What's the point of regional locks on video games?

Factual Questions
1

I wasn’t sure if this went in GQ or CS, but I decided on GQ since it should have a factual answer. I guess a mod will have to move it if he feels differently.

Video game consoles have had regional locks for probably about 20 years now. For those who don’t know what I’m talking about, it means you can’t play a game for one region (the regions usually being North America, Japan, and Europe) on a system from another region. The only system I’m aware of that doesn’t do this is the Atari 2600, and it’s the only one for which I can think of a reason for having it. The games themselves are programmed for either NTSC or PAL televisions and don’t run perfectly on the other. With later systems, that’s handled by the system itself. So why would they make it so that I have to have an adaptor or mod chip to play Japanese and European games on my American system? Not only do the companies have to spend money to design and implement such devices, but it seems to do nothing but prevent people from buying certain games that were only released in other regions. It seems like a lose-lose situation to me. Why would they do that?

It really tweaks my melon that I spent a lot of money on a Japanese Playstation game and can only play it on an emulator.

2

Market segmentation.

If anyone can play everyone’s games, then you essentially are forced to sell them at the same price everywhere. There are also international business issues. A company can make distribution agreement on a country by country basis. That said, some companies are starting to realize that there are some drawbacks, and several reasons not to region-lock.
[ul][li]Different languages already provide an effective region control for lots of games. A game with dialog and instructions in japanese is only going to be imported by super-fanboys, who are likely to be able to mod their consoles anyway.[/li][li]Most of the regions tend to have similar prices anyway.[/li][li]Mod chips tend to unlock all the restrictions, not just the region ones, which increases piracy.[/li]It pisses off some of their customers.[/ul]

3

The audiences in the three major territories (Japan, U.S. & Europe) have different tastes when it comes to games. Titles that are wildly successful in one territory may be only mediocre sellers in the other two.

This means the game companies that serve the different territories tend to be very independent. For example, Sony is a major player in all three markets, but its regional game divisions (SCEI, SCEA, and SCEE) operate almost as separate companies. A developer who wants to sell into all three zones will actually need to cut separate deals with each of the three divisions. Other game companies are set up along similar lines – or just limit themselves to operating in one of the territories.

This may seem inefficient but it does make sense. Because different games do well in different territories it’s a good idea to have your marketing and development operations run by locals. They understand the local market better and are more likely to develop and sell games that will make money.

(An example of just how independent these divisions are: I work for SCEA. If we develop a game using an internal team we still have to pitch it to our counterparts in Europe and Japan just like we were an external developer like EA or Activision.)

But because the different regional divisions are so autonomous they have a big incentive to squelch gray-market games. As a consumer, you may think “What does it matter if I buy the Japanese version of Metal Gear Solid or the American version? Sony still gets the money.” But it matters to the president of SCEA. He wants you buying the American version because then he can book that revenue as his.

The pressure is even more extreme with companies that are confined to a single market. They contract with companies in other markets to localize their games. Localizing companies hate gray-market imports because that cuts directly into their bottom line. A typical localizing agreement will grant the localizing company the exclusive right to sell the game in their particular market.

So, basically, regional lock-outs exist because the game developers and publishers want to keep a lock on the revenue from their own territories.

4

[QUOTE=Pochacco]
But because the different regional divisions are so autonomous they have a big incentive to squelch gray-market games. As a consumer, you may think “What does it matter if I buy the Japanese version of Metal Gear Solid or the American version? Sony still gets the money.” But it matters to the president of SCEA. He wants you buying the American version because then he can book that revenue as his.
[/QUOTE]

I see an issue with this. If a game (such as Metal Gear Solid) comes out in both regions, why would you want to buy the foreign one? Nearly everyone in the North American region speaks English better than Japanese for instance, and importing usually costs a bit more money. I see no reason why anyone would choose to import a game unless it only came out in the other region or they’re a hardcore fan who buys both versions (my case). Neither case costs the local company money.

5

[QUOTE=snailboy]
I see an issue with this. If a game (such as Metal Gear Solid) comes out in both regions, why would you want to buy the foreign one? Nearly everyone in the North American region speaks English better than Japanese for instance, and importing usually costs a bit more money. I see no reason why anyone would choose to import a game unless it only came out in the other region or they’re a hardcore fan who buys both versions (my case). Neither case costs the local company money.
[/QUOTE]

Well, there’s usually a delay between release in one territory and release in another which means that in some cases the choice isn’t between A Game In Another Language and A Game In My Language but rather A Game in Another Language Right Now and A Game In My Language Six Months From Now.

