How Scalpers Are Controlling The New Console Generation

Well, we've come up on a huge new console generation launch and, as you might expect, scalpers are taking full advantage. This is a world where we can't not expect this, but that doesn't mean it's not messing things up. We'll talk about it more in depth in a moment, but PlayStation 5 scalpers have more inventory than stores in the United Kingdom, that's wild! How are they doing this? Scalping is a thing that's going on and it's big. If you haven't talked to somebody who has been affected by it, or at least has seen the effects of it, you're probably not talking to many gamers.

Things are rosy for console makers. Sony Interactive Entertainment, CEO, Jim Ryan had this to say, "Everything is sold. Absolutely everything is sold. I've spent much of the last year trying to be sure that we can generate enough demand for the product. And now, in terms of my executive bandwidth, I'm spending a lot more time trying to increase the supply to meet the demand."

But consumers, the everyday person who wants to play and enjoy video games, is who we are talking about. Probably the most unfortunate aspect of the scalping is it's not just that they're sapping up extra inventory here and there, they're actively purchasing PlayStation 5s and Xbox Series Xs specifically to take them off of the market and put them in play in another market. A scalped market. In which the price is significantly higher.

It's not passive, it's extremely active. It's a thing done on purpose and with intent. It is a lucrative prospect and it works. There are people who have figured out systems for handling this stuff that totally subvert the fact that they're trying to sell as many consoles as possible as quickly as possible. Like I said a moment ago, in the United Kingdom, PlayStation 5 scalpers actually have more inventory than the actual stores do, and this is being accomplished because scalpers are actually coming together, pooling their resources, and generating marketplaces that give them a lot more control over, you guessed it, the supply.

They're able to name prices at the moment for many locations, but not everywhere. Some people are just walking right into stores and finding these damn things. Which is bizarre, but most of us aren't so lucky. The UK group that does this is one of many, and to understand how it works, they organize in a discord in which they have people go to places and buy first. They know where they're showing up first, and they know where supply is going too. They understand supply routes. They understand store rollout plans. It is taken care of down to a T. And the most interesting thing about it, it is neither based exclusively in the physical world or online. You have a lot of people sitting on that discord server using bots and proxies while ordering with multiple accounts sending to multiple addresses.

It is actually an extremely intricate operation that they charge people to be a part of. You pay to enter that discord. Because obviously, it is a lucrative prospect, and the place to be if that's what you're into. And if you want to know why it's so lucrative, and why there is a market for it, think about all the parents of upper middle class suburban kids that do not pay attention to gaming news. They don't know when things launch, don't know what a pre-order is, don't know any of the lingo. They don't know the procedure, or the mechanics, of purchasing a game console in normal times, let alone during a big console launch time. Those people find out there isn't any available at the store and have to figure out how to give their kid the thing that their kid wants for Christmas. So, they take to Facebook. They see what scalpers are doing , and they're like, "oh well, whatever."

And if you say to yourself, "well, it would be much better if they just didn't do that. That it would provide no incentive for scalpers to do this." That's actually not how any of this works. The demand generated for these consoles was generated by Sony. A massive marketing apparatus exists and there is more demand than supply at the moment. To some extent, this is even by design, as they clearly marketed it, knowing the amount of PlayStation 5s that would be out in the market.

It actually looks good for Sony that, for a month or so, people are willing to pay way more than the product is worth. Plus, Sony sells out everything that they intended to. Their business plan was executed to a T. And on top of that, these scalpers are making the product seem like it's worth significantly more than it is.

Sony can look like they're on the side of the people, but in reality, they are kind of the ones that engineered the situation. Now, please keep in mind, I do not sympathize with the scalpers personally, but many Facebook scalpers go ahead and even say these people are doing what they can to put money on the table. These are enterprising people who may or may not be in an amazing economic position and are attempting to have an easier time this holiday season. I would wager with the sheer number of people they have working together on it, that some of them actually are depending on the PlayStation 5 to be sold to literally put food on the table.

That doesn't necessarily, in my opinion, validate their decision to do this. But again, it's not them that made this possible. It's Sony, Microsoft, and the system that they both operate in. And just to be clear; it's hard to remain sympathetic to people who are involved with this type of thing, because the people who are running it are so blatant.

When Sony thanked gamers for having the biggest console launch ever, the scalping group that had a bigger number of consoles than retailers in the UK, replied saying "great news." They also have explicitly stated their intentions to continue attempting to affect the market. That is to say, buying up all the consoles as they become available and selling them at much higher prices.

As we get closer and closer to Christmas, one of the people in charge of it, even estimates they'll be selling consoles for about a thousand pounds (about $1,300) during the days leading up to Christmas. This will, of course, be to accommodate the last minute dashes from people who have no idea how to get a PlayStation, and maybe physically can't , due to the scalpers doing this.

These scalper groups are happy to do it with the PlayStation 5, which has gotten more press attention. However, they have been doing it just as much with the Xbox Series X. To the point where Phil Spencer has been kind of trying to solve the problem. He's stated that the Xbox Series X shortages are going to be continuing, likely due, in part, to the scalper problem. To help solve this, he's talked about requiring deposits on consoles before you're allowed to pre-order it.

Some people have had enough of the scrapers and are pranking them. For instance, some guy told a scalper, he was gonna buy a PlayStation 5 for a thousand dollars and got him to drive down to a comedy club. After a little bit of frustration of the two of them "not being able to find each other", he said, "are you for sure at the comedy club?" the scalper said. "Yes," he said. "Great, now you can walk in and tell them you're trying to sell a PlayStation 5 for a grand. I'm sure you'll end up with a job in there."

This situation goes further than just scalping consoles too. eBay had to issue a warning to people selling photos of PS5s, because people don't understand that they're simply bidding on a photograph and end up spending a bunch of money on a photograph. If you're going to look into buying a PlayStation 5 or Xbox Series X, this holiday season on a bidding website, or a marketplace, be sure to look at the fine print. Make sure that you are not spending console money on a photograph,

Have you had any experiences with a scalper? Have you dealt with this in any way? Let us know in the comments below.