Most of the answer here seems to be “no”: PS5s are an underpriced good and “scalpers” are simply taking advantage of an inefficiency in the market to correct the mismatch between supply and demand. You could argue that Sony and retailers are fools for not simply charging more for them, but...
Maybe Sony is taking a page from Nintendo’s playbook. Nintendo historically seems to intentionally underproduce consoles to meet demand. Although not confirmed as best I know, given it’s happened repeatedly, they have access to good market research that should let them accurately predict demand, and because this has happened repeatedly they’ve had the opportunity to address supply chain issues that would cause it. Thus, it seems to be a strategy that they believe induces additional demand for their consoles.
For example, Nintendo releases a new console, in the US generally tied to the Christmas buying season. Supplies run short, people compete to get them, the news reports on how excited people are to get the latest Nintendo console but no one can find one. People hear about this and get excited, because a sure sign that something is valuable is that other people want it. Thus demand for the console is marginally increased over what it would be if they had produced an adequate supply to begin with or priced it higher to match demand.
I’m not aware of evidence that Sony has chosen to do this intentionally, but it’s possible they’re enjoying a situation where demand is so high that there’s arbitrage to be done and they’re actually reaping intangible benefits that are already priced in.
If you produce anything then you scale up production as time goes on. If you release your console as early as possible you will have supply shortage when it hits the shelves.
Underproducing seems very silly, at least for Sony and Microsoft. A lot of the value is in the network—playing with friends. Nintendo may well be a different story, especially since their model is more single player focused and their profit (i think) is relatively more concentrated in hardware sales.
In the past, there was always talk of the consoles being sold at a loss. I’m sure that is very near the case still, especially now that they have people paying yearly subscriptions for online play. There is no reason to be hemorrhaging users when the $ is in the ecosystem
Most of the answer here seems to be “no”: PS5s are an underpriced good and “scalpers” are simply taking advantage of an inefficiency in the market to correct the mismatch between supply and demand. You could argue that Sony and retailers are fools for not simply charging more for them, but...
Maybe Sony is taking a page from Nintendo’s playbook. Nintendo historically seems to intentionally underproduce consoles to meet demand. Although not confirmed as best I know, given it’s happened repeatedly, they have access to good market research that should let them accurately predict demand, and because this has happened repeatedly they’ve had the opportunity to address supply chain issues that would cause it. Thus, it seems to be a strategy that they believe induces additional demand for their consoles.
For example, Nintendo releases a new console, in the US generally tied to the Christmas buying season. Supplies run short, people compete to get them, the news reports on how excited people are to get the latest Nintendo console but no one can find one. People hear about this and get excited, because a sure sign that something is valuable is that other people want it. Thus demand for the console is marginally increased over what it would be if they had produced an adequate supply to begin with or priced it higher to match demand.
I’m not aware of evidence that Sony has chosen to do this intentionally, but it’s possible they’re enjoying a situation where demand is so high that there’s arbitrage to be done and they’re actually reaping intangible benefits that are already priced in.
If you produce anything then you scale up production as time goes on. If you release your console as early as possible you will have supply shortage when it hits the shelves.
Thanks for this. I agree that it’s plausibly rational of Sony not to raise the RRP here.
Presumably the retailers would love to increase the price here, but they ain’t the ones setting the RRP...
Could you clarify what you mean by arbitrage here? What arbitrage is available to Sony in this situation?
Underproducing seems very silly, at least for Sony and Microsoft. A lot of the value is in the network—playing with friends. Nintendo may well be a different story, especially since their model is more single player focused and their profit (i think) is relatively more concentrated in hardware sales.
In the past, there was always talk of the consoles being sold at a loss. I’m sure that is very near the case still, especially now that they have people paying yearly subscriptions for online play. There is no reason to be hemorrhaging users when the $ is in the ecosystem