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
In: 11
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.
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