Ask John: Why Are Region 2 DVDs so Expensive?

Question:
Why are region 2 Japanese DVDs so expensive?

Answer:
Japanese DVDs are expensive because their price is scaled with Japanese game and audio CD prices. Especially computer games in Japan, as well as audio CDs and videos, are just traditionally very expensive. While American consumers are used to spending X percent of their disposable income on a single video game or VHS tape or DVD or CD, Japanese consumers are used to spending Y percent, where Y can be double or more the cost of X. In other words, while American consumers expect audio CDs to cost around $15 or less, and DVDs to cost $30 or less, Japanese consumers expect audio CDs to cost around 2,500 to 3,000 yen (roughly $23-$28 American) and DVDs to start at about 3,800 yen (or roughly $35 American). Japanese computer games commonly retail for the American equivalent of $100 each when they’re new releases, and the anime and movies that are still released on VHS tape in Japan can have suggested manufacturer retail prices as high as 9,800 yen on average.

I’m not an expert on Japanese economics, so I don’t know exactly why certain formats of Japanese home entertainment are so expensive, but I suspect that it has to do with recovering costs in a smaller market, and simple tradition. Mainstream American video games and home video releases can sometimes afford inexpensive retail prices by making up for lower prices with sheer number of sales. With Japan being such a small country, it’s physically impossible for Japan to rack up the same massive sales figures that America is consistently capable of simply because Japan has fewer consumers than America does. Furthermore, I suspect that Japanese home entertainment distributors are simply used to a certain high profit percentage that they don’t want to give up. In the 1980s, during Japan’s economic boom and legends of $10 apples and $100 steaks, it was common for an anime VHS tape to retail at close to $150 American. As the economic bubble burst, and cheaper digital technology in the form of CD and DVD was introduced, Japanese retail prices began falling. Now new release anime home video releases in Japan cost half or less what new releases did 15 years ago. But I think Japanese consumers are still accustomed to what Americans would think of as exorbitant home entertainment retail prices- prices that are probably at least somewhat artificially maintained by the collective Japanese home entertainment industry.

Japanese DVD prices can be unforgiving expensive for Americans used to American DVD prices because not only to American consumers have to pay higher Japanese retail prices, Americans also have to cover import shipping fees and taxes. So when you see an import Japanese CD priced at $30 (actually, since Japanese CD prices are on the rise lately, it may be more appropriate to say $30 or more) or an imported Japanese DVD priced at $60 or more, you’re probably not being gouged. You’re simply paying the rough equivalent (plus import shipping fees) of what you’d pay if you were a Japanese native purchasing the same item at a retail store in Japan.

No one ever said collecting anime was cheap.

Addendum:
Jonathan Hertzog & John C. Watson both wrote in with a link to the Japan FAQ article titled “Why Are Prices in Japan So Damn High?” which explains that Japan’s convoluted system of middleman distributors drives up prices, and Japanese consumers just accept this situation because it’s normal for Japanese business.