So you thought the iPod was expensive in Brazil?
It was no secret even before the popular game console was released that its retail price in Brazil would be, well, prohibitive.
Though the high cost can be attributed to many factors, the real explanation lies in the burocracia alfandegária or customs bureaucracy. Getting goods into Brazil inexpensively is no joke; according to the US Department of the Treasury, “Brazil applies a. 60 percent flat import tax on most manufactured retail goods” [source]. 60%!!!!
So naturally this means that the same phenomenon inflates the prices of other competing game consoles. The Playstation 3 in Brazil costs a whopping $3,299 reais, or $1,818.82 USD as of this writing. And games are no cheaper either; $200-$300 reais is a lot to drop on a video game when the minimum wage is about $380 per month. So what does this tech-hungry market do? Where do frustrated, Halo-loving teenagers turn?
Pirated software. In Brazil, software piracy has become a socially accepted epidemic, largely as a result of the huge discrepancy between buying power and prices. Vendors of illegally-manufactured PS2/3, XBox and Wii games, HD-DVDs, Blu-Ray discs and movies discourage the use of the word pirata, preferring the generous euphemism paralelo. This 2005 article states that 64% percent of software in Brazil was pirated at that time. Here’s the kicker: this was the second-lowest piracy rate in Latin America (Colombia weighed in with 55%). There have been some advances and there is now even some optimism about software and intellectual property security in Brazil, but eliminating piracy is clearly going to be an uphill battle.
Personal anecdote: When I was in Brazil, I wanted some CDs I had recorded with a band in college. A friend sent them down in the mail, about 20 of them. In order to receive the package, I had to pay 60% of the full retail value of the CDs, the US retail value no less! So just to be able to give away 20 CDs that I had made myself, it cost me almost $300 reais.
Comments:
Orlando Ortiz – PC Magazine Brasil:
Not only you have to pay 60% import taxes, but you also have an extra 18% sales tax. When you add shipping & handling, store profit margin (which is usually high to compensate on low/medium sales, except on certain titles) and other taxes, game prices become overly expensive.
You can buy the PlayStation 3 and Xbox 360 Elite systems in the “grey” market for about R$ 1800 ~ 2000 (about US$ 900 ~ 1000), and the Wii for R$ 1300 (about US$ 650). Still, those values are absurdely high.
Nice article 😉
Pedro Pellicano:
I live in Brazil and i’m a huge games fan and the situation posted here is really sad. Taxes around this country are all extremely high and when it comes to import goods, well….(60%!)
As Orlando mentioned on his comment, there are other costs involved in bringing games to Brazil and that only adds up to the final price. I’ve made a study on college about the Gaming State on Brazil (back in 2003) and it was very clear that we have A LOT of gamers around here. Most of them, of course, live on the piracy world.
But that means that game companies could think a little more about us (they think of Australia, for christ’s sake) and try to explore this ‘virgem’ market.
Microsoft, for instance, assembles the game boxes (and i THINK the Xbox Core too) here. So, going back to the price comparison, i can say that a X360 title can cost US$85 (around 160 reais) here. And legally. It’s not the best solution, but i bet the sales are higher this way.
Recently, our government lowered the taxes on PCs, in an effort to popularize internet and general computation access. It worked and PCs are selling like water in Saara. Considering that the Videogame market is bigger than the automobile or movie pictures ones, i have some hope we’ll see Brazil awakening for the game era. But we’ll need help from gaming companies. Our government must understand not only the game and console aspect of this market but also all the money and investiments in promotion, logistics, infrastructure (for online play), etc, that comes within the box.
Christopher:
Thanks for the comments guys, very interesting stuff, and thanks Orlando for enumerating the other costs ‘built in’ to the retail price.
The more I think about this, the crazier it is!
I had a friend who worked for Microsoft promoting the XBox when i launched, and she told me (what i think is common knowledge) that Microsoft loses a lot of money on the sale of each console.
It is the ‘razor and blade’ model; they hook the consumers by ‘giving away’ the game system and then make their money on the games.
So… if nobody is buying the games, the system is really not working for anybody. Customers get hit with ridiculous prices they refuse to pay and then the game producers don’t reap any of their deserved profits.
Sérgio P.:
Em primeiro lugar. O artigo tem fundamento e fala muitas coisas corretas. Só que o autor devia saber que não existem cópias piratas de blu-ray no mercado e logicamente jogos de ps3 piratas não existem em local algum do mundo. A taxação de tributos é realmente insana, mas a indústria está tentando modificar e ainda na área do video game já existem propostas para melhorar esse vício social.
V-Brake:
I posted this on ps3news, but since this is the site where they goy the news…hehe
And the PS3 actually costs R$2300($1265)(The 60GB one) in most famous retailer shops here. It’s actually the cheapest one of them, considering it’s the one that’s got no support at all from Sony, and is “merely” imported. No wonder we have -one of- the highest tax charges in the world. One of the reasons is that VGs are mixed together in the same products zone as videopokers, for instance(lmao). There was this deputy(Carlito Merss) that put this law project for them to go on the same division as electronics(I believe), thus greatly diminishing its taxes, benefited from the recent cut in taxes by the info products law. It was unanimously approved in the chamber of deputies, but there still a way to go for this law to be approved, after it gets to senate. Well, we have to wait and see.