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Hot on the Web

eBay changes the market for next-gen consoles

This column originally ran in ComputorEdge on December 15, 2006
(Issue 2450, If You Build it, It Will Scream)

As this is written in late November, both the Nintedo Wii and the Sony Playstation 3 have just been released in the United States. Both immediately sold out of their initial shipments.

Back in the day – say, when the SNES or Sega Saturn were first released – you waited in line all week outside your favorite retailer, you paid your money, you got one of the first machines months before your friends and neighbors.

Pure gaming enjoyment and tons of bragging rights.

Today?

How about a 300 percent markup or more?

Which may explain why there were news reports of folks waiting in lines to buy a PS3 getting into fisticuffs over allegations of people cutting into line.

When you're talking about a profit margin of $1,000 or more, tempers can get short.

Still, it shows how adult greed can change what was once kids play. We saw the same thing with baseball cards in the 1990s, when it went from buying 10 cards with a stick of gum for less than a buck and sticking the cards in the spokes of your bike to having doctors and lawyers paying top dollar for high-end cards with holographic images in them.

Pretty soon, the kids weren't collecting the cards anymore.

And within a few years, hardly anyone was collecting cards.

Ask all the poor souls who sank their life savings into opening a sports card store circa 1996, right before the market dropped out of it. (And remember when Pokemon cards were actually collectible?)

In fact, within a week of the PS3's launch, there was a serious market adjustment, with PS3 systems selling for about $1,100 – still pricier than the retail tag of $599, but far below the $3,000+ some of the first PS3s on eBay were fetching.

So market forces still work, and, in fact, operate according to computer time just as everything else high-tech does – to the point that you can have the market price of the latest gaming console change by a factor of 500 percent (the original $599 retail price to the $3,000 price some units went for to the current $1,100 price as this is written) in just a matter of days.

Without eBay, of course – or something else very much like it – none of the above would have been possible.

In fact, without the obvious speculation that was going on among first-day purchasers of PS3 and Nintendo Wii systems, you might not have had stores selling out the first day.

And while eBay reported more Nintendo Wii systems being sold the first few days after release (the Wii released two days after the PS3) than the rival PlayStation, the markup was never as crazy as on the PS3. The Wii – which retails for $249 – were being sold for an average price of about $430.

Of course, if more Wii systems were being sold than PS3s, that would indicate more Wiis were being offered for sale, which would tend to drive the price down.

I don't recall the Microsoft Xbox 360 causing such a frenzy its first day.

Of course, the Xbox 360 didn't release on the eve of the holiday shopping season.

In fact, news repots this week indicate that Microsoft is positioning the Xbox 360 as the system to buy if you can't find a Wii or PS3.

While some Xbox fan sites reported shortages of the Xbox 360 to rival the shortages of the PS3 and Wii, as this is written, Amazon.com reports plenty of Xbox 360s of both models in stock and ready to ship.

That's the other neat thing about this whole Internet.

Hype can be checked vs. reality pretty darn quick.

The vintage connection

Coincidentally (or not ...), the same day I'm writing this, I got a catalog from eBay in the mail. Snail mail. On paper.

For each item listed, eBay gave search words to find similar items as well as an average price.

And the average price for an Atari 2600 game console, circa 1977, was $48.

Not bad for a system that only sold for about $100 30 years ago. Talk about holding your value!

Out of curiosity, I looked up some other vintage systems to get a feel for the market:

  • Odyssey: $10
  • Intellevision: Asking price $100+ (but saw none with bids that high)
  • SNES: $50-$100
  • TurboGrafx 16: ~$50
  • 3D0: ~$50
  • Atari Jaguar: ~$50
  • Sega Dreamcast: $20-$50

So just wait a while - those PS3 and Wii systems will eventually come down in price ...