point of view of the industry from a retailers perspective.

So here's what we think:

If anything, it's publishers that need to play ball and facilitate a price break on games for territories like ours that are so badly affected by exchange rate fluctuation. You guys would be shocked at how little retailers like us (and the SA distributors) make off a gaming product, specifically hardware and software. I mean it ranges from 3-17% at most! To give you an idea, an average working business model for retail needs to run on a minimum 30-40% GP margin to pay bills, so ours (gaming retail) is way below a normal retail margins.

Survival in this industry is really about selling software in volume but that’s becoming increasingly difficult as the higher the price the less you sell, especially as games start to list past the 699 mark.

“Digital software” - Although digital software is usually cheaper it's the fact that physical copies (for console games anyway) have a physical second hand value therein validating the higher purchase price when you can get up to half back on the initial purchase made. For now, Digital software does not have that same value, which for me makes purchasing physical copies worthwhile. Yes, digital copies of games are a lot cheaper. But if we see a downturn in people purchasing hard copies of games, so will we see a decline in things like collector's editions. Plus, as mentioned before, digital copies have a lot less value, since once you're done playing the game you can't trade it in. That's pretty much like having a game gather dust on a shelf because you can't trade it in.

Importing games (though you will not receive the game on its launch day) can be the cheaper option even from our point of view, as retailers buying from international suppliers, barring this exchange rate issue, but AWX always tries to support local distribution to push them to carry products like JRPGs and collector’s editions. You guys would be surprised at how many collector’s or special editions would not have seen the light of day in South Africa without you guys committing to your orders like you have been and AWX validating the minimum order quantities needed by the local distributors to supply those products in our country. AWX, and I'm sure other independent game retailers, are dependent on the value of physical copies of games over digital product for the pure reason that it has resale value as a physical copy. Trading in to purchase the now ludicrously expensive games is really how guys are able to make new release purchases most of the time. If that system does indeed fall away then yes gaming retail will most certainly die.

All I can say from AWX's point of view, is that a general price increase that is in line with the exchange rate fluctuation in no way indicates that we are making more money out of you as margins are standardised in this industry. When you see pricing that’s way cheaper than us, it’s really because that retailer is taking a knock and selling below cost, to grab sales, as they have many other product lines to compensate or the budget to do so. We always try to get you guys great membership pricing on product, add a more personal service, try to make sure you have the products on time and understand the value in having you as a client supporting our specialized products.

This thread is dedicated to providing some insight into what we do and why things are as they are. I will try my best to answer any question you may have where possible, so feel free to post your feelings or queries about this subject below.

*Please note content in this forum post is expressly written from AWX's point of view and may not represent the opinion of other retailers or distributors in the industry

Price increases is nothing anyone can do anything about. This current exchange rate is forcing me to bump up prices as well.

problem with gaming is it's a hobby and luxuary. The things people start to clamp down on first when money starts getting tight.

I will admitt the bulk of what I buy these days is digital, I think the last physcal copy of a game I got was Tales Of Xillia. Mainly because of the price and because steam sales are outstanding (R50 for deadpool and it hasnt even been out a year).

Sadly imo if prices for gaming keeps to grow the way it does in SA it's only going to hurt the industry locally and retailers like yourself. Pretty sure we are all well aware you guys are not the ones just going haywire with the pricing.

At the same time though, consumers are loyal to their wallets when things get rough. And they i will go where prices are cheaper.

Only the maniacs and fanatics with little else left in their besides gaming and going to still be going for collectors editions etc...

I havent got a CE in ages because I feel it's just a waste of Money last one was the FFXIV:ARR boxet and that was more because I wanted the DLC and token more than anything else.

I agree that most of the blame is with publishers, I remember with the PS3 release, people complained that the price of games was too high. Developers then said that it costs more for them to develop on console because of the architecture and that is why there is a difference between prices of PC games and console games.

