Hello there! Have you heard of Brazil? It's country in South America populated by green mutants, wild savages and sadistic warlords. At least that's what videogames tell me. But all is not lost: we also have games and game consoles, including the all-new Playstation 4, which, for the first time ever, was launched there alongside the rest of the world.
You may also have heard that the Playstation 4 retails in Brazil for an incredible R$4000, or $1800. Not exactly a mass market friendly price, but even so, cynical people, myself included, reacted with a "oh well, at least a dozen very rich people will get one, and maybe another 20 not so rich people will also get one just to keep up and show it off". As it turns out, us cynics were wrong. So far, if reports are accurate, there are a grand total of ZERO
PS4s officially sold in Brazil
Some of you, lacking the gift of foresight that I posses, may be thinking this is a disaster, but you'd be wrong. Sony is thinking long term. Just think about all the bragging they did about selling 1 million consoles in 24 hours and breaking records left and right. Now consider that, by the time the Playstation 5 rolls around, odds are Sony will have found a way to sell at least one Playstation 5 in Brazil. Can you imagine the amazing headlines? You think those "Wii U sales spike by 1500%" headlines are kind of okay? Well, Sony will be able to claim that, in Brazil, the PS5 sold infinite percentage points more than its predecessor at launch! Actually, as far as math goes, that's not even a thing, so they will have to come up with a whole new mathematical concept to describe it. It will be on the Guinness book of world records. Excitement will be so great, that PS5 unit will single-handedly save Sony! All goes according to plan... maybe.
Seriously though, this is all kinds of depressing. Of course this doesn't mean there isn't a single Playstation 4 in Brazil. There are imports, there are friends going to Disneyland, and there's the black market, but that's doesn't make it any less depressing. I don't think North Americans and Europeans can fully appreciate just what R$4000 means, and that $1800 conversion doesn't do it justice. Not by a long shot.
Straight currency conversions are an extremely poor way of comparing prices across countries. If the Brazilian Real gains 15% on the U.S dollar in a month, our GNP in $ suddenly became 15% bigger, and a PS4 proportionately cheaper when converted to greenbacks, but that's meaningless in the real world. Brazilians didn't become any richer and prices didn't get any cheaper.
A better, if still flawed, way of comparing prices is using PPP, or purchase Parity Power. I couldn't find anywhere that conclusively stated how much a Brazilian Real is worth in U.S dollars in PPP, but I'd say that $1800 is really closer to $3000. Can you imagine? $3000 on a game console? $150 on a game? Man!
To be fair, there's not a whole lot Sony can do in this particular case to bring prices down too much, (although if you look at the graph
they released breaking down the insane price, you'll notice retailer and distributor margin accounts for 22%. In the U.S, it's reportedly under 5%, and can be as low as 3%) but it's worth noting the blame isn't entirely at the government's feet. Brazilians have grown accustomed to paying (much) higher prices for everything, and companies are not shy about taking advantage of that. For instance, cars. We have (surprise!) the most expensive cars in the world, and while manufactures are forever whining about taxes and the "Brazil cost" (justifiably so, to a certain degree), it just so happens that the profit margin of the average car in Brazil is three times higher than elsewhere. You can't blame taxes or government for that.
It's such a shame our government doesn't see (or doesn't care) the massive losses its tax policies inflict on our economy. In the United States, the games industry creates tens of thousands, possibly hundreds of thousands of direct and indirect jobs and generates tens of billions in revenue. We are now at a point where, were prices similar to what they are abroad, we'd have tens of millions of consumers ready and willing to spend money on games, consoles, accessories, you name it. Our government fears losing tax revenue if they lowered the taxes, but odds are it would result in a massive increase. As the PS4 shows, hard to lose what you don't have in the first place.