Home > Gaming, Real Life > The best kind of problem to have (Updated)

The best kind of problem to have (Updated)

Nintendo is, by many accounts, killing itself. Its supply of Nintendo Wii consoles is vastly outstripped by the market demand, even a year after the release of the console. And this has a lot of people pissed. I’m kind of at a loss as to why, though. (And if anyone should be pissed, it’s me. I was there.)

Let’s start with the New York Times, who wrote a veritable sob-story on the topic, attempting to depict the poor and starving who have to camp out in the rain to get their Wiis. Except not. This is a nice introduction to a keep point in all of this, which we’ll see pop up again and again: this notion that people “have to” jump through all these hoops to get a Wii. First off, nothing is requiring them to get a Wii. I’ve been Wii-sober for months now, and I can tell you life without one is hard, but not impossible.

The second thing here is that, generally, something required in exchange for something else is called a “cost.” If you want to buy a Wii at its current cost, you will have to put in some man-hours in addition to dropping your cold hard green on the counter at the right time. How high that cost is (i.e. how much time you must spend doing a better job of getting to the Wiis first) is a direct reflection of how many other people are doing the same thing. In other words, the cost rises as demand does. Duh.

But lets say that you don’t have the spare time to do this running-around nonsense, as you’re a working person with a real job. Well, eBay is there for you. While Nintendo is utterly unwilling to raise officially raise the price on Wiis — quite rightly due to the enormous publicity backlash that would be caused — the free market is perfectly willing to dictate exactly how much a Wii is worth.

This has created an entire sub-industry for reselling Wiis on the internet, perhaps most popularly through eBay. In other words, the price the market will pay for a Wii is higher than they are being sold for, so people have begun making jobs out of buying Wiis from stores and selling them online.

But each and every time a news item is posted about these folks, an exceedingly polarized debate springs up, where one side regards them as scum who are robbing children of their happiness and the other side view them of champions of the free market. (Bonus points: guess which side I’m on from the phrasing of that sentence.) Because of their evil profiteering, the argument goes, the first camp argues, they are hurting the industry and “forcing” people to pay higher premiums for a Wii. (Except not. See above.) Here we go (from the Consumerist article comments):

Console flippers make it even harder to find already rare items at christmas because they snap them up en masse and then sell them back, feeding off of high demand. It’s obvious that these people are sociopaths, no sense of fairness or equity. The only reason that they make money is because they have it and the store doesn’t. That’s not capitalism. That’s piracy. Best Buy doesn’t send cronys [sic] out to Circuit City to buy up all of the Rock Band boxes on sale so they can sell them at a regular price. That’s not allowed. So should the same be true for consumers.

It should go without saying that if you’re not buying it to use it, you shouldn’t buy it, but trying to tell these soulless zombies that is like talking to a wall. Way to ruin Christmas. Assholes.

Hmm, where to start. First off, this person doesn’t seem to understand quite the meaning of “sociopath.” From Wikipedia: “The essential feature for the diagnosis [of a socipath] is a pervasive pattern of disregard for, and violation of, the rights of others …” To follow this line of reasoning, buying up and reselling Wiis is sociopathic because it ignores the rights of others to be able to buy a Wii. Except that’s not actually a right.

Also, as soon as the commenter let the words “fairness and equity” slip, though, I knew that the underlying problem here lies in an underlying socialist (i.e. anti-capitalist) nature of the commenter. The place of socialism is debatable in politics, but when it comes down to a purely leisure market, it’s utterly irrelevant.

And, as one last point to stop from beating this to death, it’s interesting to note that the commenter comes dangerously close to rationality by stating that “the only reason that they make money is because they have [Wiis] and the store doesn’t.” That is entirely true. But then the commenter backslides into wailing about how it’s “piracy.”

But in response to this, there comes this second camp, who says “Bullshit.” Again, from the Consumerist commenters:

You don’t “Have to pay”. You don’t have to have it the first day. If people let the scalpers sit on their inventory till their credit cards came due, then there wouldn’t be a problem. Scalpers exist and profit because people are stupid enough to pay them the arm & leg they ask for. $2000 for a PS3? $5000 for “Hannah Montana” tickets? Please.
These are not necessities.

