The truth behind SA game prices

Grand Theft Auto 5 SA news

GTA 5 has caused a bit of a stir in the online gaming news space in South Africa, and not for the traditional “glorification of excessive violence and crime” reasons – this time, it’s the price point for GTA 5 in SA that has raised eyebrows and prompted questions.

At a recommended retail (RRP) price of R729 for the standard edition of GTA 5, this is one of the most expensive console games at launch that SA has seen in quite some time. However, an RRP only tells part of the story.

Megarom Interactive is the official distributor of Rockstar Games in SA. Spokesperson Jason Borea explained that Megarom always strives to bring games into South Africa at the best possible price, contending with issues such as exchange rates, and shipping costs and logistics.

When Megarom secures an order, they do so at a stable price for the shipment (there are rarely outliers, such as a price change from the publisher or a wild fluctuation in exchange rate beyond manageable levels, but in the interest of clarity, these were mentioned as scenarios).

GTA V screenshot_10

This extends to the topic of South African Recommended Retail Price (RRP). When Megarom indicates an RRP it is not to say that retailers must sell the game at this price point – it is merely an indicator of a fair price based on a number of factors, such as the publisher-set pricing, import and shipment costs, exchange rates, and local distribution costs. This is before the retailers apply their own pricing strategy to the product.

Borea explained that in fact, Megarom would run afoul of South African business competition law if they dictated prices. Having sold the gaming products on to SA retailers at their wholesale price, it is the retailers’ discretion to decide on the price they advertise.

GTA V screenshot_04

What we should take away from this is that the combination of Megarom pricing and retailer pricing strategies is what brings us to the advertised price for games. Prices can differ from retailer to retailer, as each will have their own strategy for the sale of the game; whether it’s to build store brand loyalty and awareness through sales “specials”, or secure online store account registrations. As we have observed by tracking sales specials each week, consumers won’t often see a game hitting the store-shelves (online or physical) at exactly the RRP put out by the game’s SA distributor.

A topical case-in-point is GTA 5, which has seen a number of pre-order prices and “specials” going up in the months since its launch availability announcement. Initially, in December 2012, the game hit online stores at a pre-order price of anywhere between R799 and R729, causing a stir among gamers who baulked at the high price. At the time, Takealot explained to MyGaming that it is common practice to list a product with a placeholder price so that it can be made available to pre-order, with pricing and release dates likely to change closer to launch.

In the months that followed, various retailers began to adjust their pricing, and Megarom announced their new RRP (down from R799 in December 2012). The following table reflects the retail situation at the time of writing for both Xbox 360 and PS3 versions of GTA 5:

Retailer Standard Edition Special Edition Collector’s Edition
Megarom RRP R729.00  R899.00  R1,699.00
CNA (valid until 7 July)
R599.90
Kalahari R649.95 (R599.95*) R749.95 R1,459.95
Takealot R669.00 R849.00 R1,699.00
Loot R699.00
Animeworx R725.00 R890.00
GamesX R749.00
Top CD R799.95
BT Games TBA

Recently there was some speculation that a GTA 5 price decrease in the UK pre-order market could indicate an incoming price decrease for SA. The speculation also swung the other way, suggesting that a price increase could happen due to the poor exchange rate.

Megarom fielded this question by saying that they have secured their pricing for GTA 5 (aforementioned rare outliers notwithstanding) and they always strive to ensure that there are no drastic changes to pricing once the information has gone out to the retail channel.

GTA V screenshot_07

We contacted local retailers to find out if it’s fair to speculate on SA pricing based on UK market price movement, or if this has any bearing on the SA market.

Kalahari

“We won’t see a price drop here in SA, as the exchange rate has taken a knock since the title was listed; if anything it might increase,” said Kalahari’s Ramone Pickover, when asked about the UK’s pricing trend influence on SA, particularly with GTA 5.

Pickover added that for products in general, “most suppliers are increasing their prices, due to the current exchange rate fluctuations.”

CNA Online

CNA said that the UK pricing trends will not have a role in the changing of prices for SA gamers.

“UK prices will not have a major effect on SA prices – remember that SA prices have duties and rand/dollar rates to contend with that UK prices do not have,” said CNA’s Nerisha Lakha.

Animeworx

Gaming and anime retailer Animeworx said that “the exchange rate is not doing SA any favours,” but game pricing shouldn’t change drastically.

Animeworx’s Tex Hartog explained that retailers often put up placeholder prices for games, and that price differences would appear as a result of retailer competition. Backing up Megarom’s point about recommended retail pricing, Hartog said “R799 was an indication of recommend retail at that point in time, just as R729 is the RRP now.”

“I think a lot of the pricing you have seen (barring the collectors and special editions) really has been place holder price point,” said Hartog. He added that you may sometimes see a big discrepancy between retail and online pricing, as physical retailers and online retailers have different operational overhead costs.

BT Games

A spokesperson for BT Games said that “At this stage we can’t confirm retail pricing for SA. We understand an RRP has been set by the distributor Megarom Interactive, but as we are subject to Rand fluctuations and other factors, we will prefer to confirm pricing at a later stage.”

“Further to the above, BT Games will announce pre-order pricing at a later stage – our pre-order price will as usual offer our clients a discount off the recommended retail price, in addition to the other pre-order incentives we have on offer. As GTA 5 only releases in September we will be more confident to confirm pricing closer to the launch,” added the retailer.

Takealot

Takealot did not respond by the time of publication.

GTA V screenshot_02

Grand Theft Auto 5 will release on 17 September 2013, and in anticipation for the game, we recently looked at 5 things that we can’t wait to do in GTA 5.

*Update

At some point on 5 July 2013, after this article was published, we noticed that Kalahari had dropped its price for GTA V (standard).

More GTA V news:

GTA 5: two discs for 360, multiplayer info

GTA 5: who’s got the cheapest pre-order in SA?

New GTA 5 screenshots

GTA 5 Collector’s, Special Editions SA pricing

GTA 5 Special and Collector’s Editions revealed

GTA V PC petition hits 44,000 signatures

GTA V vs GTA IV graphics comparison

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