I've seen the effect you're talking about in another industry with a big secondary market, comicbooks. Any collector can tell you about the prospecting era of the lat '80s-early '90s. "Collectors" started buying up every #1 issues, every special edition cover, etc.. (all those things they were told increased the value in the longrun) As a result, the companies created more and more of these issues, increase print runs, stores ordered more copies, "collectors" continues to but 5-10 copies. What happened though is that because of the high number printed and the fact that so many were bought as "collectibales" they were easy to find and the prices plummeted. Publishers went back to having fewer "special issues", stores ordered less, and the only ones that suffered in the long run, were the prospecters themselves, either the "collector" who is now stuck with a bunch of stuff he doesn't want that worth less than he paid for it, or the store owners that based longterm actions like expanding on a shortterm situation.shadowcat2576The main difference being that these are not collector's items. Their value will go very far down before it ever comes back up and is never guaranteed to surpass the original MSRP. Comic collectors only profit after time has passed and the supply has diminished making their item a true rarity. Console profiteers can ask a higher price right after the product launch than they can in the future because there is more of the product in production and less demand as time goes on.
Profiteering is ruining the gaming industry
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If you are trying to make me feel bad that one of my friends payed me an insane amount of money for my Wii it's not working.
It was for him, it was all his idea and he knew he was getting the shaft when he forked over the money and his PS3.
[QUOTE="shadowcat2576"]I've seen the effect you're talking about in another industry with a big secondary market, comicbooks. Any collector can tell you about the prospecting era of the lat '80s-early '90s. "Collectors" started buying up every #1 issues, every special edition cover, etc.. (all those things they were told increased the value in the longrun) As a result, the companies created more and more of these issues, increase print runs, stores ordered more copies, "collectors" continues to but 5-10 copies. What happened though is that because of the high number printed and the fact that so many were bought as "collectibales" they were easy to find and the prices plummeted. Publishers went back to having fewer "special issues", stores ordered less, and the only ones that suffered in the long run, were the prospecters themselves, either the "collector" who is now stuck with a bunch of stuff he doesn't want that worth less than he paid for it, or the store owners that based longterm actions like expanding on a shortterm situation.effthatThe main difference being that these are not collector's items. Their value will go very far down before it ever comes back up and is never guaranteed to surpass the original MSRP. Comic collectors only profit after time has passed and the supply has diminished making their item a true rarity. Console profiteers can ask a higher price right after the product launch than they can in the future because there is more of the product in production and less demand as time goes on.But the end effect is the same. Eventually, console supply catches up, and unless you unload right away, you're gonna end up with a huge supply of stuff that's worth less than you paid for it. Not only that, most return policies are for a limited time only, so if you don't turn it around soon enough, you'll either have to return it or "eat it"--not only that, returns are logged, and suspicious practices could be red-flagged and refused. It's happened with every console--even the 360--but the problem was that the supposed speculation on the PS3 backfired because the demand was not nearly as high as the speculators believed it to be. That was the correction.
[QUOTE="shadowcat2576"]I've seen the effect you're talking about in another industry with a big secondary market, comicbooks. Any collector can tell you about the prospecting era of the lat '80s-early '90s. "Collectors" started buying up every #1 issues, every special edition cover, etc.. (all those things they were told increased the value in the longrun) As a result, the companies created more and more of these issues, increase print runs, stores ordered more copies, "collectors" continues to but 5-10 copies. What happened though is that because of the high number printed and the fact that so many were bought as "collectibales" they were easy to find and the prices plummeted. Publishers went back to having fewer "special issues", stores ordered less, and the only ones that suffered in the long run, were the prospecters themselves, either the "collector" who is now stuck with a bunch of stuff he doesn't want that worth less than he paid for it, or the store owners that based longterm actions like expanding on a shortterm situation.effthatThe main difference being that these are not collector's items. Their value will go very far down before it ever comes back up and is never guaranteed to surpass the original MSRP. Comic collectors only profit after time has passed and the supply has diminished making their item a true rarity. Console profiteers can ask a higher price right after the product launch than they can in the future because there is more of the product in production and less demand as time goes on.The issue is actually quite similar though, because of the way profiteers flooded the market back then, buying up every issue that came out that they thought would go up in value, #1 issues new publishers like Image, Death of Superman, Return of Superman. In the short run the prices did jump, because there was demand, but not long after, everything leveled out and returned back to normal. Again the only ones hurt were the profeteers that were stuck with a bunch of effectively worthless inventory and the foolish people that were willing to pay their prices.
