Kotaku
Twas the month before Christmas and all through the land,
Not a single retailer had one Wii on hand...
More like the year before Christmas, actually. An entire year where not a day went by that hundreds of electronic and gaming retail employees didn't have to negatively answer the same nagging question. "Do you have any Wiis in stock?" Even though the console sold relatively briskly in the year following its launch, getting your hands on one meant you either won a contest, knew someone who worked for a retailer, shadowed UPS trucks or were just plain lucky.
As the holidays season started heating up, things looked bleak for parents and gamers looking to get their hands on Nintendo's tiny, motion-controlled console. Rumors of chip shortages ran rampant, and I personally was certain that the eBay grey market price for the hot gift item would far meet if not surpass the highest numbers seen during the initial late 2006 release window.
Miraculously that never happened. At the very last moment, in a series of moves that gained them criticism from fans, Nintendo managed to pull together enough supply to curb the often ridiculously inflated eBay demand before it was too late.
Rising...Slowly
As you can see from the chart, back in early November the Wii was selling for a relatively modest price on the world's largest online auction house. While $350 is still $100 than the retail price of the system, the markup isn't quite as painful as it could be. Then the Christmas panic sets in.
By November 21st the price had spiked to $459...nearly double the retail cost of the system, and with a few fluctuations the price stays solidly about the $400 mark. Perhaps consumers hoping to avoid the Black Friday rush 2 days later were trying to get a leg up on things, causing the price to reach this high of a point. Either way, things were looking pretty grim for parents and fans hoping to get their hands on a Wii without getting fleeced by eBay resellers - until one day.
Reggie Spreads The Word.
On December 14th, Nintendo President Reggie Fils-Aime held a conference call to address the growing problem of Wii shortages, detailing the companies 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.
Bursting The Bubble
On December 17th, according to my data seen on the chart above, 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. As Crecente noted in a previous post, eBay was positively slammed with Wiis, bringing the average price down and significantly lowering the normally high auction success rates on the console. Folks looking for a huge payoff still made a little dough of course, but nothing like the windfall they were expecting when they rushed out over the weekend to snag the systems for profiteering purposes. By the time Christmas Eve hits, the consoles are dollars away from the lowest price since November started.
Conclusion
As of this writing I cannot say if this was a calculated move by Nintendo to thwart the profit-hungry eBay grey market or simply a happy side-effect of a last-ditch effort to save face in the eyes of consumers worrying about where the product they wanted to purchase was, but Reggie's press conference and the subsequent console flood neatly nipped in the bud what could have been a terribly expensive Christmas for families looking for a little motion-controlled joy. Whatever the case may be, the end result is a small victory for the hardworking folks out there more worried about the smiles on their children's face than the thickness of their wallet.
Nicely done Nintendo.
While Nintendo declined to comment for this story, back during Fils-Aime's December press call he did address the issue of Wii gouging.
"We are always very disappointed if we see retailers that are pricing the Wii or any of our products above the MSRP price."
How I collected the graph data:
To track eBay sales for the Wii I once again used a website called Terapeak, which is of of the most trusted eBay market research tools available. I looked at data for the US eBay site each day utilizing the keyword "Nintendo Wii" in the Video Games/Systems category. I set the price range for $200 through $10,000 to weed out any artificially inflated auctions as well as any fake buying guide auctions. Keep in mind that the results are still in part tainted by systems including games and extra controllers, but I believe the method I used obtained the most accurate results, all things considered.
As for the numbers sold chart, I used the same data, taking note of the "Items Sold" statistic for each day in the period.
Comments
or you were on a Football team in the BCS.
It's always funny as hell to watch the resellers take one in the back when they think they can carry on forever with the old markup and Ebay combo. Much like people got stuck with PS3's and maxed out credit cards, the same is happening now with Wii's, as they will be forced to make little to no profit in order to get rid of the systems before retailers restock.
interesting article...i'm happy to see that people were gouged...TOO much :)
my girlfriend got my wii by following [www.consolewatch.com] and it was really helpful, hopefully it can be helpful for others (note: this seems to be a canadian only site...just a heads up!)
