Regional pricing in games distribution is still necessary – here is why | Opinion
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When I head to my local supermarket in Amsterdam, the Netherlands, a pack of rice (one kilogram) will set you back anywhere between €1.79 ($2) and €4.99 ($5.50), while looking for an equivalent product in Argentina’s capital, starts at somewhere around 400 Pesos or $1.
While I’m not an expert in commodities, or rice in particular, it is obvious that the regional price is somewhat adjusted, when taking into consideration disposable income as well as factors such as production cost, distribution cost, current demand and supply levels, and so on. In short: purchasing power parity.
The Economist has developed its well-known Big Mac Index to measure purchasing power parity by tracking the local price of McDonald’s signature burger and measuring differences and how one particular currency compares to another. Looking at the latest available July 2023 data, the Euro overvalued 4.3% in raw data and 15.5% in GDP adjusted against the US dollar price. In Argentina, the peso was overvalued by 33% GDP adjusted, likely because of the soaring inflation and strong devaluation of its currency.
This similar logic also applies to other products and services, including those of digital format. Netflix and Spotify both offer regional prices that are adjusted based on maintaining a relatively similar accessibility level.
When I was working at BoaCompra (now PagSeguro), we supported Valve’s first release of local catalogs and pricing outside of major currencies, including many countries in Latin America. We advised applying a similar logic and suggested reasonable discounts for Argentina and Brazil (and later Turkey). This was something that worked well when
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