Age of Conan prices – rip-off or rebate?
I recently read a blog entry by Tobold on the European price for Age of Conan and I am must say that I was a bit surprised by Tobold’s comment and by some of the commenters.
The European monthly fee for Age of Conan was 12.99 Euro if one paid one month at a time. This was basically called a rip-off because with the current exchange rate between Euro and US dollars, this is substantially less than the US monthly fee of $14.99.
This is just silly. The fees are basically the same as all major subscription-based MMOGs , be it in Europe or in North America. It is not a market where the companies compete with price, but at the same time it is a bit price sensitive – at least no company is willing to try to get a much higher fee than the rest, too much risk.
Since the fees actually pay for operations and continued development of the game, what becomes interesting is where do the companies have those costs?
In the case of Funcom – originally a Norwegian company, but at least on paper it is registered in Netherlands and has a headquarter in Switzerland. There are probably some tax reasons for this. They are listed on the Olso stock exchange. They also have offices in Norway, USA and China.
There is little doubt that the majority of the development work is done in Norway though. The main expense there is salaries; that is typical for a software-focused IT company. The salaries do nto change with exchange rates. So how many Norwegian crowns (the currency – NOK) would they get for a monthly fee today (May 9th 2008)? How would they have received a year ago (May 9th 2007)?
Today a North American subscriber gives them
$14.99 = 14.99 * 5.1307 NOK ~ 76.91 NOK
Today a European subscriber gives them
€12.99 = 12.99 *7.8815 NOk = 102.38 NOK
Looking back a year ago, the corresponding numbers are
$14.99 = 14.99 * 5.9893 NOK ~ 89.78 NOK
€12.99 = 12.99 * 8.1317 NOK ~ 105.63 NOK
Note: I did not include any taxes here . That will affect what a customer will pay in the end, but that is not money that is going to the game companies, that is picked up the the governments. So it is not relevant in terms of whether a game company would rip someone off or not, since they do not get that money.
In both cases Funcom are “loosing” compared to if the game would have been released a year ago. If the exchange rates change they might of course “gain” some later, or “loose” again.
Roughly, the fees from 3 Europeans pay for the same amount of work that 4 North Americans do. If the value of the US dollar drops more, then more North Americans are needed to pay for the same amount of work, since they keep the prices the same. The same is the case for those paying in EUro as well.
Now, everything is of course not handled in NOK most likely. US servers and operations are likely handled in the US and with US costs. European servers and oprerations are likely handled here in Europe, perhaps in Norway or Switzerland.
The costs there would very likely be in the local currencies and differences in exchange rate would not matter that much.
Now, if there were any “rip-offs” that would more be from the companies with have the bulk of their development in the US, e.g. Blizzard, SOE, Turbine, NCSoft (for Western games).
Or aren’t all Westerns getting ripped off, since prices in China is likely even lower for any games that are available there? Let’s encourage all these companies to relocate and put all of their development work and all of their servers and operations in China instead. That would surely cut the costs and they can lower the fees for us all and not rip us off.