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Many retailers raise console prices into the thousands by bundling games, accessories and even HDTVs.

Last week, DailyTech revealed the near-$700 Wii bundle offered by GameStop and EBGames which was the only way to purchase the system online. For the PlayStation 3, the retailer says that it "will begin offering online bundles only after our initial in-store pre-orders are filled, which is anticipated before Christmas."

Unfortunately, customers may be forced into a bundle if they wish to score a PS3 before Christmas. Many retailers are packaging consoles with other software and accessories that the consumer may or may not want.

As seen on Kotaku, Wal-Mart has posted Wii and PS3 bundles on its website. The Wii "Customer's Choice" package runs for $648.38 and bundles eight games of the customer's choice (hence the name). The PS3 "Customer's Choice" package goes for $1,421.98 and bundles 12 games of choice, an extra SIXAXIS controller, two Blu-ray movies and a memory card adapter.

Frys also presented similar bundle options on its Frys.com website. The Wii bundle for $679.90 will get you the system plus nine pre-selected games. The PS3 bundle is $1,369.86 for the 60GB unit, nine games and an extra SIXAXIS. 

Perhaps the biggest bundling effort of them all goes to Sony's offer at CompUSA: "Reserve your PlayStation 3 on Friday, November 17th when you buy any Sony HDTV 40" or larger." According to Uninnovate, if the customer returns the television, they must also return the PlayStation 3 and pay a 15% restocking fee. Considering that the least expensive Sony 40" HDTV sold at CompUSA online is a $1,799 model, this could be the priciest pre-order offer yet. Even with the cheaper 20GB PS3, the full package will set you back almost $2,300.

The story also states that "pre-order terms are dictated by Sony to CompUSA," which could mean that the retailer may be able to sell consoles without bundles to customers who did not pre-order. Chances of getting a PS3 from CompUSA may be slim, however, as a representative said to GameSpot: "The reaction we're receiving is so phenomenal that we're devoting our entire allocation to that offer."

While Sony has said that it does not encourage nor support the act of bundling, surely it will help improve U.S. tie ratios with system sales. For the Japanese launch, data firm Media Create figures that a total of 81,639 PlayStation 3s were sold, compared to 66,684 pieces of software, which created an abysmal tie-ratio of 0.82.

An article on BusinessWeek explores the legality of such "predatory packaging" business practices and quotes an expert on anti-trust laws.

"The most common way that something like this would be looked at would be a problem with so called tying arrangements, where someone will condition the purchase of one product on the purchase of another... and this comes up in anti-trust law in a variety of ways," Freitas told GameDaily BIZ. "You can have a standard tying of unrelated products, you can have what's called full-line forcing where they make you take the whole line and they won't sell you one little part of it, or sometimes bundling problems can get analyzed in this way."

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Ludicrous...
By Fenixgoon on 11/15/2006 8:42:40 AM , Rating: 2
I understand the retailers want extra $$... but good god, $1400??? that's criminal practically. what's even worse is that plenty of people will pay :(




RE: Ludicrous...
By zombiexl on 11/15/2006 8:47:23 AM , Rating: 1
I think requiring you to buy something to reserve a product that is available for general sale (even if there are shortages) is illegal in at least a few states.


RE: Ludicrous...
By Lazarus Dark on 11/15/2006 11:51:53 AM , Rating: 2
microsoft requires the purchase of a "hardware item" in order to purchase an oem copy of windows. Ive never heard anyone question the legality of that.

A ps3 is not a necessity, not in the least; while it could be argued that for some, windows may be a necessity for thier line of work. As ps3 is a non essential item, then quite frankly, if you dont want a bundle, then dont buy one. wait for more availability. Its not like you have the right to a video game system.


RE: Ludicrous...
By theapparition on 11/15/2006 12:55:43 PM , Rating: 2
OEM stands for Original Equipment Manufacturer. You don't have your own legal business where you build computers and sell them, do you? You get a discount on the OEM version since it is assumed that you are not keeping it.It is not microsoft requiring the hardware purchase. It is the reseller being creative to hop over the original intent. Reguardless, I will buy that 4.99 y-cable from newegg and take the 4.99 good customer credit, because I'm just as cheap as the rest of you:-)

It is just the same as buying a box of candy bars at SamsClub, and then complaining that you can't resell them since each one is "Not marked for individual sale".


