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Aussie game prices to drop by end of year - Analyst

Australian consumer analyst predicts local video game prices will go down in price from around A$120 to A$70 by 2012.

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In July this year, Macquarie Bank's Equities Research arm released a consumer sector report into the rise of online spending in Australia. The report, compiled from the results of various studies and surveys into the online retail market, sought to debunk the myth that the growth of e-commerce will negatively impact traditional brick-and-mortar retailing.

According to Rob Blythe, consumer analyst for Macquarie and one of the report's authors, the Australian dollar moving toward and beyond parity with the US dollar is the major catalyst for the Australian growth in online shopping. But when it comes to the video game market, online video game sales in Australia are significantly lower than in the US and UK. According to the Macquarie report and information sourced from Forrester, UK ONS, the US Census Bureau, and Screen Digest, the combined category of toys and video games makes up roughly 3.7 percent in Australia, compared to 24 percent in the UK, and 19 percent in the US.

Cheaper games in Australia by 2012? Yes, please.
Cheaper games in Australia by 2012? Yes, please.

Blythe recognizes that Aussie gamers want to shop at overseas online retailers due to better pricing, but he says there are a lot of factors that come into play that stop many from doing so.

"Firstly, a lot of console games are region locked, so if Aussie gamers buy a game from Play Asia, they end up with the Asian or US version and therefore can't play online with their Aussie friends," Blythe said. "Secondly, maybe around 50 percent of sales of a big, AAA game are in the first week. Core gamers don't like to wait; they want to be part of the whole experience of lining up for the title on the day of its release at a brick and mortar store and then going home to play it."

Blythe thinks the pricing issue won't be an issue for much longer. He believes game prices in Australia are slowly becoming aligned with other territories, as a result of publishers understanding that exchange rates will always fluctuate.

"Australia has been slow to adapt to international pricing for games, yes, but I think in the second half of this year or at the very least by early 2012, we will start to see game prices in Australia coming down. From my estimates, I predict they'll drop from around A$120 to somewhere around A$70.

"That said, Australian pricing will still be at a premium to offshore, due to things like distribution and shipping costs, but the gap won't be as significant. Economists are predicting that our currency will normalize and eventually come back down below parity with the US dollar, and when that happens, the attractiveness of buying video games overseas will be eliminated for Aussie consumers."

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