Sony now releases a console that is easy to develop on with similar architecture to a PC and prices go up. What's the excuse now? I honestly believe there should be no difference between PC and Console game prices. Games should actually be cheaeper now as developers have more options to make money these days such as DLC or charging for online multiplayer.

It also doesn't help that we work on the EU pricing. Which is why with region free it works out cheaper to import games.

What is the general view on that by the way? Has AWX ever discussed the possibility of importing US versions of games? Is this allowed? I mean a game in the US is $60 at an exchange rate of R11 where as in the UK it is £60 which is R18 at the moment.

Thank you, Tea--for the well written and open letter. I have always loved how open and personal you guys are. I think that's part of the reason I will always stick with you guys. I mean I've been coming to you since I was a kid. I do realize that everything's just BLOWING up in terms of price. Not once did I ever fault you guys for it. I know the root of it all lies further back. I will continue to do business wit you regardless.

Definitely publisher set prices don't help (I've also never quite understand how some games devalue and whereas others don't) and I guess we're probably still too small a market to argue with publishers for a better deal.

I don't know if it's the same with AWX but it seems from games media, many European and North American specialist retailers survive on the 2nd hand trade these days for direct revenue or to allow gamers to trade in for new games (as you mentioned). I guess everyone's moving away from physical as most gamers using current and next-gen consoles probably have an internet connection ranging from just sufficient to excellent (by SA standards) but I still have an urge to create collections of tangible game cases and the odd collectible and hope others do to.

Things like PSN and Games on Demand still make little sense to me price-wise when it comes to new games but they do at least offer some older titles that are difficult to find 2nd hand (tho I'd rather grab a physical copy if I could). Digital distribution in the PC space is much more developed but I still try be conservative with Steam and GOG sales as there seems to be a big habit of buying stuff that'll never be played or only briefly looked at (I myself picked up all the GOG Black Isle/Bioware games and so far I've only played through Planescape Torment). Some people have started arguing that Steam sales are encouraging a massive amount of people to sit out and wait for sales which I don't think ends up benefiting anyone (except Valve).

As far as rising prices go, videogames are still definitely considered a luxury as Woofels pointed out and I guess people will steer towards only picking up the biggest "casual" or "popular" titles and pretty much destroy the niche market that AWX caters to. Perhaps it's time to support local guys for big titles but look at purely importing anything niche on request (arriving later than release) or on a sizeable enough preorder? As for the price point now going over R700, with the option of trade-ins (and even without) I'd still invest in a physical copy on day one for games I was really looking forward to. Perhaps it's time to try make pre-ordering mandatory on certain titles that aren't guaranteed a large amount of sales?

Another issue that I guess can't really be changed through any business practice is the relative value of a game to an individual. I've enjoyed playing through every COD single player campaign, as stupid and entertaining as they are, but I've never bought a copy 1st-hand as I'll never play multiplayer. Likewise I'd sooner poke my own eyes out than spend any length of time with an Assassins Creed game. On the other hand I see games like Darksiders 2, Fallout 3 GOTY, Alpha Protocol and Prince of Persia (2008 game) that sit in the 2nd hand shelf, all less than R150 not moving instantly, and wonder what the hell is wrong with people!

A few question if you can answer them:
- Regarding preorders, do local suppliers only sell bulk quantities or can AWX define the amount? Does this affect the viability of stocking only based on preorders?
- Visiting my in-laws in the UK, the local "Game" store (as in the franchise) sold physical vouchers for DLC for a range of titles (admittedly mostly the big sellers like COD and Battlefield but also Skyrim DLC). I'd love to see this here as I don't like loading credit card details onto sites (and some gamers might not have one) and it also means you can pay the exact amount in store and not worry about set-value vouchers and useless quantities of leftover currency sitting on your PSN/XBL account. Do we have the option of getting these download tokens in SA and do they add any value to the retailer or is it just a service offered?

