Why video game prices have skyrocketed in South Africa

Fewer major releases, expensive logistics, global price-matching and a shift in distribution strategies are among the major factors sending video game prices skyrocketing in South Africa in the past few years, but the main culprit has been a weaker Rand.

For several years, South African gamers have had big holes burnt in their wallets due to a substantial increase in prices in 2020.

That was the year it first became common for major titles to launch at around R1,000 or more.

For example, in August 2020, a pre-ordered digital copy of Ubisoft’s Assassin’s Creed: Valhalla was R1,199 on PS4 and Xbox One.

Buying a similar game from the same publisher is substantially more expensive in 2024.

Pre-ordering Ubisoft’s newest upcoming AAA game — Star Wars: Outlaws — will now set you back R1,429 for the base game on PC, PS5, or Xbox Series X|S.

The same is the case for another major publisher — Electronic Arts.

In August 2020, a digital copy of F1 2020, which was only out for a month at that time, would have set you back R849 on PS4 or Xbox One.

The upcoming F1 2024, due to be released at the start of May 2024, is priced at R1,399 and R1,299 on PS5 and Xbox Series X|S, respectively.

Average price in South Africa aligned with international markets

MyBroadband asked well-known brick-and-mortar gaming retailer BT Games, video game distributor Prima Interactive, and PlayStation distributor Gamefinity to learn more about the reasons for the price hikes.

BT Games CEO Launa Bagnall said that the prices of the latest AAA releases on PC, PS5, and Xbox Series X|S typically ranged between R1,299 and R1,899, with the average at R1,499.

Bagnall said the company’s pricing structure was influenced by currency fluctuations, a trend among publishers towards favouring digital sales, and the aim of maintaining a consistent worldwide price point.

While South African prices have increased substantially, the typical $69.99 price for a major console release’s standard edition in the US has remained the same since the launch of the PS5 and Xbox Series X|S in late 2020.

However, the Rand weakened significantly from R15–R16 to the dollar at that time, to ranging between R18 and R19 to the greenback this year.

The typical R1,499 price of a new AAA game in South Africa is now more aligned with the US price of $69.99, which works out to about R1,529 when including VAT.

Prima Interactive CEO Ian Hepplewhite said the recommended retail price for a new release in the UK was also between £59 (R1,399) and £65 (R1,540) — in line with the South African pricing.

Therefore, the South African price hikes make sense, particularly in light of publishers wanting to maintain consistent worldwide price points.

Gamefinity CEO Mario dos Santos pointed to an example showing that the price changes were an exclusive function of the exchange rate variances.

He said God of War: Ragnarok, released in 2022, launched at a recommended retail price of R1,299.

In March 2024, the price of this game had risen to R1,499, matching the 15% devaluation in Rand since that time.

Dos Santos also said South Africa had inordinately higher inbound prices for physical games.

Hepplewhite explained more about why this was the case.

“This stock is flown in to make the street date, and it’s released to us very close to the actual street date,” he explained.

“As a result, it needs a premium airfreight rate to try to ensure it makes the flight. Locally we have a short window to get it to stores, again requiring a premium distribution rate.”

Rand and logistics not the only factors

However, Bagnall also blamed publishers for adjusting prices to maximise profits due to less frequent releases and pointed to a transition to a centralised distribution model for physical copies, which made publishers less price-conscious in South Africa.

“Rather than working with multiple local distributors, they are moving towards large international distributors representing multiple territories and publishers,” Bagnall said.

“These distributors may not possess the local knowledge or interest required to remain competitive in our specific market.”

“We have only a limited number of local distributors who heavily depend on their relationships with publishers to offer competitive pricing.”

Dos Santos also said it was common knowledge that video game production costs had increased materially due to scale and technical competencies.

Hepplewhite said although physical copy sales were down in South Africa, the overall market was not declining, thanks to substantial growth in digital sales.

“South Africa has seen a much larger share of sales shift to digital. In other countries is split is more even,” he said.

Hepplewhite attributed this to two factors — digital prices usually being cheaper than physical copy prices and gamers having the guarantee that they will get the game on its launch date.