What's Up With Australia's Game Prices?

I don't want to tread on anyone's righteous indignation, but I think it's time we got something straight. I've heard very many complaints from Australians about the kind of situation depicted below.

 

Spot the difference: Rage on Steam's Australian store (above) and on the US store (below).

What the? Aussies have to pay $30 more? How is that fair?

Well, it is fair. Let me put on my economist hat and tell you why.

The first thing you need to understand is that the purchasing power of a currency is not the same as its market exchange rate. Ok? When you go to a site like xe.com, all you are learning is how much of one currency you can buy for another currency, not the comparative value of those currencies. The value of a currency is determined by what you can buy for it. We call this "purchasing power". A currency's purchasing power can often be quite different to its market rate. If a country's economy is strong, like Australia's is right now, then purchasing power will be a lot lower than the exchange rate; if a country's economy is weak, then its currency's purchasing power might be higher than its exchange rate. Exchange rates can fluctuate wildly, but purchasing power tends to remain pretty consistent (inflation notwithstanding, but assuming two countries have roughly the same rate of inflation, their currencies' comparative purchasing power isn't going to change much). If only there were, I don't know, some cool way of comparing purchasing power directly without those pesky fluctuations of currency markets getting in the way.

Well, as it turns out, there is, and it's called PPP-adjustment. PPP (or purchasing power parity) works on the basis that things are going to cost pretty much the same wherever you go. As a simplistic example (cribbed shamelessly from an IMF page on the matter), if a Big Mac costs £2 in London, and $4 in New York, then the PPP-adjusted exchange rate would be £1 = $2. In other words, one pound is worth two dollars, no matter what the current exchange rate might be, because you can, on average, buy the same things in Britain for £1 as you can in America for $2. Like I say, this is a simplified example: the people responsible for the International Comparison Program survey, from which PPP-adjustment is derived, look at a lot more than just Big Macs - they look at a whole host of goods and services across the globe, comparing their prices (and it turns out £1 is actually worth $1.61).

To avoid confusion, we introduce a hypothetical currency called the "international dollar". The international dollar is like a US dollar, but it's entirely virtual. It's calculated from the findings of PPP-adjustment. Because it can't be traded, it's not subject to the fickle whims of the currency markets, and as such it is useful as a stable benchmark of the purchasing power of a given currency. That is to say, the hypothetical exchange rate from a given currency to an international dollar is the amount of that currency an inhabitant of that country would have to spend on average in order to get goods that, in the US, would be worth $1. The most recent international dollar rates are from 2005, but that's ok, because, as I said, comparative purchasing power doesn't change very much.

The most recent international dollar rates are available from the World Health Organization here (the rates themselves are in an Excel spreadsheet). So we'll look at that and find out that one international dollar is worth 1.39 Australian dollars. There's a big difference between that and the market rate, which is currently 1 USD to 0.96 AUD, but I said that might happen, since Australia's economy is relatively strong right now (Australia being one of the countries that was least badly hit by the global recession).

Let's do some calculations. Australians have to pay $89.99 USD for Rage. At current market rates, that's $86.06 AUD. Adjusting for purchasing power, that's $61.91 international dollars. Remember how I said that an international dollar is how much of a given currency someone would have to spend to get $1 worth of goods in the US? So in real, purchasing power terms, Australians are paying the equivalent of a whopping $1.92 more than Americans. So unfair!

This, like I say, is based on the assumption that goods and services are going to cost pretty much the same wherever you go. So, either literally everything in Australia is 50% too expensive, or games specifically are priced just right (compared with the rest of the world, at least). Given that the average salary in Australia is about twice that (at market rates) of the average salary in America, and remembering that salaries are decided based on purchasing power, and not market rates, I'd go with the latter.

I don't think that the Australians who are complaining actually realise this. It's not particularly a well-known thing. Australians want to pay the same price as everyone else, and that's understandable, because that seems fair. But that relies on market rates being indicative of purchasing power, which they're not. If Australians actually paid $60 USD for Rage, by the time you converted to AUD and adjusted for purchasing power, they would be paying the equivalent of about 40 international dollars.

My point here is that, despite what they think, Australians aren't complaining about how expensive their games are; they're actually (however unwittingly) complaining about how they can't have these games effectively cheaper than everyone else. Which, you know, wouldn't be fair.

Virtual Tourism: I Lost Myself in Tokyo and San Francisco

I spent the other evening playing through Go! Go! Nippon!: My First Trip to Japan, Overdrive's first visual novel targeted at overseas audiences. The somewhat by-numbers romantic plot aside, Go! Go! Nippon! contains elements of travelogue. Players can choose three of six possible areas of Tokyo to visit, followed by a visit to Kyoto and then, depending on how the romance plot plays out (which depends on which areas you chose to visit), either Kamakura or Yokohama. It veers towards virtual tourism.