@ Woofels - I agree - be smart about your purchases - If you are going to spend R 899 on a game make sure its something you will play and is worth the value. Collector's editions fall into the same category. Pre-order if you know you want one as they are going to be distributed in extremely small quantities going forward but make sure the content is worth the price tag.

Part of the reason I only buy digital when its the only option is I like physically owning product, which I can pass on or share with others, even if a die. Just owning a digital license to a product while I am alive or until the service provider decides to de-list support on it just doesn't gel well with me as a gamer that collects games.

@ DP - We could look at that but have found that many guys are adverse to USA packing or product support (keep in mind if imported and faulty it has to go back to the states or UK to be replaced / repaired) unlike local product which is a lot simpler to replace repair. Very often the price difference just isn't worth not supporting the local release especially with the current exchange rate on the USD and GBP. When you factor shipping, duties and the rest of the stuff supporting local just makes sense.

As you guys know we do import when we cant get our hands on it locally and will continue to do so but to us growing the local industry is more important so that publishers can see the value in doing localised support like servers, special edition product and allocations on collectors editions. Buying from the UK or US just means those territories will see the sales volumes and in turn receive said support.

The local distributors obviously don't condone importing their product but have understood when we don't have access to it through them.

I'm glad that you guys import games we would not get otherwise (Deus Ex on WiiU case in point). Most of the big DVD/Blu-ray chains import non SA released titles for years for exactly the same reason.

@ Lurch - We define the amount we order based on forecasting that's done months in advance. However in order to receive a healthy allocation (as some stocks are in limited supply or for the collectors editions) we often do need to make commitments before we have even listed the item for pre-orders or we have to purchase (sometimes pre-purchase) a certain volume in order to be included in a offer or product launch. It's a tricky business but seeing your guys pre-order commitments really helps us understand the demand before we end up over committing or short stocking an item.

Very often allocations on limited stocks are provided to a retailer based on the stock commitment we make and the marketing exposure we will provide a product (like midnight launches etc). In that case though the suppliers will usually offer some marketing assistance.

In regards to the DLC or CIB "codes in a box" - its becoming a focus product going forward on a few lines but not in mass due to the internet bandwith issues SA still suffers from. I'm sure down the line it will be come the norm for the standard edition of a game to be sold as a CIB. Currently EA offers this with Battlefield and Sims expansions but many publishers will do this soon as the demand grows.

@ Scottie and Wolfshadow - Don't forget we are gamers, collectors and anime enthusiasts too! So we want the product as much as you guys do and really do understand why we all love this hobby of ours.

First course of action is always try source it local, when that doesn't work, import

AWX should look into Ebucks then I can get a free game every 2 months of so

@ DP - Its something we are considering just not easy to implement

^it would even be an awesome way to advertise AWX

I'm grateful for the trade in system though - that does help :,) But yea I'm having to be much more selective on which games to get lately >.

Lack of time notwithstanding, it's hard to justify purchasing a game at the current pricepoint. R500 is bad enough, but R700+ for next-gen is a little too much to ask for.

Sure the exchange rate makes it tricky to be competitive, and yes the distributors are just as much to blame, but personally, I'm finding it difficult to justify paying full price for a game purely because of the return you get on your investment, taking into account factors like:

1) How much time must I put in to get my money's worth
2) How much entertainment value do I get from a R500 game vs something similarly priced

And lately it's just coming up short. Call it growing up, call it changing responsibilities which translate into having less time to sit and dedicate 12-30hrs to something, point being I'm personally not finding as much worth in it.

Would rather spend R500 on a graphic novel, get my total money's worth in 2hrs worth of reading, keep it on the shelf for aesthetic purposes, and have an asset if you will that generally keeps its value.

It's that fine balance of cost vs personal worth. For arguments' sake I'll still gladly spend R50~R300 on a variable length game, and even if I don't ever finish it I won't bat an eyelid. R300 is what one pays for a cheap dinner, so if I pay that much and only spend 2hrs with it, meh.

