Some resold PlayStation 3 units auctioned for more than $5k
CHICAGO - There might be only one thing crazier than standing in line for three days to be the first one on the block to have a new $600 PlayStation 3 game system: paying someone else thousands of dollars to do it for you.
On Friday, a few hours after Sony Corp.'s next-generation gaming device went on sale, the machines started popping up on eBay, with bids exceeding $5,000.
It's a mania that explains impromptu Las Vegas weddings and why some were willing to pay $2,500 for a single ticket to Saturday's Michigan-Ohio State game: When intense passion meets sudden opportunity, the result can be thrilling and expensive.
Because PS3 is one of the holiday season's hottest new gadgets but also in limited supply, there was a fast and furious rush online by some desperate gamers.
It was a showcase for how vital the Internet has become as a place for get-it-now commerce. By late Friday afternoon, 832 consoles sold for an average price of $2,921, according to eBay Marketplace Research.
"It's really a reflection of our culture today," said Mark Stephens, general manager for the Chicago region of online advertising firm Avenue A/Razorfish.
"To some degree, this mania is man-made because as marketers we cultivate this. These events have been seeded by PR on top of the pent-up demand waiting for these new things to come out."
Five years in the making, Sony's PS3 is loaded with next-generation features, including Blu-Ray disc technology for gaming in high-definition.
Yet it was precisely those new features, and Sony's troubles making them work right, that led to a shortage of the available gaming systems and the frenzy that broke out in stores and across cyberspace. The company said it has only shipped 400,000 units for the launch, far below expected demand this holiday season.
Robert Zeithammer, an assistant professor at the University of Chicago's graduate school of business, wasn't surprised by the tumult on Friday.
"It's finally been released, but not in the quantity to meet the demand," said Zeithammer, who studies online auction behavior.
"It was originally supposed to be released last year and it wasn't," he said. "And I checked at Best Buy, Target and Wal-Mart, and they don't have them today."
So buyers naturally turn to eBay, he said.
"There are people out there who really want this, and eBay has become a very flexible way of tapping into this demand," Zeithammer said.
But he also pointed out that while the prices sound astronomical, only very few people are bidding outrageous sums.
"The opportunities for speculative buying are somewhat limited because next week you may be competing against Best Buy," he said. "So this phenomena has no repercussion of what the price should be in the mass market."
Zeithammer called it intertemporal price discrimination, "or price skimming. It means these sellers are skimming the very top of the market. And there aren't many of these people" willing to pay that much money.
At eBay, the pitch from sellers went like this: One seller told his potential buyers that he had "waited outside Toys R Us for over 17 hours" to get a machine. The vagaries of the bidding process resulted in that machine selling for $3,050, while another buyer paid $5,251 for the same system several hours earlier.
Stephens, the marketing executive, said he was part of the frenzy five years ago when the PS 2 was released.
"That was the strangest transaction I ever had," he laughed. "I met this guy named Byron in a parking lot of a grocery store. I gave him $600 and he gave me the game."
This time, he didn't promise his son or his nephews that he would have a game system in time for a Thanksgiving family tournament.
"The real trick of marketing these days anyway is sustaining this demand for a product," he said. "It's not creating the initial excitement."
At eBay, Gadget Director Cat Schwartz called it a very exciting day.
"It was capitalism at its finest," she said.