PS3 In High Demand; Fetching Above MSRP As Stock Supply Suffers

June 2, 2010 Written by Anthony Severino

We’ve always been able to see the amazing value packed into the PlayStation 3, so much so, we’ve dedicated countless hours of our lives informing all of you about our favorite high definition console and its software. However, the PS3 had long been a hard sell to many consumers, especially in the first couple years of its lifespan due to the substantial manufacturing costs Sony incurred (at launch, the PS3 cost Sony nearly $900 to produce), resulting in a higher price tag than the competition. All of that changed with the announcement of the 120GB PS3 “Slim” model that was released last September. At a much more affordable price point of $299, average consumers could finally begin to see the value that the PlayStation 3 has to offer. From HD gaming, Blu-Ray movies, and so much more, the PS3 has the best feature offering out of any of the current-gen consoles on the market, in fact, it only does everything.

Ever since the 120GB “Slim” launched, the console has been in extremely high demand, breaking sales records for the PS3 during the last holiday sales season. Toward the end of the holiday season, the PS3 became hard to come by, and since then, the stock supply has all but dried up. Sony themselves are aware of the stock issues, and are currently trying to fill the retail channel to the best of their capabilities. When an item is in such high demand, yet obtaining one is rare due to short supply, the price is usually driven upward. Supply and demand is, according to Wikipedia, an “economic model of price determination in a market. It concludes that in a competitive market, price will function to equalize the quantity demanded by consumers, and the quantity supplied by producers, resulting in an economic equilibrium of price and quantity.” Makes sense right? You want it, it’s hard to get, so you pay more. Simple enough.

So now that the PS3 is in such high demand, yet quantities are low, how has that affected the price? What about sales?

According to last month’s NPD sales figures, the PS3 sold a whopping 180,800 units, just under 5,000 shy of its closest competitor, all while being in scarce supply. The console has been selling similar figures for the past 5 months, despite the console being extremely difficult to find. Imagine how many additional units would have been sold if they were only available for eager consumers to buy them up.

That covers sales, so what about price? This is by no means a perfect example of the overall market, but it is a good example nonetheless. Amazon.com, the world’s largest marketplace, not only sells products, including video games, on their own, they also allow other retailers (such as Target) or distributors to sell the same products Amazon sells for a competitive price. Amazon, has long been sold out of the PS3, with stock only trickling in here and there. However, that hasn’t stopped Sony’s HD behemoth from making the online giant’s bestseller list. So if Amazon is sold out of PS3s, then how is it selling enough to be on the bestseller list? It’s sold out at Amazon’s most prominent retail partner, Target as well, so this forces consumers down the line to other retailers or distributors on Amazon’s marketplace.

Here is where the supply and demand model comes into play. Normal retailers like Amazon and Target have set MSRPs. If they have it in stock, you’re going to pay the $299 MSRP. However, these other distributors are free to inflate, or deflate the price depending on supply and demand. One distributor has the 120GB PS3 in stock for $364.53, which is a considerable amount above the MSRP. Another distributor, has the 120GB PS3 listed for $384.99 + $10.50 for shipping, that’s just under $100 more than what the PS3 normally retails for. What a rip-off, right? Apparently not for consumers, who are indeed buying up these PS3s with inflated price tags, as evident by the PS3’s inclusion on Amazon’s bestsellers list as we noted earlier. The PS3 is even beating out the normally priced Xbox 360 on Amazon’s bestseller list. Despite the PS3’s jacked up price on Amazon, it’s currently residing in the #9 spot on the bestsellers list, with the closest Xbox 360 model (the Spring Elite bundle that comes with 2 Halo 3: ODST and Forza 3) sitting not-so-pretty at the #57 spot. Of course, Nintendo’s unstoppable Wii console trumps both sitting at the #1 spot thanks to a $149.99 sale that Amazon is currently running. Again, all of this is not at all an accurate portrayal of the overall console sales market, especially since the Xbox 360 did outsell the PS3 in April according to NPD sales figures. Also again, imagine if the PS3 was fully stocked with its normal $299 MSRP, think of how much better it would have sold if consumers want it bad enough to pay close to $100 over MSRP!

Shocking? Not really, especially considering the PS3’s momentum ever since the price drop and release of the slim model. Shortly after that, some of the PS3’s most anticipated titles were released with God of War III and Final Fantasy XIII, both of which are consider to be “system sellers”. On top of the already robust library, the future for the PS3 is a very bright one, lit by the glowing orb atop the PlayStation Move controller, and the console manufacturer’s very best first-party software offering ever with the likes of Killzone 3, LittleBigPlanet 2, along with many more to be revealed at E3.

The momentum won’t be stopping anytime soon.