*weren't gouged..oops lol
As long as theres the possibility of making an extra buck, someone is going to screw it up for a kid or anyone who genuinly wants it.
Money rules all, i suppose.
This was very True-
As a person who has an xtra Wii during the Xmas season I found it hard to reach the price I wanted. However once I advertised it for a local pick up it was sold for about 50 bucks more than wanted so I added a few used Wii titles that gamestop would have raped me for. The buyer was pleased.
@Sixtail:
They are still selling them between $330-$400. Still a nice profit, and still selling.
Nicely done. Looks like it took plenty of work to do all this, and it all looks good. Nintendo is filled with some very crafty people indeed if they can fight eBay.
Nice article!
Terapeak is a great little tool, next time I'd suggest adding a category filter Fahey, I'm pretty sure they separate consoles from accessories, not all sellers follow that per-say, but it would help the accuracy of your reports. This stuff is always interesting.
@EnigmaNemesis:
I know, this is great. Amazon prices are actually higher than Ebay's. I'm going to sell mine as soon as I get my hands on a working camera. Hopefully they'll be back in stock by the time Brawl comes out.
Hmmm ... oddly enough, info such as this lends credence to conspiracy theorists who have always held that Nintendo has had enough supply to meet the demand, but that they are keeping it artificially scarce. It's almost like they're monitoring the market and releasing systems as certain indicators reach a certain point.
Fascinating post.
could it also be that resellers have moved elsewhere to peddle their goods? craigslist, amazon, ubid, etc. ebay has really pissed off a lot of sellers...esp. resellers looking to maximize their investment & set their asking price.
@mac-phisto: There's always some other way to sell stuff. You can take a car to a Flea market and do it.
@jayntampa: It does? Where? I missed it.
imagine wii going into a 2 year shortage, could it happen?
@EnigmaNemesis:
I think that will finally change when the Wiis hit at the end of January. We'll see some shortages leading up to Smash Bros., but not anything like what's went on so far and I think Nintendo is going to make sure these things are on the shelf for anyone and everyone who wants to buy a copy of the console along with Smash. Hopefully I'm right, because if not, sellers on eBay will be making a tidy sum once again when that game is released.
@altgod:
Dont need one, just use the generic pic. Nobody really cares on eBay, as long as you have a good rating and are descriptive ... unless of course yours is used then that is understandable about the camera.
@jayntampa: The stores were stockpiling the Wiis, not Nintendo. Also, the raincheck Wiis were essentially imported from THE WORLD OF TOMORROW!, so no reason to be suspicious there.
Those numbers are impressive! Almost looks like someone was buying Wiis on ebay just so they could sell it again for hopefully an even higher price!
stockpiling wiis seems to just create more hype.
I only went out shopping for my Wii once. I found a Sunday that my local Best buy would have them, and planned on getting there about a half-hour before opening time, or around 8:15. Needless to say, I was surprised to find out that my local Best Buy had recently changed their store hours and now opened at 7am on Sundays. Even more surprising was the fact that they still had Wiis in stock when I arrived an hour and a half after the store opened. I guess I'm one of the lucky ones...
The single fact that people are able to resell the Wii on eBay for more than the retail price means Nintendo is not doing enough to regulate the current demand. Nintendo has one again proved that gameplay > graphics... or maybe Crysis did that for us.
And now we have re-entered the time of 3 Wiis per shipment. Those little baby shipments sure go fast.
@Hiero Glyph:
But what games are they buying?
Since the Wii's attachment rate is so low!
anyone else notice that the wiimotes are in shortage too, but the wiiplay is widely available. Clever nintendo, real clever.
@EnigmaNemesis: I am a statistical anomaly as I own 16 Wii games excluding Wii Play. Funny as I only own 2 PS3 games and 2 Xbox360 games. Living with my brother, we have quite a large entertainment budget, so we decided it would be best to have 4 controllers for each of our systems (Nunchucks included!) and rechargeable packs for them all as well.
@EnigmaNemesis: Wasn't it pointed out a few months ago on here that the Wii's attachment rate is a nice #2, right behind the 360?
