[foota]

It's really the opposite, it's a form of price discrimination.

There's a theory of surplus in economics, which is the extra benefit that someone gets from a transaction above what they would have been willing to pay.

If I buy a game that I would have paid $100 for for $50, then I have a "$50" consumer surplus. One the other end, if the producer was willing to let that game sell as low as $40, then they have a producer surplus.

Profit seeking producers want to capture as much as the surplus as they can, and they do this through price discrimination. You see this in product as two things that are essentially the same but with different marketing etc.,

Price discrimination based on geography is quite effective though as well. People with lower incomes aren't as willing to pay high prices for games. Countries can be effectively segmented based on geography (whether virtually or not), and through this producers can charge a higher price to countries with high incomes (taking away the consumer surplus they would have had vs a lower global optimal price), and still get some value out of consumers in lower income countries.

So it's not that NA is subsidizing the market, so much as it is the company trying to squeeze the most of everyone. Now, you could call it subsidizing in that there are probably products that wouldn't be brought to market without the NA market to pay for them, but that's not really "subsidizing".

[cruano]

> People with lower incomes aren't as willing to pay high prices for games.

It's a bit deeper than that, let me share my perspective of purchasing software in a developing country.

Growing up I remember that video games only picked up in popularity when you could "buy" pirated games. For reference, I'm talking about the Nintendo Wii era and those were about 1-3 USD each for a CD with the pirated version of the game. Also for reference, right now a Nintendo Switch game (that costs $60 MSRP in the US) sells for about $90 due to taxes and stuff [1].

To me, there's two significant issues with that: 1. People don't feel like they are stealing when buying pirated goods. They are spending their hard-earned cash into something they want/like, and that's as far as their reasoning goes. This happens for other software like Photoshop too, and even physical goods. I remember buying fake yu-gi-oh cards knowing they were fake, but that's the only ones that were available and that I could afford. I had a few legit ones and I treated them as a treasure, in the same way you treat your fancier clothes better than your normal ones. 2. You can have a full meal in a diner for about $3 in my country, desert and all. If you want to sell food, that's how low you have to go because that's what people can afford. A $10 dollar meal is normal in the US, but here it would be a luxury.

Now, that combination is very problematic as you can expect. People do want to pay for stuff, and to their minds that's what they are doing. To me, selling pirated goods is as scummy as it gets, but I cannot blame someone for buying it when it's their only choice.

So for most companies, having "regional" prices on this markets is the difference between selling or not.

[1] Not exagerating at all, google `700 GTQ to USD` and then this https://www.max.com.gt/juego-nintendo-switch-pokemon-violet-...

[matheusmoreira]

> People don't feel like they are stealing

Yes. That's because they aren't stealing. It's completely normal to feel like you're not stealing when you're not stealing.

The copyright monopolists would very much prefer that you felt bad when you "steal" their imaginary property but the truth is nobody other than the politicians they lobby cares about their opinion on anything.

[matheusmoreira]

Excellent. So how do we figure out which regions have the lowest prices so we can pretend to be in that region? Because I sure as hell don't want to pay high prices while some other guy is paying peanuts.

Any attempt at price discrimination should immediately result in arbitrage.

[not_a_shill]

>Now, you could call it subsidizing in that there are probably products that wouldn't be brought to market without the NA market to pay for them, but that's not really "subsidizing".

That's every product ever made for profit by a developer in a 1st world country. It's still essentially subsidizing even if you don't like the optics of the word.

[TeMPOraL]

Depending on the specifics of the business model (e.g. is the marginal good sold paying primarily for the up-front investment, or for the per-item costs), you can sometimes call it "NA subsidizing everyone else", or in other cases "vendor overcharging NA customers because they're wealthier on average", or in yet other cases, "selling at the local market rate".

[foota]

It's not subsidizing though.

It would be subsidizing if the effect were that Americans pay more so that people in other countries pay less.

But the alternative to Americans paying more isn't the other people having to pay more, the alternative is the product not existing. (or, alternatively, the company making less profit).

There might be some cases where if the US market didn't exist, the price in another country would go up, but it would happen because a company wasn't able to sustain a lower price with the reduced quantity, and would therefore have to settle for selling less quantity at a higher price.

[mr_toad]

Subsidising would imply that they’re selling in other markets for a loss. They’re not, there’s no subsidy.

[greiskul]

From popular internet knowledge, games are more expensive in Australia then NA (Including digital distribution). Would you say that Australia is subsidizing games for Americans?

[ipaddr]

If there were more Australians or if part of the money didn't go into government taxes

[simonh]

It is in the interests of North American consumers for the company to maximise it's revenue from other regions to help fund product development. Higher price points in developing countries would make the product largely unaffordable there, reducing revenue.