Time for a little supply and demand 101…
Let’s say you own the last Oreo cookie on earth. I’m not talking about the multi-flavored, double stuffed, Christmas/Easter/Arbor Day edition either. I’m talkin’ a regular old Oreo. Maybe it’s not even that fresh. Hell, for all I know you could have found it under the sofa and it’s got little bits of hair and gunk on it. Frankly, it doesn’t really matter. The point is, you’ve just become a multi-millionaire simply because you own the last one. So, what does a stale snack food have to do with the world of gaming you might ask?
More than you might think.
I use the example above to illustrate how crazy people can get when they want something. You’ve no doubt seen the multitude of people stampeding over each other during Black Friday on the five o’clock news. It’s a desire to acquire. Manufactures are well aware of this character defect in its customers, and thus they exploit it in order to garner extra profits. Take the launch of the next-gen consoles last month. Mixed reports indicate some retailers having “shortages” on systems, while others still had launch-day editions on hand weeks later. Now, I say “shortages” in quotes to denote a healthy dose of skepticism on my part.
Actually, I’m going to come right out and say it: the lack of inventory was deliberate.
I mean, think about it: what better way to eat up the headline space on Monday morning (the same space your competitor wishes to occupy) than by causing a near riot for your product. How might one do this? By simply looking at the number of people wanting said product, reduce the supply to where some are left empty handed, thus causing an epidemic of people yearning for an item they can’t have. Companies bank on social media for these types of stories to spread like wild fire, and since there’s no such thing as bad press these complaints just come across as being unable to handle the huge rush for their product (and making their competitors look weaker in the process). A nice problem to have, if it wasn’t so exaggerated. By all accounts, things have shaken out to where both Sony and Microsoft hold a fairly equal grip on the market.
Don’t just take my word for it; these accusations have become so prevalent that Sony was recently forced to address the allegations.
Sony CEO Jack Tretton states that the recent shortages are by no means trumped up, but are simply due to the company not being able to keep up with demand. He suggests that he doesn’t even own one himself, as he wants all available consoles out on the market. That last one I find hard to believe. If he really doesn’t own one, I can’t image it’s because their supply is SO tight that they can’t squeeze out one more just for him. To hear them tell it, it sounds like all our resources have been commandeered for the military effort like in the days of Rosie the Riveter and World War II.
He also points to the claim that if Sony did create an artificial shortage, it would be bad for their business model (suggesting that Microsoft would snatch up their market share). “Do you create an artificial shortage because you want there to be a feeding frenzy? No you don’t. You have competition out there; there are lots of things that people can spend money on, especially during the holidays; and the holidays only come around once a year so that’s really when you want to take advantage of the market opportunity.” Said Tretton.
Frankly, I’m calling BS on the whole thing. You can’t tell me that, with the window of time a company like Sony had leading up to the launch of the PlayStation 4 (dating back years, almost to the beginnings of the PS3), they couldn’t muster the resources to keep their biggest money making venture to date stocked on shelves. Not to mentioned the holiday dash playing such a huge part. Again, I have no smoking gun to lie at Sony’s feet to prove this, but it seems clear that they’re banking on word of mouth and the mad scramble that ensures when people want something they can’t have. Some would call that brilliant (and free) marketing. In that regard, I can’t argue with them.
As a footnote, I recently read that a luxury department store in the UK is selling a gold plated Xbox One for $10,000. Still having doubts about the vulgarity of consumerism?