Meiji Shrine, Shibuya

Sadly, while the locations are beautifully drawn (and often link to photographs of those locations on Google Maps), and the textual information about the locations imparted by the two girls is interesting (at least, I learned some stuff I never knew), iconic, familiar landmarks (and even familiar views of those landmarks) are favoured. In a way, it's unsurprising that a title like this, targeted at overseas audiences, would show people the things most people want to see, but in the static frames of the visual novel format, the landmarks become decontextualised: more a highlight slide-show of a visit to Japan than a virtualisation of an actual visit, and it left me feeling strangely unsatisfied. One might suspect that that's the point: After playing, I've gone from "I'd like to visit Tokyo some day" to "I'd like a little more to visit Tokyo some day".

But I'm really interested in virtual tourism proper. It's not a substitute for real travel, but it's inexpensive and convenient. More than that, though, it's risk-free, and you're not limited to travelling to places in the real world. Let's say you want to experience life in the Old West, or in Pompeii before Vesuvius blew its top, or Renaissance Europe, or Edo-period Japan. Those places don't exist any more, so the only way to experience them is virtually. Further, you could visit worlds that can't exist -- a common setting for games, but games are... different. Even further, you don't have to be yourself when you visit these locations. You don't even necessarily have to be human.

Video games have given us an indirect taste of what virtual tourism might be like. Ernest Adams said that he was very excited about exploring Far Cry's Pacific island environment until he realised that he couldn't do it without someone shooting at him every 30 seconds. The Grand Theft Auto series allows us to visit 'gamified' (though it's not really anything to do with Gamification) versions of New York, Miami, L.A., San Francisco and Las Vegas. True Crime: Streets of L.A. and L.A. Noire both allow us to visit somewhat more authentic recreations of L.A. than does GTA: San Andreas (and, as a bonus, L.A. Noire lets us visit a recreation of an L.A. that no longer exists, albeit with the disclaimer that it's not entirely authentic), but they somehow feel less believable.

Let me tell you about an early gaming experience of mine. Visiting my dad at a young age, he let me on his PC and loaded up for me a game called Vette! This game involved racing Chevrolet Corvettes around a cubist San Francisco (the game was released in 1989, and the 3D technology of the time didn't permit much in the way of detail). As a child, I was always interested in subverting the object of the game and finding other play-spaces within the game's systems, so it wasn't long before I realised I could ignore the actual race and just go for a leisurely drive around a recreation of San Francisco. While my brother was probably more interested in the proto-Grand-Theft-Auto elements (you were, shockingly, able to run over nuns!), this was probably my first taste of virtual tourism; complete freedom to drive around the city and just see what was there (interrupted only if I happened to crash into a certain statue, at which point the developers posted a textual memorial to the Tian An Men Massacre and froze the game).

Ok, your virtual tourism could also be interrupted if you got stopped by the police for your reckless driving. Those poor nuns!

The thing is, video games give us a seductive glimpse of what virtual tourism might be like, but they're not actually that good at virtual tourism. Game environments are often the spatial equivalent of a movie montage: enough to convey the sense and salient details, but necessarily contracted and warped. Partly this is because of technical considerations, and partly it's for the sake of the gameplay. A street that takes five minutes to walk down in real life might take thirty seconds in a game, because spending five minutes walking down a street is boring from a gameplay perspective. Virtual tourism, unlike games, has a covenant of simulative fidelity: it needs to be accurate. Technologically, there's a trade-off between accuracy, detail, and scale. This is why World of Warcraft's Azeroth is, mile for mile, about the size of a small city; not so much a 'world' at all. Morrowind and Oblivion have earned a reputation as games the strength of which lies in being "a place to be" rather than "a game to play", but their environments are still designed in a very game-like way. Virtual tourism using existing game technology would probably be necessarily limited to very small areas, or else be rather unpretty, violating the expectations we -- thanks to games -- now have of virtual environments.

Other, non-game applications have moved towards virtual tourism as well. Second Life contains impressive recreations of real-life locations. But Second Life's problem is community-generated content. Much of it is ugly due to people not realising that just because you can contribute, doesn't mean you should -- and, though I'm no prude, the permissive nature of the user-generated content creates a pervasive air of seedy sexuality: you can almost smell the jism, which is naturally rather off-putting. Google StreetView is another application that suggests virtual tourism. In The Book of Japans, Momus (whose song Folk Me Amadeus I reference in the title of this post, because I'm a bit of a fan) gives instructions for recreating the journey taken by two of the novel's characters in Google StreetView. The problem with Google StreetView, I would suggest, is that tourism is not purely exploratory; you can see things, but it suffers from a lack of agency, and, like Go! Go! Nippon!, from the static frames in which you explore (albeit with an awful lot more of them, although using only the visual medium). Further, both Second Life and Google StreetView have navigation problems that interfere with the sense of presence that a good game can provide: surely a prerequisite for satisfying virtual tourism!

It would be nice to think we could just load up a program and visit some exotic locale, but the more I think about it, the more difficulties I see with that concept. Video games may make an attempt at distilling and approximating what we want from virtual tourism, but that relies on "what we want" from virtual tourism being an objective truth, rather than the subjective thing it is. For now, we have to close off some of the possibilities.