Grey market for Xbox 360 games

JULY 28 | Many third-party publishers are distributing their Xbox 360 games in Asian territories such as Taiwan and Singapore without region-locking, creating a source of relatively inexpensive inventory for the U.S. market.

The titles retain English-language soundtracks and menus and are playable on U.S. Xbox 360s without modification to the hardware. What’s more, the games sell for $20 less than the $59.95 U.S. MSRP and can be shipped to the U.S. for as little as $3, presenting online shoppers a greater savings than the traditional 25% wholesale discount of $15 available to retailers.

There are currently 12 such titles distributed in Asia, although there is little data on their impact in the U.S. market. Four of the titles have U.S. versions that were on NPD Funworld’s June Top 20 bestseller list (Hitman: Blood Money, Tom Clancy’s Ghost Recon Advanced Warfighter, Moto GP ’06 and Call of Duty 2). Two other titles that also can be purchased in Asia, X-Men: The Official Game and Tomb Raider: Legend, were on May’s Top 20 list.

Savvy gamers are aware of the unlocked Asian versions thanks to Web sites such as CheapAssGamer.com.

Microsoft said “market conditions” have led the company to price Xbox 360 titles sold in Asia at $40. Although its own first-party games are region-locked to deter sales of these lower-priced titles in the U.S or Europe, Microsoft does not force third-party publishers to region-lock their games or prevent them from selling below $40 if they choose.

American retailers might be at a price disadvantage on these 12 titles, but Michael Pachter, managing director of research at Wedbush Morgan Securities, says dealers have little to worry about for now.