But, yes, you’re right. Metal Gear Solid was a poor example because so much of the enjoyment of that game depends on understanding what’s going on in the story. As iamthewalrus(:3= points out the language barrier creates effective region control for a lot of games.

However, this isn’t true for many arcade and action titles. For example I played all the way through the Japanese version of Katamari Damacy without being able to speak a word of Japanese. This includes racing games, fighting games, old-school shooters – anything in a familiar genre without much story.

Please understand … I’m not arguing that the game industry **should ** be doing this. I’m just trying to answer the OP as to **why ** they would.

6

[QUOTE=snailboy]
I see an issue with this. If a game (such as Metal Gear Solid) comes out in both regions, why would you want to buy the foreign one? Nearly everyone in the North American region speaks English better than Japanese for instance, and importing usually costs a bit more money. I see no reason why anyone would choose to import a game unless it only came out in the other region or they’re a hardcore fan who buys both versions (my case). Neither case costs the local company money.
[/QUOTE]

I think there are a lot of cases where a game is released first in one market, and later translated and released in another. In that time, Impatient Fanboy will import the earlier-released Japanese version, rather than waiting for the American translation. Or there may be differences between regional versions that make one more desirable than another (for the sufficiently obsessive).

Still, I have a hard time seeing this practice impacting sales in any one region. It seems to me that anyone interested enough to go to the trouble of importing a game is also likely to buy the local version when it comes out. Same goes for the collector. As iamthewalrus pointed out, attempts at restricting this only piss off the most dedicated fan base. If they can’t play the imported game, they get an imported console or a modchip. If they can’t import a game at all, they’ll just pirate it, etc.

Has anyone actually done any kind of study on the actual impact of imports?

7

Pochacco: Okay, I see your point. I’m highly doubtful that importation of games before they come out (especially by gamers who are serious enough to do it but not serious enough to mod their system) would make up for the cost of implimenting regional locking, but the companies may feel differently.

8

[QUOTE=snailboy]
Pochacco: Okay, I see your point. I’m highly doubtful that importation of games before they come out (especially by gamers who are serious enough to do it but not serious enough to mod their system) would make up for the cost of implimenting regional locking, but the companies may feel differently.
[/QUOTE]

The cost of implementing region coding is basically 0. It is a tiny tiny subroutine in a huge amount of code and a few bytes out of billions on a cd or dvd. Region coding is done so that content companies can charge what the market will bear in many different places. They can charge more in some regions than others. Without region coding Europeans could buy games for cheaper and sooner by having them shipped from the US.

9

Region-free games may be helping Nintendo sell DS handhelds, and their studios sell games. One particular case involved the game “Osu! Tatakae! Ouendan”. It became so popular with the North American import fanboys and girls (myself included) that it actually got a North American translation: Elite Beat Agents. I hope that someday Nintendo will report on cross-region sales and earnings, to give more weight to arguments for region neutrality.

10

[QUOTE=snailboy]
I see an issue with this. If a game (such as Metal Gear Solid) comes out in both regions, why would you want to buy the foreign one? Nearly everyone in the North American region speaks English better than Japanese for instance, and importing usually costs a bit more money. I see no reason why anyone would choose to import a game unless it only came out in the other region or they’re a hardcore fan who buys both versions (my case). Neither case costs the local company money.
[/QUOTE]

Born in Spain, 1968.

Moved to the United States, August 1994.

Moved to Spain, August 1998.

Moved to the United States, January 2003.

Moved to Spain, March 2004.

Moved to Costa Rica, September 2005.

Moved to Spain, April 2006.

I’m leaving out any moves that weren’t across the pond, DVD-regions, game regions etc. While people who move across the pond as often as I have are very uncommon, there’s thousands of Latin Americans who go home every year carrying a large flat TV, DVD players for all their siblings, a bunch of DVDs and CDs… And of course there are more and more people for whom assignments in another continent are a normal part of their job: military, sailors, consultants like myself, engineers, etc. My previous job (which did not take me out of Spain) was for a company that owns factories in Spain, the States and China: some of our coworkers in Spain were Chinese, one was American, we got American visitors every other week, several of my Spanish coworkers had to travel to China for a month or longer.

Often, it is not about “importing stuff from elsewhere”, it’s about moving with what you’ve already got or about being able to buy a new game at the airport.