With all the news about PS5 and graphics cards being so hard to get due to low supply and scalpers. What stops Sony, Nvidia, etc. from jacking up their prices? PS5 has been out for over 6 months. In economics terms I would think it is now the long run, so prices shouldn’t be fixed. The companies might as well get in on the action and cut out the scalpers. What gives?
In: Economics
They are. Third party board manufacturers are definitely charging more over the FE cards MSRP than they usually do because they know people will pay more. It was definitely apparent with the third party AMD cards, which came out after Nvidias cards sold out immediately. They saw what happened, and decided they’d be better off just introducing their cards for a higher price in the first place. And Nvidia releasing the 3080ti for $1200 is definitely a response to seeing the current market.
But generally introducing new products with higher prices is different than raising prices after the fact. It might not feel like it, but this is still a relatively short term issue. Businesses don’t want to sabotage their reputations by blatantly taking advantage of the situation by raising prices. Having customer loyalty is important even if people don’t realize it. It’s not worth throwing that away for a little extra cash now.
The *market* does respond to scalpers…because scalpers are part of the market. As the people willing to pay a significant premium for early access get their devices, the scalpers will fade away and find something else. Their “business” model doesn’t work for commodity available stuff, it only works in times of scarcity. The manufacturers jacking their prices won’t stop scalpers, it’ll just move the money balance between the OEMs and the scalpers, because it won’t change the demand or willingness to pay of the end users.
The OEMs don’t make much profit off the consoles themselves, they make it off the games. Their optimal strategy is to manufacture as much as they can as fast as they can…they don’t *want* expensive consoles, they want everyone to have consoles so they can sell them expensive games and game accessories. Jacking the prices wouldn’t change how fast they can manufacture and would slow down broader uptake as their supply catches up to demand.
Because increasing MSRP will not cut out the scalpers, it’ll only make the scalped prices higher, leading to the same issue
Regardless of how scalping has increased the prices, the cryptoboom and desperate buyers have been feeding the scalpers anyway
Scalping is a long run game. The GPU (and other chip) shortage has been going on for barely 8 months. Many scalpers have deep enough pockets to sit on things for longer than that, let alone when the scalping prices keep rising and people are desperate enough to pay 3-4x the MSRP because of need or impatience
Because that is how you burn customers who aren’t scalpers. A repeat customer who spends some but does it every system generation is more valuable than the one time buyer of a PS5.
The answer to scalpers is an increase in supply. Also you have to take into account that Sony doesn’t care if a scalper buys 200 ps5s. Because then they just sold 200 ps5s. Increase the price to combat scalpers and then nobody will buy them because this will cause scalpers to price hike, or nobody to buy an over priced system. which just starts a never ending cycle which ends with your customers moving to another brand.
The problem isn’t scalpers, it’s artificial scarcity.
These companies don’t want to be seen as profiteering on the supply shortage. It’s a public relations problem, because they want their product to be seen as a commodity product rather than a “limited edition collectable”. It’s very hard to convince game developers to write for a product that has an intentionally limited customer base.
For the existing units, there’s a substantial risk of generating ill will among the customer base if a company raises prices after announcing the retail price. Enough to dissuade them from doing so even though it may lead to increased profits over the short term (even the medium term). But rest assured these companies are revising their pricing strategies for the next generation of consoles. Don’t be surprised if the next generation of consoles sell for 50% or more comparesd to current consoles.
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