Nintendo fans were momentarily elated when they heard Perrin Kaplan imply that first-party Wii games would be region-free. However, this was incredibly short-lived as Nintendo soon confirmed that all Wii games will indeed be region-locked.

Why was everyone so happy when they thought the Wii would be region-free? Was it that they could finally import all those games that never make it to their country? Or was it that they could finally buy hardware and games at the cheapest price possible? Personally, I think that hardcore gamers were thinking the former, but Nintendo (in deciding to stick with region-locking) was considering the latter. For the rest of this article, I discuss the pros and cons of region-locking. Not just for first-party Wii games, but imagining would could happen if the entire Wii system was necessarily region-free.

Region-locking is a tool for console manufacturers to isolate commercial markets. It basically allows them to create different price points for their hardware and games for people in different areas. Consider this example: It’s December 8 this year and Europeans are coughing up US$425 for a Wii console. It’s the exact package that their North American friends have already received (with Wii Sports packed in), but they’re paying a good deal more for it (around US$65 extra). Why would they pay more? Well, they don’t really have a choice. If Europeans were to import an American Wii, they would have to import all their games too, because any games they buy locally simply wouldn’t play on the system. All things taken into consideration, it’s just not worth the hassle.

Nintendo are a business and they clearly want to maximise their profit. The games markets in Japan, the US, and Europe are all very different. The US market demands a Wii price point of less than US$250, but the European market doesn’t. By impeding market unification (which could occur a region-free Wii), Nintendo positions itself to exploit each market where possible, but also to appease each market when required. For example, the Playstation name carries a lot of weight in Europe. Consider this scenario: It’s March next year and the Playstation 3 is ready to launch in Europe. Nintendo plans a local Wii price drop to maintain mind share in the European market. Without market segregation, the low-priced Wiis could be snapped up by importers in the US, leaving the European market in under-supply.

For both of the above examples, you might say that individuals generally won’t be interested in importing anyway (it can be quite a bit of hassle). However, if the Wii were truly region-free, I’m confident that individuals wouldn’t have to. Retailers could import from wherever possible and gamers could then buy the Wii locally from them. When a large retailer sells hundreds of items a day, it’s worth their time to find the best price worldwide if the total cost (including the cost of bulk shipping) is less overall.

The original reason for region-locking dates back to the adoption of different standard television signals in different countries. Japan and the US adopted variants of NTSC and Europe adopted variants of PAL. Back in the day, PAL televisions couldn’t display an NTSC signal and vice versa. Moreover, video games were programmed directly to output either NTSC or PAL. You literally had to buy the correct version of the software to play on your console and television.

In the age of world-wide telecommunications and very capable display technology, region-locking seems incredibly dated from a technical perspective. LCDs and plasma screens are increasingly common and pretty much all televisions made in the last 10 years will accept an NTSC or PAL signal, and modern consoles can easily display either signal (softmodded XBOX and PS2 consoles can output either signal without any hardware modification). Unfortunately for hardcore gamers, region-locking is clearly still an important business model.

I wonder how much longer region-locking can last. Every indication is that full-game download services will dominate the market when the next generation of games consoles hits (presumably the Xbox720, the Wii2, and the Playstation4). Will console manufacturers really be able to convince consumers that region-locking is necessary when people expect games to be just a button-click away?