Consumers in the U.K. will likely be paying considerably more for their videogames this Christmas season as retail prices, led by the highly anticipated and highly priced Modern Warfare 2, are expected to increase significantly.
Activision has confirmed that the regular edition of Modern Warfare 2 will launch in the U.K. at £54.99 (roughly $90) and retailers are expecting other publishers to impose similar price hikes. A weak British currency and "record development costs" are being blamed for the increases.
"Exchange rates between the Euro and the pound are making it very difficult for publishers to show an acceptable operating margin in the U.K.," said Ian Curran of THQ. "You can't continue to trade as normal when the biggest territory in Europe has seen cost of goods increase by 30 per cent due to the strengthening of the Euro. Publishers somehow need to offset this drastic increase in costs. I'm not surprised to see the [Modern Warfare 2] SRP go up and I feel this will continue across more key titles."
"Development costs for next gen software have increased at a time when the take-up on these machines is slower than expected and therefore the opportunity to sell more units is limited," he continued. "The increase in cost of goods due to the weak pound has added to this burden, and therefore something has to happen to ensure publishers' return on their investment."
Regardless of the pressures facing the industry, consumers are not expected to respond well to the higher prices. A games buyer at a large U.K. retailer said the retail industry itself reacted negatively a few months ago when publishers said they were "being hammered" because of the high Euro and would have to raise prices as a result. "The fundamental problem is that the customer will feel conned that the latest triple triple-A is £50 at retail when last year it was only £40," he said.
Interestingly, while most publishers are expected to follow Activision's lead, at least one says it will buck the trend and maintain current pricing through the 2009 Christmas season: Electronic Arts, which told MCV, "There has been no change in our trade pricing policy and there will be no change in RRP (recommended retail price)."