The videogame industry knows that there's a small portion of "gotta have it" customers. Limited Editions or Collector's Editions are not that new, but a fairly silly thing in this hobby if you ask me. Heck, they even play into it with Midnight launches and preorders. Did anyone really have a tough time getting their copy of Halo 3 or GTA4? They also appear capable of understanding the concept of deminishing demand fairly well. I'm sure they didn't sell 5 million copies of Halo3 (wild guess) that first week, turn around and say "Wow we sold 5 mil in one week, we need to match that supply next week, and again the week after."
What may likely come out of the current situation, is companies, Nintendo, MS, Sony, will all increase their launch shipments to avoid those sellout situations. You'll still have plenty of profiteers, but I doubt they'll make as much profit.
[QUOTE="subrosian"]You cannot stop this from happening, in fact to do so is anti-capitalist. The reality is, there are people who are willing to pay *any* price to get their hands on a videogame system in short supply. Simple microeconomics tells us when there is high demand, and low supply, the price should be higher. When the price is not set higher at the store, it will instead reach its natural price point in the second hand market.
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This isn't a "huge blow" to the economic system - this is the economic system. This market only exists because Nintendo is undervaluing their system - that is, they are selling Wii Fit and the Wii at prices that are lower than the equilibrium price point. They actually do this so that they don't have to constantly adjust prices, which can create consumer confusion, but so long as they launch at the same price they intend to sell at for a year, during periods of high demand (launch of a new product) the price WILL get driven up.
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Frankly you should consider yourself lucky - you have the opportunity thanks to pre-orders (next time, eh?) to get a game below its fair market value. Yes, getting Wii Fit at retail price is below free market value - and frankly a Wii as well, because there is a shortage on these items.
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But if you're concerned about prices being higher in the second hand market, then I simply suggest you don't goods from resellers. If people refuse to pay a premium on such goods, then resellers will not bother speculating on them.
effthat
I refuse to buy from profiteers. The theories are all correct, but in practice this is what caused our current economic situation. Housing prices were booming and flips were the hot investment item. Now we have about 36 months worth of housing supply on the market and everyone is taking a hit. It just happens that this spread into the lenders and caused even more trouble with the financial institutions further complicating the matters by making it nearly impossible to get a loan at the same time that the dollar is inflating at breakneck speeds.
My issue isn't that the prices are high. It's that it's being done by individuals who can't appropriately forecast demand and this messes up the system. PS3 launched and sold out. Prices bottomed out over night on ebay. Profiteers were stuck with breaking even after shipping or returning the product. The Wii and WiiFit might be doing great for profiteers, but the market will eventually bottom out. By then the damage is done, the manufacturer sees inflated demand, the retailer sees the returns and no longer stocks the item, the consumers never wanted the good in the first place.
There are other problems with the profiteering, though. These individuals aren't offering a warranty, don't offer reliable service, don't insure their end of thebargain. Not to mention don't pay taxes. Finally, most investors expect to make money. They refuse to sell for less than they paid. Again, the price isn't able to fluctuate properly and causes inflated prices.
The housing crisis was cause by problems with the regulation of the banking industry, same as the savings-and-loan crisis of the 1980s. It has nothing to do with individuals seeking money - rather, because we have a partial-reserve fiat banking system, "easy money" via loaning actually "creates" new cash - the net effect of readily accessable loans is to devalue our currency. Hence, the value of the dollar has crashed.
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Again, actually, we're discussing reality. You CANNOT remove the ups and downs of the market - the market has to move, period. Yes, people will get screwed over, at both ends, there's nothing you can do to fix that. When you attempt to fix it, you simply remove the capacity for growth.
The solution to the problem would be for Nintendo to directly auction their product, offer flexible pricing, or increase supply. Unfortunately, until the supply increases, there is literally nothing you can do - no amount of whining about "profiteers" changes that Wii and Wii Fit are scarce resources, more people want it than can possibly get it - and there's no distribution system that's going to be entirely "fair" in deciding who gets to own the game.
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There's no way to stop console scalpers, other than to kill the market by ensuring there is more-than-adequate supply.
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