And the industry loves scarcity. They don’t give a rat’s posterior that accessories aren’t selling yet. If they sell every console they make at full mark-up as soon as it gets to the store- perfect.

The same people that paid a $200 markup will be back to buy the contollers later.

Want [console resellers] to die like leeches covered in salt? Don’t buy stuff at huge markups. Let them sit on 5 $300 consoles for six months.

And, unfortunately, in the middle of all this always comes the argument that it’s “bad for the children” or some such nonsense. See, by making parents unable to pay the retail cost to get their kid the Wii they promised them for Christmas, the scalpers are “ruining Christmas.” The question here is: why are we pitying parents who made unfulfillable promises to kids. And when informed of their parent’s inability to come through, how will the child react? Doubtlessly with tears and screaming because the kid doesn’t know the word “No.” I know this point has been covered ad nauseum ever since Tickle Me Elmo and before, but it is still entirely relevant here.

But what I find most difficult to believe in all of this — aside from the utter ignorance of free-market principles — is the lack of pondering alternatives. In the first camp’s dream world where there were no scalpers, the man-hour cost for tracking shipment arrival times and making sure that you’re there at the exact time to snag a Wii would be about the same, given that people who had bought the reseller’s stock would instead be rubbing shoulders with the “legitimate” buyers.

But let’s take it even further. In this paradise, there is no such planning and conniving. You just go into a store, and if they have a Wii, you can buy it. Otherwise, you go home empty handed. Not only would this be horribly wasteful in terms of time and resources, it would be, in essence, a lottery, with which no one would be happy either.

I’m reminded of an adage often applied to democracy, capitalism, or any of a dozen other Western principles: Sure, it sucks sometimes. In fact, it’s terrible. But all of the alternatives are worse.

UPDATE (7:52pm EST 22 Dec): Ars Technica is reporting that one retail chain is selling their entire stream of Wiis online for $400, a $150 markup:

“In the past year, none of the 12 [Slackers locations] haven’t sold any Wiis except for a one-time promotional deal, where we did force customers to buy a game with it,” the employee told Ars Technica. “The real crime is that we get Wii shipments regularly. In fact, right now we have about 20, but none of them make it to the store front. They all get put on the store’s eBay site at a minimum $499.99 buying price.”

Our source then told us that the price has since been lowered to $399.99, (they weren’t moving at $499) and sure enough, there are three Wiis available through Slackers’ eBay storefront at $399.99. Looking back in the store’s history, one can find other Wii sales in its feedback, with the auction advertising “NEW WITH GAME.” The game of course being the bundled Wii Sports.

Categories: Gaming, Real Life
  1. Bob
    December 21, 2007 at 11:40 am

    I’ve been amazed at how stupid so much of the commentary has been about the Wii shortage, even from commentators who generally seem rational. You’re right that a sense of entitlement seems to be at the root of it, along with a failure to grasp basic economics.

    In particular, I’ve been amazed by the analysts who seem to think that Nintendo is hurting themselves by having such a successful product. A common theme is the idea that nobody has a Wii, because they’re so hard to get. But that’s absurd: they’re hard to get because so many people are buying them. *Lots* of people have Wiis; where else would all of those Wiis go after they fly out of the store?

    Normally, the free-market response would be for Nintendo to raise the price, given that they seem to have maxed out their manufacturing capacity. But you’re right: in the console industry, an official price increase would not go over well as a PR move. Better to let the eBay resellers be the targets of the “what about the children?” outrage.

    Techno-lust is a powerful force, but life becomes much easier when you manage to suppress it and act rationally. We have a Wii, and it didn’t cost me a dime over the list price, nor did I have to go to any special effort and buy it. I just had to be patient and accept that I’d get one eventually, even if it was almost a year after launch (which it was). And I certainly wasn’t idiotic enough to promise my daughter one for Christmas!

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