Why are AAA games a rip off in US, UK & EU?

Because money is complicated, and it's priced where they expect that (copies sold) * (unit price) will result in the highest number for each region.

The price elasticity varies by market. The publisher makes an assessment of what price maximizes their profits. In addition to that, fluctuations in currency markets can lead to (temporary) distortions of the relative price measured in the same currency. After all, a seller in Kazakhstan isn't going to update prices daily just because the USD or EUR exchange rate has changed.

It's also very possible that the costs of distribution are different in different regions. I'm no expert so that's just speculation.

"Overpriced" is a value judgement. I'd argue that if people are paying that much then they're not overpriced.

I couldn't even buy AAA games if I wanted to. They're like $100-$150CAD now. Goddamn absurd prices.

$40 is very expensive by Ukrainian standards. 400-600 dollars is a median salary here. For more there will be literally zero sales.

Why does the same cost less in Kazakhstan for example but it’s overpriced in the US for American players

There is an optimal price for a market to produce the biggest return for the publisher.

If I make a widget and then sell it for one cent above what it costs me to make, then I will probably sell a lot of units. But I won't make much profit on each.

If I make a widget and then sell it for ten thousand dollars a pop above what it costs me to make, then I will probably sell few units. But I will make more profit on each.

There is a point where a seller maximizes their return. They'll try to price their product at that point.

An input to that price at which one maximizes their return, as .world points out, is the price elasticity of demand in each market.

People in Kazakhstan are not as well-off as people in the US. They're more price sensitive, will just not be willing or able to buy something at a given price than people in the US. That means that that optimal price for the seller to set is going to be higher in the US than in Kazahkstan.

What you'll probably also see --- because a digital download of a video game has a marginal cost of production that's basically zero --- is prices slowly decreasing over time, approaching zero. Once a publisher has sold it to everyone willing to buy it at a given price, they'll probably lower the price to try to sell it to more people who wouldn't have bought it at the higher price. It's why you can often get old games sold at lower prices --- for example, <em>Doom</em> and <em>Doom II</em> are currently selling on Steam together for $3.99, much less (especially in inflation-adjusted terms) than they originally sold for. So down the line, that game may be selling for less, in both the US and Kazakhstan.

I just class it against my hourly rate.

If it means I spunk 60 quid on a game but I get 30+ hours out of it then I don't really care

Exchange rates aren't a complete picture of global economies, you really have to look at the average wages for people living there. If the average person in these countries is making substantially less than the average US/UK/EU consumer, just setting prices based on the exchange rate may result in games being unaffordable. So it makes more sense to price in those regions based on purchasing power, even if they're making less money per copy sold that's better than making no money by selling no copies.