Nintendo is artificially controlling the amount of Wiis in the market. Why? More publicity (They can't keep up with demand!) and the fact that I don't see any excuse why they should keep it scarce after a year. I mean, how many people work in the Wii factory? Five?
Well I'm disappointed, as I love the idea of desperate parents who have never told their children "no" in their lives mortgaging their already mortgaged souls for Wiis. I also find nothing wrong in re-selling. It's not illegal, it's not even unethical, just logical. Nintendo pulled a fast one on them to break them, and I have to respect that. The question is, will Wii supply increase? Or will there be continued shortages?
I think the market ,may recover to something between 350-400 right now, but nothing like the beautiful gold mine that it was. Oh well, that's how the market works.
Being second is no feat if there is only 3 to be up against, it is how far you are in second though. The 360 has a blistering 7:1 where as the Wii last checked was only 2:1.
@EnigmaNemesis: a valid point, however, considering the fact that nintendo was making money on the console from day one, im guessing they arent too worried about that at all.
especially considering if you look at sales numbers (as usual) few third party game sales come close to comparing to nintendos first party game sales....nintendo fans buy nintendo colsoles to play nintendo games.
casuals buy the wii to play wii sports. think about that, actually. wii sports has got to be the most expensive console game ever....people pay $250 (and more, obviously) just to play wii sports.
@EnigmaNemesis: Actually people bought WAY more Wii games then any other console games over the holidays so take your attach rate nonsense and leave it at the door.
@karl_hungus: You aren't with the times either... 3rd party games have been selling well on the Wii. Wii games have longer legs and sell more over time. There are a lot of very happy 3rd party devs with their Wii profits.
As far as attach rates... I own, I think, 10 Wii retail games and approximately 30 Virtual Console games, and I only own 2 360 retail titles (Ultimate Alliance and Forza 2, think about it) and 10 XBLA games. The 360 does not have the breadth of variety the Wii does. This is often overlooked because there is also so much shovelware for the Wii.
True story: I didn't even want a Wii. I went with a friend on launch day because he didn't want to wait in line. I ended up getting a ticket, and decided to buy one and resell on eBay. After getting home and playing my friend's Twilight Princess and Wii Sports, I decided getting rid of my Wii was foolish.
I'd pay $400 for a Wii. Nintendo needs to curb demand the economics way, by raising the price. Obviously people will pay $400 for it, it's like Nintendo is throwing away $150.
More like, "Do you have the Wii Sports machine?"
@Smash_Bro: Annecdotes are worth their weight in pixels.
I'm not too concerned about attach rates for the PS3 yet as the good titles are coming out slowly but hopefully increasing. With the Wii continuing to sell systems at a crazy pace, would that artificially lower the attach rate? (That is, older Wii users now have x numbers of games, but newer ones only have a a couple and there are SO MANY new ones that it's skewing the rates?)
@Smash_Bro: I'd have to disagree with you.. Games I enjoy on my 360 include: GHII, Beautiful Katamari, Halo 3, Portal, Catan, Worms. I need to get a driving game. It has plenty of variety.
@NoBullet: Whats sad is Ive actually heard a mom ask me when i worked at Target say:
"What system is Wii Sports on?"
classic
no the best is when people ask for wii as if it was an actual game, "hey you got that wii game in", haha. I heard people ask for wiistation before too, no joke.
@rockett1:
WII STATION? Wow, what shame.
I have yet to see someone walking through the fisher price aisle looking for it.
I <3 you Wii.
Remember all those people way back before the Wii launch talking about how reserving the Wii was stupid, and that they would just walk into a store and pick one up? Yeah well they are just some of the ones that for over a year have been trying that and failing to get a Wii.
I just have to say to them: I told you so, and next time maybe you should rethink that launch console reservation you lazy bastards.
-WPack911 ;P
@fonzy: Agreed, I need to get Portal and Viva Pinata. I have Worms, GHIII for Wii, and I'm banking on a Wii Katamari before I get the 360 version. It's not a bust system (well, it is busted, I've had it for two months and it's already broke... it chews my game discs to hell) it's just everytime I walk into a Gamestop to get the Orange Box I see some awesome Wii game that's cheaper and just as fun. That $10 difference is a big deal-breaker.
i also heard, vii and wii2. Among them all, wii game is the most popular haha.