RE: Ludicrous...
By Lord Evermore on 11/16/2006 4:21:35 AM , Rating: 2
The "discount" is not based on the idea that the OEM isn't keeping it. It's based on stricter license terms (no transfers to another machine) and the fact that OEMs are buying in volume, and don't get the retail packaging, and MS doesn't have to handle distribution to retailers (they go through distributors).

It is in fact Microsoft requiring that OEM software be part of a bundle with hardware; the terms of the license explicitly state that it must be sold with a "computer system", and in fact it also does explicitly state that it has to be included with a fully assembled machine. It also allows the license to be used by anyone assembling a computer or installing software on a computer. It's also rightly placed on the outside of the bubble packaging that the OEM discs come in, so that you know about the license before you open it. All this boils down to anybody being able to buy an OEM license and install it on a machine, but it still is controlled by the OEM terms, not retail terms, and officially gets no support from MS. (They do require that it be installed using an OEM Preinstallation Kit, so it's not totally compliant for us to use the OEM license.)

Retailers can sell the OEM packages because the license allows you to sell it on to another system builder if you don't open the package, and there is no hardware requirement when doing that, as they aren't "selling" the license to a user, they're redistributing the OEM kit. Sellers don't have to require hardware at all anymore, because of that difference. MS of course disputes that interpretation, since people like us aren't buying it to use when selling computer systems, but the license doesn't require that it be a commercial system builder or that it not be your own system you're building.

http://oem.microsoft.com/downloads/Public/sblicens...

Previously, licenses were interpreted to mean that we were not "OEMs", so the seller wasn't just redistributing it to a system builder, so it had to be sold along with hardware, which for some sellers meant only a hard drive or mainboard. However it was in fact still Microsoft's terms for people selling the software that required the OEM license be included with computer hardware, and the fact that it didn't explicitly state "fully assembled computer system" allowed sellers to just allow cheap hardware.


RE: Ludicrous...
By iNGEN on 11/15/2006 5:25:00 PM , Rating: 2
There may be statutes in some states that this form of bundling may violate. Unfortunately, because the consoles were available outside of the bundle via pre-order, my guess is few of the statutes will be worded in such a way as to be useful to any group of dissatisfied potential customers.

When it comes to federal law in the US, there doesn't seem to be anything illegal here. Although the black robes have surprised me from time to time.


RE: Ludicrous...
By SilthDraeth on 11/15/2006 8:51:37 AM , Rating: 2
MY first thought was that this has to be illegal. What you do is buy the bundle then sue the company saying you wanted a completely separate retail product, but the company refused to sell it to you by itself.

I don't know. Bundling the system with games is one thing, and even then its ludicrous because the retailer is creating the bundle, and not Nintendo, or Sony. Especially if they do not have any non bundled systems.


RE: Ludicrous...
By therealnickdanger on 11/15/2006 9:28:52 AM , Rating: 1
Best Buy Corporate has mandated that they will not participate in any bundle requirements - which is nice for the customer. While it's certainly not illegal to "force" bundles on people (at least in this state), it's certainly bad business IMO. Depending upon store policy, managers are able to affect pricing and conditions of nearly any purchase at any time. There are exceptions, like if you advertise the PS3 for $599 with no other requirements, then you certainly can't force a bundle (ye olde bait'n'switch). For those of you who have never worked retail, there's is a massively gray area when it comes to "hitting the numbers".

My own personal feelings, in support of free economy, are that retailers should be able to price it how they want. The double standard is exactly why more than 3/4 of the people camping outside my store are buying the PS3 just to sell on eBay. If retailers were allowed to sell them at $3,000 at the store level, at least the store would walk away heavy in black ink.

I feel sorry for all the suckers camping outside of Best Buy stores. Rumors from the top suggest that they are going to force them to leave as of tonight, completely negating their efforts thus far to "guarantee" their position.


RE: Ludicrous...
By h0kiez on 11/15/06, Rating: 0
RE: Ludicrous...
By DigitalFreak on 11/15/06, Rating: -1
RE: Ludicrous...
By h0kiez on 11/15/2006 12:48:10 PM , Rating: 3
Ebay. And don't worry, I'm strapped.


