Valve has made changes to its regional price recommendation system that should make life easier for developers, but could also drive up game prices in some countries.
Steam currently supports 39 different currencies, which is a lot of money for developers to deal with, especially the Small Indies. As Valve said in today’s announcement (Opens in a new tab)It’s easy to decide that you’ll charge $20 for your latest edition, but how much does it cost in QAR or NOK? Instead of forcing everyone to stick around with manual exchange rate conversions, Steam makes recommendations across all currencies, based on your pricing in US dollars.
“We think it’s a useful guide, but with purchasing power and foreign exchange rates constantly evolving, we need to make significant changes to these conversion recommendations to stay current,” Valve said in the pricing recommendation update.
“We are also committed to preserving the value of this guide as much as possible by creating a more regular rhythm of price revisions. We will take a closer look at these recommendations on an annual basis, and make adjustments accordingly.”
All this seems very reasonable. But the new price recommendations, shared on Twitter before SteamDB (Opens in a new tab)Reflecting some amazing increases. In the $59.99 game, for example, the recommended price in Turkish lira jumped from 92 to 510, an increase of 454%. The Argentine peso rose even more, from 649 Argentine pesos to 3,800 US dollars, an increase of 485%. Other increases are less egregious but still noteworthy: Steam recommended rates in Russian rubles increased by 75%, Indian rupees 80%, Kazakhstani tenge by 97%, and Polish zloty by 28%. Even the beloved Canadian dollar rallied, despite it being tied to 13% inflation.
To be clear, these increases don’t reflect an actual price increase on Steam, only the rates Steam recommends to developers, who are free to ship whatever they want in any region they want. However, it can have an impact on some games: Busy indie game developers trying to launch games on Steam probably don’t want to waste much time figuring out pricing unique to Colombia and Switzerland, for example, so at least some of those who are likely to benefit are likely to benefit. From Valve’s recommendations to get it done.
The massive increase in Turkish and Argentine prices in particular could be driven by Valve’s efforts to limit region swap – the practice of using a VPN to buy games on the cheap. (Opens in a new tab). Some developers have taken individual steps to combat zone switching: for example, Motion Twin has increased the price of dead cells (Opens in a new tab) in Turkey and Argentina earlier this year because “a large part of the sales last year came from these two countries, without a similar increase in the number of players there”.
“The percentage of our total sales from a particular country will roughly equal the percentage of our total players from that country,” the studio wrote. “For Argentina and Turkey, the percentage of total sales is 3-4 times the percentage of their total players.
“It is no coincidence that the price of Dead Cells and DLC in these two countries is by far the lowest in dollar/euro terms, so it is very likely that people will change their region to take advantage of the 70-90% price drop.”
Fluctuations in exchange rates can also affect regional pricing recommendations, although Valve said it’s not the only factor that goes into that. From the updated Steamworks pricing page (Opens in a new tab):
It is tempting to treat pricing as a simple problem of foreign exchange rates and to relate each currency’s price formula to the exchange rate. But this type of strategy greatly oversimplifies the varying economic conditions from one province to another. And although exchange rates have macroeconomic consequences, they generally do not have short-term effects on individual consumer purchases.
Instead of just pegging prices to foreign exchange rates, our price-suggestion process delves deeper into the details of what players pay for the goods and services in their lives. This includes metrics such as purchasing power parity and consumer price indices, which help to compare prices and costs more broadly across a range of different economic sectors. But in the case of games on Steam, we’re also turning more specifically to entertainment purchases to better inform these decisions.
All of these factors have led us to commit to updating these price suggestions at a more regular pace, in order to keep pace with economic changes over time.
Even with recommended price increases, games in many of these regions remain significantly cheaper than they are in the United States. 3800 Argentine pesos is around $24.50, while 510 yen is $27.40 — each still less than half the cost of the game in the US. But the percentage increase is huge, and net income per capita in both countries (and many others on the list) is much lower than in the United States. Developers who adopt higher price recommendations may see lower area swaps, but it will also put greater financial pressure on consumers in affected areas.
Some users on Reddit don’t think the new recommendations will have much of an impact on the big releases, because the big publishers don’t care about the recommended prices anyway – and they generally charge more. “RE4 Remake was 25% higher than the new price even before the change, and FIFA 22 (yes, last year) won twice that price,” redditor SchrodingerSemicolon (Opens in a new tab) Wrote. “What this does is just increase prices across the board for those games that followed [the guide] Before.”
Indie games are a different matter, because as many redditors have pointed out, indie developers are the ones most likely to follow pricing recommendations. Indonesian player arhcerwartune (Opens in a new tab) “We’ve had a hit of +30% to +73% on games priced between $10 and $30,” he said on Reddit’s ‘Frustration Huge’. [is] indie spot. I understand that because [of] Inflation and stuff but it broke the purpose of regional pricing.”
I’ve contacted Valve for more information on recommended price increases, and will update if I receive a response.