Konami’s Consumer Hostile Region Locking Is A Bad Thing

Update: The ban in Ireland has now been lifted. Details here.

In recent years, a number of the old giants of Japanese Video Game publishing have been increasingly turning their attention to the PC gaming. It seems to me that this is part of a general trend of seeking to become less insular, diversifying their output to be less dependent on the handful of console platforms available to them, and a recognition that there is a strong business case for catering to PC gamers. Whether it’s Sega’s transition to a PC publishing powerhouse, Namco Bandai’s eventual capitulation to the hoards of petitioners and bringing Dark Souls to PC (making a boatload of money in the process), or Capcom’s shift towards cross platform development with their in house tech and their outsourced projects, it’s clear that there’s gold in them thar hills.

Whilst PC gaming isn’t a massive market inside Japan, there is a huge international market for Japanese developed games for PC platforms. Especially since digital distribution is far more prevalent on PC than on traditional console platforms, it’s feasible to port a previously console only game over to PC, and more than cover the porting costs with a low risk digital only release. We’ve seen Konami dip their toe into this space with Castlevania: Lords of Shadow, but now it’s time for the utterly fantastic Metal Gear Rising: Revengeance to get a PC release, it’s due out on Steam on the 9th of January.

Revengeance certainly had a somewhat troubled development (read about it here), but before Platinum Games took over and saved it, it had always been slated for a PC release. This initially appeared to go out of the window once Platinum took over, they have never shipped a PC game before, and ever since they were unhappy with the results of Sega’s outsourced PS3 port of Bayonetta, they have developed all ports internally. So with no experience in the field, and no intention whatsoever to let anyone else handle the port, a PC release seemed off the cards.

But thankfully for those who wish to see Platinum Games’ titles released for PC, it appears that they’ve either staffed up, or their current staff have been learning the ropes of developing and shipping games for PC, and soon enough PC gamers will be able to play this fantastic piece of digital entertainment software about cutting dudes up into tiny little pieces and absorbing their spines.

Not all PC gamers though.

Konami have made some decisions about how they’ve handled the PC release that are consumer hostile, and it’s not entirely clear why. Lets unpack them a bit.

Revengeance is being released as a Steamworks game, so this means although it is available to purchase from a range of distributors, if you buy it from anywhere other than Steam, you will just receive a serial code to enter into Steam. My data suggests that this is generally extremely popular with customers, and when given the choice between a Steam key for a game, or a direct download, SavyGamer users typically opt for a Steam key at a ratio of around 10:1. However, Valve have built region locking functionality into Steamworks, and it seems Konami have opted to use this functionality with the release of Revengeance. This means that serials bought from distributors in one region will not work for customers located in another, unless the customer opts to use a technical measure to bypass the region locking (breaching Steam’s user agreement in the process).

Distributors like Amazon US, Gamefly, Greenman Gaming and Nuuvem are all selling region locked serials. Amazon US and Nuuvem will sell serials to any customers, but these serials won’t activate on Steam for customers outside of North/South America (and Nuuvem are kind enough to make this clear before customers purchase from them). Gamefly and Greenman Gaming simply don’t have listings for the game available for customers Europe.

On top of this, Revengeance is simply impossible to buy on Steam in some regions. It is absolutely impossible for customers in Ireland or India (Update: and Japan, home of both the developer and the publisher) to buy Revengeance directly from Steam, they’re simply told “This item is currently unavailable in your region”.

Konami have also opted to disable cross-region gifting through Steam. There’s been several instances in the past where games have been unavailable on Steam in certain regions for censoring/ratings reasons, but a workaround has been for customers outside of those regions to gift the games to those for whom it is not available. Because of Konami’s decision to disable cross-region gifting, that will not be possible here.

All this results in a situation where Revengeance is going to be exclusively available through torrent sites for some users, but even users who aren’t entirely prevented from purchasing the game are impacted by these decision. Konami are using the region locking functionality provided by Steamworks to engage in a process called regional pricing discrimination. This is a process by which different regions are split up into different markets, and pricing is determined on a case by case basis for each region, in an attempt to maximise revenue.

This list price for Revengeance on Steam in the UK is £19.99, and there’s a 20% preorder discount, bringing it to £15.99. The USA Steam list price is $29.99, with the same 20% discount bringing it to $23.99. This represents a slightly cheaper price in the USA than the UK, although this is fairly typical for most games available on Steam. However, the Russian Federation list price is 499 Rubles, or 399 Rubles with the 20% discount. 399 Rubles is equivalent to ~£7.32, less than half the UK price. Similarly, Brazilian distributor Nuuvem have a list price of 49.99 Brazilian Real, equivalent to £12.81, and they had a (now expired) pre-release 35% discount, bringing it to ~£8.56.

The benefit to Konami of engaging in regional pricing discrimination is that they are able to charge customers in more affluent regions higher prices, but still make money from customers in less affluent regions. The wikipedia topic on this is as good a starting place as any if you want to read up more about this economic function. This isn’t illegal, and there’s a debate to be had over whether it is immoral, but I’m firmly of the opinion that charging people more simply because of the country they are in is poor customer service, constitutes a disrespectful relationship between the publisher and the customer, and it deserves to be highlighted.

There have also been instances where a game has been made unavailable to purchase from Steam in certain regions because the publisher has negotiated an exclusive deal with a local distributor in that region. I’ve not seen any evidence to suggest that Konami have engaged in this with the regions that Revengeance is not available in on Steam, but it’s something to look out for.

It’s worth noting that Konami are in charge of these decisions, not Platinum Games. Whilst Platinum Games will have signed a contract with Konami allowing them to make these decisions, the responsibility for them lies with Konami. Platinum Games’ Creative Producer JP Kellams has specifically stated this was a Konami decision:

Attention people asking. I don’t know why @konami isn’t selling MGR PC in your country. We are the developer, not the publisher. — JP Kellams (@PG_jp) January 5, 2014

In my role as Avant-Garde Economist running SavyGamer, it’s my job to find the best deals on games for my users. This region locking makes providing that service more difficult. It means that customers are restricted in their ability to force digital distributors to compete to offer the best value and service in exchange for their money. I think it is a bad thing, and I’ve tweeted at @Konami to tell them exactly that, I suggest you do the same if you feel similarly.

Despite all this, I am hugely looking forward to playing Revengeance again on PC. It was one of my favourite games of 2013, and Platinum are a peerless studio. They only make the best action games in the world. My blade yearns to bathe in the blood of my enemies.