RE: Ludicrous...
By therealnickdanger on 11/15/2006 4:07:04 PM , Rating: 3
That's so awesome! You'll probably be able to buy a new car or put a healthy down payment on a house after this, eh? LOL, the lunacy of some people to pay 5x more for something they can buy a week later for retail is just beyond me.

You certainly won't be strapped for cash after this week! (pun intended, durr)


RE: Ludicrous...
By zombiexl on 11/16/2006 8:45:37 AM , Rating: 2
Doesn't help you if they shoot first.


RE: Ludicrous...
By othercents on 11/15/2006 11:26:18 AM , Rating: 2
The reason behind bundling is very simple. It costs most retailers more to get the system and stock it than the system sells for. The retailers make money when people buy games. My friend owns a retail store and makes about $10 per new console no matter what console it is, but he makes about 50% on every game that is sold which usually sells for $20 ore more.

Here is another thing about the legality of bundles. If it isn't legal for the retailers to bundle, then it isn't legal for the manufacturer to do it either. I talked to a lawyer and he said when you add the hard drive, wireless, memory card reader, and controller to the unit then you are actually forcing people to buy them and inflating the price to do it. The Wii is interesting because it comes with a game too.

Another way to side step a legal issue is to sell one unit unbundled and tell everyone that the unbundled stock is sold out and the only thing left is the bundle. This gives people an ability to buy it unbundled. Now you have the choice to wait for the unbundled stock, or buy a bundle.

Other


RE: Ludicrous...
By Lord Evermore on 11/16/2006 4:25:15 AM , Rating: 2
Retailers don't lose money on the system. Sony does. They set the price the retailers sell it for, but there is still a very slim profit on them after Sony takes their cut. If the overall portion of the costs of doing business which are attributed to the PS3 being stocked are greater than the profit margin, then it's the store's fault for being a poorly run business, and they shouldn't be selling items that they lose money on.


Sometimes I don't mind bundles
By Milliamp on 11/15/2006 8:57:25 AM , Rating: 2
As long as I have the freedom to select what I get with the bundle I don't mind them, what does suck though is where you are forced to buy things you don't want or need, or when you get a 10+ item bundle and the total cost is no less than the individual combined cost.

If they are that concerned about milking out another $10 or $20 of their margins on the first consoles, why don't they just skip the retailers and auction off the first few batches directly through eBay for $3,000 a pop.

A million or so consoles at $3,000 each should give them a good head start on recouping the loss they take on selling the rest of the consoles.





RE: Sometimes I don't mind bundles
By yacoub on 11/15/2006 9:17:53 AM , Rating: 2
Is it really freedom when you're forced to buy a quantity as high as eight games from the limited selection of launch titles, often few of which people are interested in?


RE: Sometimes I don't mind bundles
By Chadder007 on 11/15/2006 9:40:07 AM , Rating: 4
No one is FORCING you to buy it. You must just choose not to purchase from the company that is pulling this crap.


RE: Sometimes I don't mind bundles
By yacoub on 11/15/2006 11:03:27 AM , Rating: 2
wow, please learn to read the thread, not just one post.

He clearly stated: "As long as I have the freedom to select what I get with the bundle I don't mind them."

He is clearly talking about buying a bundle, and that is what I was replying to. How in the world did your post get rated up when it doesn't even make sense given the context of the post you are replying to??


RE: Sometimes I don't mind bundles
By yacoub on 11/15/2006 2:41:04 PM , Rating: 2
Again, my point is this: When deciding to buy a bundled system, he DOESN'T have "freedom" because he is forced to choose a large number from the small selection of launch titles, many of which are generally games no one wants to buy, let alone be forced to buy just to get the system.

He's wrong to call it freedom - it is anything but. That is my only point. Clearly your post is tangential to what I am saying. I guess off-topic posts get rated up. Whatever.


Score
By Devenish on 11/15/2006 10:05:52 AM , Rating: 4
This sounds low, but after thinking of this you could buy that $1800 TV and Ebay the PS3. The end result a free 40” Sony HD TV yours to keep. Happy Holidays.




