Wednesday, May 13, 2009
1 Euro is not equal to 1 Dollar
Over the last 365 days 1 Euro bought you between $1.25 and $1.60, with an average of $1.40. Thus if you could find suckers to which you could sell 1 Dollar for 1 Euro regularly over the last year, you made a 40% profit just from the exchange rate. But who would be willing to pay 1 Euro for 1 Dollar? Unfortunately all European customers of Steam, as well as some other online game distribution services, as well as some MMOs, including Free Realms. All these platforms offer identical services in the US and in Europe, but what costs $1 in the US cost 1 Euro in Europe. European customers pay 40% more for exactly the same service. (In the case of Free Realms you could even argue that the service is worse, as the servers are in the US, and we get more latency.) If you're just laughing about this, because you hold an US passport, be aware that if you ever live for a period in Europe, like being stationed as a soldier, you'll overpay in Euro too, the price is based on location, not nationality. If you try to circumvent that using a proxy or other technical means, you will get banned by Valve, and all your Steam games will stop working.
Of course the European customers of Steam aren't happy, the 1 Euro is not equal to 1 Dollar Steam group already has nearly 20,000 users, and that's after Valve banned the most vocal ones. Of course we are used to getting screwed like that with games that come with a DVD in a box, for example The Sim 3 costs $49.99 in the US and 49.95 Euro in Europe. But in that case at least I can order the game in the US, and still come out ahead in spite of transport cost and VAT.
Curiously Valve is well aware that their price policy is hurting them, as they know how much better games sell at reduced prices. Overcharging European customers by 40% MUST have a negative effect on Steam's sales over here. Of course they aren't alone in this, the game publishers share the responsibility for setting prices and cashing in on the exchange rate profits. But the next time you hear how video games sell less well in Europe than in the US, you'll know why.