What's worse than the ebay-inflated Wii prices is the ass face retailers who put the Wii in a bundle with all this useless shit and crappy games for 450 buckS!! I wish Nintendo had threatened to cut off shipments to those retailers.
@NeoAkira: Do really have such a big problem with supply and demand as a natural phenomena? Or do sellers owe everyone a duty to sell a hot item for less than the market would actually hold. Are you owed an ounce of gold for less than the actual market price (which is around $850 at the moment) simply because the ounce costs far less than that amount to produce? The same market function that delivers Wii bundles and higher than retail ebay prices power the very market that generates the incentive to create and sell the Wii.
All you eBay Wii resellers are a bunch of no-good bah-humbug grinches. Boooo!! Boooo!!
> but Reggie's press conference and the subsequent console flood neatly nipped in the bud what could have been a terribly expensive Christmas for families looking for a little motion-controlled joy. Whatever the case may be, the end result is a small victory for the hardworking folks out there more worried about the smiles on their children's face than the thickness of their wallet.
> Nicely done Nintendo.
How so? If they had just shipped all the systems they were making instead of stockpiling them the very same Wiis that showed up around Dec 17th would have been in stores earlier and the people who bought them on or after the 17th would have bought them earlier (and resold them on Ebay earlier). The demand for Wiis didn't change. The supply of Wiis didn't change. All that happened was that Nintendo CREATED a shortage by holding some Wiis off the market and then flooded* the market with the Wiis that they had been holding off?
I fail to see any benefit.
*since the demand is still outstripping supply they didn't actually FLOOD the market but they tried...
@jayntampa: I disagree. Nintendo didn't suddenly have more consoles, they simply started finding ways to get them directly to consumers. The rainchecks, for instance, helped to satisfy customers who might have otherwise turned to eBay.
With a raincheck in-hand, people don't consider eBay to be a better alternative, and so don't bother to bid on a Wii on eBay, which keeps the bid price of Wiis on eBay down. If the bid price stays down, profit margins disappear, and resellers stop buying up Wiis to auction off. This means more Wiis at retail locations, and gradually the need for rainchecks goes away.
The real question is, will the Wii maintain its sales momentum once the perceived "shortage" has been rectified? I'm certainly glad that I bought a Wii when I did, but I have met more than my share of people who purchased one just because it was the hot gadget of the time, and who have since sold theirs or are allowing it to collect dust. They just wanted to be able to say, "the Wii? Oh, yeah, I have one of those."
Proof, if any were needed, that demand for Wii is artificially created by nintendo by holding back units.
@kwa4250:
Right I forgot this capitalism thing has been so amazing so far, that's why the US economy is doing so amazing right now. =-O oh wait...
Sigh. I'm tired of hearing about this story, although the graphs are interesting. I'm just glad I was able to rid myself of a Wii while the demand was still high. I needed the money.
Oh, and selling a Wii on Facebook's marketplace plants a firm facepalm to selling a Wii on eBay because you can set your price. I put mine up at midnight EST during the first week of December and had 4 offers by the time I woke up the next morning.
@artki: Again, as previously stated by a commenter and the article itself, Nintendo did NOT stockpile them, retailers did. That means that Nintendo was not sitting on them, Wal-mart, Best Buy, Target, were.
Something tells me that retailers are bound to start doing this a lot more often now, during the holidays, to control 'floods' of people coming into their store. They can stockpile a device all year long, leak bits and pieces out to their various retail chains to keep constant sales alive... and then when they want to start moving stuff, proclaim 'We've got X! This weekend!' And next weekend too. And another weekend down the road, just a few days away from Christmas. No magical 'Wow they shipped more consoles/units.', a shrewdly planned market strategy.
@Amaryllis: My last comment, directed at you too. At least read the Kotaku articles, people.
Looks to me that price dropped significantly on the 17th, basically the first day that you were not certain to get a Wii delivered in time for Christmas.