Eugene Chan thought a big profit was almost guaranteed after getting his hands on new video-game systems from Microsoft Corp and Nintendo Co.
Like other speculators, Chan planned to resell the consoles through Internet auctions run by companies such as EBay Inc and Yahoo Inc. Sony Corp's US$299 PlayStation 2 last year sold for more than double the retail price in some auctions.
This time it isn't working out that way for many. The slowing economy has made consumers wary of overpaying and the supply of the new machines is greater than before. As a result, Microsoft's US$299 Xbox and Nintendo's US$199 GameCube are frequently fetching less than US$50 or US$100 more than the retail price at auction, disappointing Chan and other sellers.
"I was hoping to make US$150 on each originally, but that quickly became fantasy," said Chan, a 21-year-old student from Hillsborough, California. He sold an Xbox for US$375 and a GameCube for US$249. Both devices were introduced in November.
After sellers pay fees to auction sites and online payment services, profits can evaporate.
"I actually lost money," said Sherri Hamilton of San Diego.
"I wish I was involved last year. This year is not very good." A single mother, Hamilton sold four GameCubes, hoping to raise enough cash to buy one for her two kids. Her auctions of toys related to the movies Harry Potter and the Sorcerer's Stone and Monsters Inc are providing wider profit margins, she said.
Xbox is Microsoft's first console. The largest software maker is challenging Nintendo and Sony for a piece of the US$20 billion worldwide market for video games. GameCube is the successor to Nintendo's N64, introduced in 1996.
Reflecting the slower demand for consoles offered at auctions, Yahoo said 300 Xboxes and 161 GameCube units were sold through its site in the nine days to Nov. 29, compared with 1,214 PlayStation2 units in a similar period last year.
The average price for an Xbox was US$505, higher than sellers interviewed recently have seen. The average price for GameCube was US$257. EBay, the largest auction site, would not provide details.
Demand for new game systems often outweighs supply, driving some gamers to pay premium prices. There are several reasons why Xbox and GameCube aren't selling as well in auctions as PlayStation2 did last year, sellers say.
The first is the economy, which has made people less willing to pay the higher price that auctions often attract. The other reason is that the supply of GameCube and Xbox consoles is greater, giving gamers a better chance of picking up a new system at the retail price in a store.
Nintendo plans to sell 1.3 million units to retailers. Microsoft appears on track to sell more than 1 million units. PlayStation2 is also widely available this year after selling fewer than 1 million last year.
RSS