news via redherring
Buyers prefer less expensive, more readily available game console.
November 21, 2006
Sony’s PlayStation 3 may have had a two-day head start on eBay, but rival Nintendo’s Wii has quickly emerged as the game console of choice among shoppers on the popular Internet auction site.
eBay officials on Tuesday afternoon said shoppers had already bought more than 14,400 Wiis since the console was first put up for sale on Sunday. Wiis, which went on sale Sunday at U.S. retail stores for $249, have sold on eBay for an average price of nearly $430—a 72 percent markup.
Online demand for Sony’s PS3 appeared heavy in the early going. eBay shoppers snapped up more than 500 PlayStation 3 by Friday morning, only hours after they went on sale at U.S. retail stores, the company said. The auction site said average selling prices tipped the scales at a hefty $2,700—not a bad markup from the system’s $499 or $599 retail price. “This is pretty much par for the course,” eBay spokesman Hani Durzy said of demand (see Ready to Big Big at eBay for a Console?).
But as of Tuesday afternoon, eBay had count some 11,300 PS3 units sold, well behind rival Wii’s sales on the auction site. The PS3’s average price fell sharply from the early going to $1,460, although that remained a healthy 143 percent premium over its retail price.
But Sony isn’t seeing a whole lot of holiday cheer. Despite the PS3’s high retail price, analysts believe Sony is losing hundreds of dollars on each console it sells. In a detailed analysis released on November 16, research firm iSuppli estimated the Japanese gaming giant loses has under-priced its PS3 by as much as $307 a unit. Dubbing the amount remarkable even for the video game business, iSuppli nonetheless described the console as a “great bargain” well worth its hefty retail price tag (see PS3 Loyalty, Guts Examined).
Wiis, on the other hand, are less sophisticated and more readily available than the PS3 or Xbox 360, making the system less expensive to manufacture. In fact, Nintendo appears to be making money on each system it sells. Without giving specifics, Nintendo of Canada exec Pierre-Paul Trepanier told gaming news web site GamesIndustry.biz that the company is “making money from day one on the Wii.”
Both the PS3 and the Wii, which are challenging Microsoft’s long-released Xbox 360 to become the dominant next-generation game console, were rushed out to the U.S. market to be available for the holiday season. But the two consoles are in short supply and retailers are selling out of the units as quickly as they receive them. Many of those lucky enough to snag a new PS3 or Wii are turning eBay, where the not-so-lucky are more than willing to pay steep markups. With both consoles trickling through U.S. retail channels, eBay’s secondary economy is likely to continue humming.
That 7 million unit head start won't be enough. Sony and Nintendo will be right on their coat tails by mid 2007. *Bwa-Hahahahahaaaa!!*
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