It’s something that has annoyed me for quite a while. Like having nowhere to watch certain DBS movies that would already be on streaming services that I have, but because I live in America it doesn’t exist there
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Sometimes media release dates and pricing differs in different parts of the world due to factors such as economic disparity or different rights holders being involved.
Region locking is designed to make it difficult to take advantage of differences in pricing/availability for profit
Typically what ever studio is making the movie or TV show will enter into distribution deals with third party companies and those deals will typically involve territorial restrictions, so the third party company only had distribution rights in a certain region.
Region locking was invented as a way for companies to charge more in some areas than others, originally we didn’t have region locking, but with the advent of digital purchases and places like ebay where you could buy something from overseas companies started implementing region locking so they could rip off people in one region without giving them the option to circumvent unfair pricing.
Look up the australia tax for an example
Because different companies are in charge of releasing media into different areas of the world. For instance, you have Nintendo who releases games in Japan. But if you want to release that same game in the U.S. then you’ll need to negotiate a contract with Nintendo of America. And then there is Nintendo UK.
Say you write a book it’s pretty cool, and you sell it for 5$ a copy in your home town of Cleveland and do pretty well for yourself. The book is good though and some big shot from New York City says they’ll pay you 7$ a book for every copy they sell in NYC, but you can’t sell it for 5$ in NYC anymore. Now with that established you start thinking “huh, maybe I can sell this book to someone with a similar plan in Los Angeles, but they won’t want to buy it if I’m already competing with them, and I don’t have to deal with the hurdles of doing business in LA.”
Region locking fundamentally exists because the rights holders and/or distributors don’t want or aren’t allowed to have consumers in one region purchase or consume content from another region. There are many reasons for why that is, for example:
* Contractual models for distribution rights that haven’t been updated since the times of physical media and regional broadcasting.
* Purchasing power varies between different regions more than is accounted for in currency conversion rates. If you want consistent pricing you must either charge a higher price and accept that some regions cannot reasonably afford your product, or you charge a lower price and potentially have an unprofitable and unsustainable business model. Regional pricing lets you tap in to more markets, but in these days of cheap international shipping and digital media it doesn’t work without enforcement.
* Legal or regulatory requirements can mean products must comply with complicated local distribution procedures (applying for classification in Australia, working with local distribution partners in China etc), be altered for sale in certain regions (eg. Nazi iconography in Germany), or are prohibited entirely.
* Rights holders may simply want different distribution contracts for different regions, they don’t even have to have a reason, it’s their product to do with what they like.
Money.
Let’s say I want to sell my game. The price of manufacturing a game is very low, because most of the costs come from development which I have spent already. I need to charge as much as I can to recoup the development costs. I know that Americans will pay USD$79.90 for a video game, so I charge them $79.90.
However, if I charged $80 USD in say, Turkey, very few people would buy my game and instead they would be motivated to pirate it. To make more sales and combat piracy, I sell it at the equivalent of say, USD$30. There are a lot of gamers in Turkey so even if I make less per copy, I still can make a lot of money by selling more copies. Remember that each copy costs me very little to make because most of my costs come from development.
But oh no! An American retailer notices that I’m selling the game in Turkey for under half the price in the US. He buys up a ton of Turkish copies and sells them in the USA for $60. Now instead of making $80 revenue from a US buyer I am only making $30 revenue because that buyer is buying the Turkish version. This is called parallel importing.
So I put special software in the Turkish console that the Turkish copy of the game will check for. If you try to run the Turkish copy in an American console, it will not work. Now the American buyers will have to buy the American version and I can keep making $80 revenue from them.
Now with digital downloads it is even easier for the parallel importer. They can just buy the CD-keys in Turkey on a sale-by-sale basis and they don’t even have to wait for the product to ship to the USA. So game companies put in region locks on CD keys that will only work in the country they are meant for.
This is for games, where the profits for most companies can get pretty slim (not everyone is EA/Activision/Ubisoft who can make billions on low-effort crap).
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For watchable media, region-locking exists because of exclusivity contracts. Say Netflix wants to put this awesome anime on the service. Netflix contacts the Japanese production company and asks for a contract letting Netflix stream this anime to the world.
But the production company says, “Not the world. You can stream this in the USA and Europe and most places, but not China or South Korea or Singapore and definitely not Japan. We’ll charge you a bit less.”
Netflix asks, “Well, the discount is nice, but why not those places?”
The production company says, “Because in Japan we already have a deal here to broadcast the anime and they pay a lot more than you just for one country. The same applies to those other countries with other broadcasters. The rights are exclusive, meaning we can’t sell them to you also.”
So Netflix implements region locks in China, South Korea, Singapore and Japan for this anime, because if it didn’t, the rights owners who bought them would sue Netflix. And win easily, because this kind of contract tends to be quite clear.
Different countries have different laws.
Almost universally this results in a major international business starting a subsidiary for each country they’re involved in. Eg. Nintendo America, Nintendo Japan, and Nintendo UK are all separate companies. All owned by Nintendo Inc.
What this means is that typically with media companies they have to buy the rights through *each* of their subsidiaries. So they try to balance what will get the most bang for their buck. Maybe it costs $10 million to bring it to America, but then it’s got an audience of 330 million people. That’s a worthwhile deal. But maybe it also costs $10 million to bring it to Switzerland. So now it costs $10 million to reach 8 million people. Not as good a deal. It might not be worth doing.
Sometimes laws *about content* actually are the reason. Like no gay stuff in Russia, no Nazi stuff in Germany, nothing about organ harvesting in Australia. Sometimes there’s just laws about it. So companies don’t bother breaking the law for the potential to make a couple bucks.
But most of the time it’s for economical reasons. Just doesn’t get the required ROI.
The TLDR answer is money.
The full answer is this:
Different countries have different media laws, and cultural sensitivities. It costs money to get someone who understands those laws to navigate them for you, and ensure the media is within the cultural sensitivities of the market. There was a time before the internet where distribution of products had to come through official channels, and strict oversight went into localization to the point where major companies would start subsidiaries in their market (Nintendo of America being an example).
In the modern world, that has been shrunk by this technology, region locks have become a standard method for inadvertently running afoul of other countries laws due to (digitally distributed) products inadvertently ending up in places where their existence or contents might constitute a legal or cultural liability for a company.
A region lock tells governments a product was not intended to be consumed outside of the region it was built in compliance to laws for, and that the company has made a good faith effort to avoid any problems. It tells consumers they’re getting a product “as is” and with “no warrantee expressed or impaled” meaning no consumer protection applies (and no money can be lost by enforcement of local consumer protection laws).
When region locks are easy to bypass, that is usually by design and the very act usually constitutes a violation of a company’s user policy. A policy violation that allows them to terminate any implied relationship without any other cause. Another way it frees them of liability.
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