The Finch Formerly Known As Gold

8 January 2008

Grading on the demand curve

"We are always very disappointed if we see retailers that are pricing the Wii or any of our products above the MSRP price."

So said Reggie Fils-Aimé, Nintendo's American boss, and apparently he was sufficiently disappointed to do something about it. Kotaku reports:

On December 14th, Nintendo President Reggie Fils-Aimé held a conference call to address the growing problem of Wii shortages, detailing the company's plans to get customers matched up with systems by any means necessary. First came the raincheck system, which allowed customers a chance to pre-purchase the machine at GameStop stores across the country, with the understanding that they would be guaranteed a system by the end of January.

Then he announced that seven retail outlets — Best Buy, Target, Wal-Mart, Sears, Kmart, Toys R Us and Circuit City — would have the coveted consoles in stock that weekend, revealing that stores had been stockpiling the systems for a massive, last-minute flood.

While the rainchecks met with varying success due to limited ability, the flood of systems that weekend had a huge effect on the eBay market.

This is the sound of a bubble bursting:

On December 17th, according to my data ...11,016 Nintendo Wii consoles were sold on eBay, for an average price of $368 — the first time the price had dropped below $400 in a month.

There is, however, a practical limit to how much a manufacturer can rein in either retailers or the secondary market, as Nissan is finding out:

Nissan was considering voiding the warranty of any GT-R resold in its first 12 months on the road, but has since abandoned that idea. "We've talked about ways to stop eBay sales by restricting the transfer of the new car warranty to the next buyer for at least six months," said Eric Anderson, Nissan's North Central Region vice president. "But we gave up on that idea because it would have been unfair to the guy who found he really had to sell his car sooner."

Anderson continued by saying there is nothing Nissan can do about dealer markups — which are expected to be at least $15,000 — either. "We'll counsel dealers on why they shouldn't, but there's no way we can stop them from doing it," Anderson said.

Excluding the inevitable "destination charge," the GT-R will list for $69,850, or about the price of 280 Wiis — at MSRP, anyway.

Posted at 10:52 AM to Common Cents , Driver's Seat