During Steam’s Monster Summer Sale, I noticed something during the Tom Clancy franchise sale. The price of the upcoming Rainbow Six: Siege is $80 CAD. The US dollar price is $60. If you were to pay for the game in USD and have your credit card company convert it to CAD, a Canadian customer would spend $73. That’s an inexplicable loss of $7 as a sort of living in Canada tax (when no sales tax is charged by Steam in Canada) from a company whose biggest development studio is in Canada and receives subsidies from various levels of Canadian government.
It’s not just the Canadians who are losing out for not living in America. According to the Steam All Region Price Checker extension, British customers are being charged the equivalent of $80 USD and others in the EU will be paying the equivalent of $68 USD.
So why are certain countries paying more than other and who is at fault for the price discrepancies?
The answer to the first question is fairly simple. Steam doesn’t do live updating of prices around the world to reflect the foreign exchange rates on the currency markets. Instead, prices are set at a fixed amount in order to not lose too much on foreign exchange transactions outside of their native currency.
To answer the second question about who is responsible for the pricing, I did a little more research.
I asked Ubisoft on Twitter why they were charging $73 CAD for buying the game in the US but $80 CAD for living in Canada. They bounced the blame to Steam. After doing some research, I’m not so sure that Ubisoft is as without fault as their social media team would have us believe.
Tomorrow’s big release, Batman: Arkham Knight, is priced at $60 USD. It’s also priced at $60 CAD. In fact, it’s cheaper for someone to buy Arkham Knight in every other price region when you compare to the US price. Fallout 4 is provisionally priced at $70 CAD which comes to less than $60 USD when converted (remember that $60 USD equals about $73 CAD). The upcoming Hitman and Street Fighter V also hit that $70 CAD price.
The unfortunate thing for Ubisoft is that other Ubi games are priced far more favourably for Canadian customers than Rainbow Six: Siege. Might & Magic: Heroes VII is priced at $50 USD which converts to $61 CAD but Canadians save $1 with a $60 CAD price on Steam. Anno 2205 has that very common $70 CAD price tag. Trackmania Turbo actually is about $1 more expensive in CAD than USD with a CAD equivalent of $49 for its $40 USD price. The price in Canada is $50 CAD.
Conveniently, though, Assassin’s Creed Syndicate is also priced at $80 CAD. So the pattern would hold that Ubisoft is either aggressively pricing their triple-A games with the expectation that the Canadian dollar will devalue relative to the US dollar between now and this fall so it will work itself out (so Ubisoft expects that the exchange rate is $1 USD = $1.33 CAD) or this is just how they’re pricing their big triple-A franchises in Canada from now on.
So who exactly sets the price? Well, last year, PC Gamer looked into foreign exchange pricing on Steam. They found that when a price is submitted to Steam for a game, it will automatically generate suggested regional pricing for the various currencies that publishers should use when pricing their game outside of their native currency.
While PC Gamer couldn’t get Valve to comment on foreign pricing for their article, they speculated that the factors Valve uses for generating suggested pricing included “current exchange rates, regional sales trends, and other factors.”
Let’s apply that to Ubisoft’s triple-As. The current USD to CAD exchange rate (at June 18, 2015) is about $1 USD = $1.22 CAD. That puts the current exchange rate price at $73 CAD. But since that’s not terribly round, let’s say that the CAD price would be acceptable at up to $75 CAD. For less than $2, I’m probably not going to kick up too much of a fight. But what about historical exchange rates? Over the last year, the average rate is $1 USD = $1.17 CAD per the Bank of Canada. That exchange rate would translate a $60 USD game to $70 CAD. That seems to explain how everyone else lands at $70 CAD for their game prices.
So how does Ubisoft land so much higher than what the current and historical exchange rates would have you expect? That’s because those suggest regional prices that Valve gives publishers are just that. They’re only suggestions. While many publishers are going to go with Valve’s suggestions, that PC Gamer article says that publishers don’t have to go with Valve’s suggested prices. You can do your own thing. It would seem that based on what other big publishers and even themselves for some games are doing, Ubisoft is making their own call for what their games should be priced rather than Valve.
Now, while circumstantial evidence and patterns aren’t enough to convict someone in a court of law, in the court of public opinion, the standard for conviction is far lower. Ubisoft should have learned that last year after shipping Assassin’s Creed Unity without faces or the laws of physics.
While the Canadian market isn’t particularly important to most companies in the grand scheme of the world because of its size, it’s still alienating an apparently important customer base for Ubisoft. They bring a big sales and demonstration display to Fan Expo (Canada’s biggest comic book / sci-fi convention) so clearly Canada is worth spending money on.
Various levels of Canadian government have decided Ubi is worth spending money on with Ontario pledging $263 million for Ubi’s Toronto studio, Quebec City contributing $500,000 to the local Ubisoft studio expansion, and the Province of Quebec contributing $9.9 million to job creation on top of tens of millions of dollars they poured into the studio since the late 90s. The irony being that after the big provincial contributions, Ubisoft threatened to re-evaluate its future in La Belle Province after Quebec tax subsidies for the gaming industry were cut from 37.5% to “as low as” 24%.
You know, the first thing they teach in business school is that the goal of a business is to make money (as opposed to generating a profit which is an accounting measure). Given the proliferation of DLC and microtransactions in recent years, game publishers are certainly getting good at making money. Those DLC and microtransactions are providing something, however little or inconsequential, for that money. Charging more than competitors or yourself for a game, though, isn’t about money for a product. It’s premium pricing that no one else is doing. I’m not seeing a good reason for it.
Sources: Steam (accessed June 18, 2015 and confirmed June 20, 2015), PC Gamer, XE.com (accessed June 18, 2015), Bank of Canada (accessed June 18, 2015), Financial Post (1), Financial Post (2), Ubisoft, IGN, Develop, @Ubisoft