But R500+? Nope, grown past it.

Of course there are always exceptions, but it's a tough call lately. Also I think I may have digressed a bit, but in summation, games are too expensive and it's BS

can't we just make a petition to send to whoever is in charge of making games more expensive -_-

(edit: I R DUMB, me no understand economy)

@ Surreal - I think that's relative to a persons hobby (addiction) and the rand value you see in it. I personally wouldn't spend R 500+ on many books that I would only read or use once, opposed to a game that I would most likely play more than once and keep on the shelf because its part of my collection but I do understand why you would.

I think for most "luxury" purchases, especially gaming, know the product you are buying and if its the gameplay time factor that is your deciding factor, make sure the game's gameplay time is worth the amount of rands you are spending. Possible look at a budget / platinum release or what for it second hand if you are unsure.

@Tea: Thanks for being so open about this. Just know that you guys are doing an awesome job! Even though prices have gone up there are still a few games coming this year i'll buy day one. I only buy std editions unless the co ed has items that are really great to have. And i also agree on owning physical copies versus digital. I'm just old school like that. It's the same with music as well.

I'm shocked about the GP% being so high. It's not just gaming though. I've read in business articles before that other retail stores also has to implement a similar GP% just to survive.

When i buy games i research a few things before buying. Some shorter games can also provide hours upon hours of fun(example Portal 2). So for me the most important factors are fun and engaging gameplay, replay value and engaging narrative.

I might consider getting a PS4 later this year but i just need to find my feet for this year 1st. I've started a new job this year so will probably have a little less time for gaming but i'll just plan my gaming purchases a little better.

DarkPrince said ...

I agree that most of the blame is with publishers, I remember with the PS3 release, people complained that the price of games was too high. Developers then said that it costs more for them to develop on console because of the architecture and that is why there is a difference between prices of PC games and console games.

Sony now releases a console that is easy to develop on with similar architecture to a PC and prices go up. What's the excuse now? I honestly believe there should be no difference between PC and Console game prices. Games should actually be cheaeper now as developers have more options to make money these days such as DLC or charging for online multiplayer.

It also doesn't help that we work on the EU pricing. Which is why with region free it works out cheaper to import games.

What is the general view on that by the way? Has AWX ever discussed the possibility of importing US versions of games? Is this allowed? I mean a game in the US is $60 at an exchange rate of R11 where as in the UK it is £60 which is R18 at the moment.

Keep in mind that overseas PC games also retail for $60.

For example : Watch Dogs

Which equates to R665. Yet our local pricing is about
R200 cheaper.

Locally we are VERY lucky with our PC game pricing. Other territories are not as lucky.

EDIT: Fixed the links.

I think AWX is AWESOME and offers a great personal experience! Love this store! Since I found this store by mistake in 2008, I have tried to support as much as I can. As Woffels said though, when you have to clamp down the first thing is hobbies. As for the poll, I don't think people were talking about AWX's pricing, pricing in general. !bm !bm

http://www.awx.co.za/shop/product/t/Gaming/s/PS+Vita+Games-181/p/102918-Danganronpa%3A+Trigger+Happy+Havoc.html
http://www.awx.co.za/shop/product/t/Gaming/s/PS+Vita+Games-181/p/102953-Ys%3A+Memories+of+Celceta.html
uh, these are the correct prices, right?

I mean... when you compare it to other games coming around the same time
http://www.awx.co.za/shop/product/t/Gaming/s/PS+Vita+Games-181/p/102961-Final+Fantasy+X|X|2+HD+Remaster.html
http://www.awx.co.za/shop/product/t/Gaming/s/PS+Vita+Games-181/p/94983-Sorcery+Saga%3A+The+Curse+of+the+Great+Curry+God.html

they're all the same price in the UK
who chooses the prices for these in SA?