A Stitch in Haste

As background, Microsoft will be releasing its next generation video game system, the Xbox 360, on November 22. The retail price will be $398, but many stores have sold out even their pre-orders.

Which has led to quite a mania on eBay, where re-sale offers are running as high as $800. And in most cases, the eBay sellers must first wait for the units to be delivered to them before they can then resell them to the eBay buyers. Hence the eBay buyers might still be waiting for as much as two weeks after the November 22 release date before they get their systems. And they're willing to pay as much as a 100% premium above retail for the privilege.

Now I of course acknowledge that all tastes and preferences are subjective and that if you have nothing better to do with $400 (above the retail price) than using it to buy the status of "first on your block" to own an Xbox 360, then so be it and good for you. Isn't capitalism grand?

But three months from now, let alone three years from now, will anyone really care that you had your system a week before everybody else? Will you even be playing an Xbox 360 three years from now? Is it rational to spend money satisfying one's impatience? Or is it succumbing to an irrational impulse, comparable to feeding an addiction? Might you actually experience enough regret for your impulsive purchase to offset the utility you initially derived from your "first on the block" status?

Alternatively, could it be that there is a true "bubble" element here? Might people be paying exorbitant premiums on eBay today not for "first on the block" status, but rather with the expectation that they will be able to "flip" their system, which they don't even own yet, as the release date approaches and people become even more desperate to obtain a system before Christmas? Are these premium-paying eBay bidders just hoping to make a quick speculative profit? It will be interesting to watch the eBay pricing trend as the release date approaches and then passes.

Any predictions? Will Xbox 360 prices on eBay rise or fall between now and November 22? Between November 22 and Christmas? After Christmas? Do these astounding prices represent a "first on the block" premium or a speculative resale bubble?

More thoughts at Catallarchy.

POST SCRIPT: In case you're wondering, yes I intend to purchase an Xbox 360, but I will not pay a "first on the block" premium. I'll gladly wait a bit to pay retail, or less. Still, this will be my first video game system since my Atari 2600 as a kid, so theoretically I should be even more excited than those who are upgrading from a contemporary system.