RE: Score
By h0kiez on 11/15/2006 12:46:56 PM , Rating: 2
You calling me low?


RE: Score
By zombiexl on 11/16/2006 8:50:15 AM , Rating: 2
Maybe since you feel like you had to respond you think you're doing something wrong?


Tie-in ratio
By therealnickdanger on 11/15/2006 9:59:47 AM , Rating: 1
quote:
81,639 PlayStation 3s were sold, compared to 66,684 pieces of software, which created an abysmal tie-ratio of 0.82.

That is certainly poor, but what amazes me is that the Xbox360 managed to get ~0.91 during its Japan launch. While equally poor, I'm just a bit shocked that the PS3 couldn't manage a better tie-in ratio on its home turf. Is it a sign or are the launch titles really that crappy? A stat I would be curious to see is how many Blu-Ray DVDs were sold along with PS3s in addition to games... Technically, those can be regarded as attachment purchases as well. Given the ridiculous markup on most BR movies, I'm sure that cushions losses (for retailers).




RE: Tie-in ratio
By Lonyo on 11/15/2006 10:34:07 AM , Rating: 5
Buying for Ebay. If people buy for Ebay they don't want software, so they don't buy it.


What kind of title is this?
By Calin on 11/15/2006 10:05:46 AM , Rating: 3
"Retailers Resort to Expensive Bundles to Sell PS3, Wii"

The title should have been:
"Retailers Resort to PS3, Wii to Sell Expensive Bundles"




By therealnickdanger on 11/15/2006 10:31:20 AM , Rating: 2
LOL, I see your point. I think more appropriate would be:

"Retailers Resort to 'High-Margin' Bundles to Sell PS3, Wii"


Huh.
By Death To Humies on 11/15/2006 8:46:09 AM , Rating: 2
Jeeze, this reminds me of the bundling with Xbox 360 all over again. At any rate, this is why I will be waiting the rush to pass after December as not to be subject to this sort of thing.




RE: Huh.
By ajira99 on 11/15/2006 9:42:33 AM , Rating: 2
IMHO, this is much worse than the 360 bundles (with the exception of the Gamestop Premium bundle w/plasma TV). I got the Premium bundle from EBGames for about $720 shipped (it arrived the day after launch). It had everything I needed (2 wireless controllers w/charger, remote, memory card, headset) and included 4 of the best games available at that time. I didn't feel too bad about the price then and I have no regrets now. Asking $700 for a Wii bundle is a joke and I won't even get into the PS3. With all of this preorder nonsense, I don't mind waiting 1-2 yrs. down the road to get the PS3. I really can't understand all this fervor!?!


thoughts on pricing...
By yacoub on 11/15/2006 9:08:10 AM , Rating: 3
So considering we don't "pre-order" our gaming rigs either, this means that a real-world comparison for pricing is no longer the $499 or whatever the console itself would cost (plus one game to play), when comparing with the cost of a gaming computer and a game.

Now we're seeing pricing in bundles such that it REALLY DOES cost just as much to be a console gamer as a PC gamer, and the console gamer doesn't even get his display device included in that price - something that often costs an additional 50-100% on top of the cost of the bundle, considering a nice HDTV which is what this generation's consoles are designed for is easily $750-1500 for a decent one, if not more.

imho, people can claim inflation isn't going up all they want, but the real-world cost to maintain technical hobbies has certainly steadily increased (see the release price of GPUs going up and up as well as the consoles and their bundling practice).

At least on the PC side we see last-gen GPUs dropping quite a bit (7900GT, 7950GT, etc) which can run all the games just fine today.

Note this analysis focuses exclusively on pricing. It does not even take into account things like control schemes, modability of games and interfaces, etc.




I never buy from those retailers
By Araxen on 11/15/2006 9:42:52 AM , Rating: 3
I always end up buying from a place like Wal-Mart or Target that doesn't force those expensive combo deals on you. You end up paying for stuff you'll never use. I'd rather put that money into games or accessories I actually want.




12 games?
By ajfink on 11/15/2006 11:11:53 AM , Rating: 2
People honestly expect that there will be 12 good games (or 12 games that an individual would want to play) on the PS3 by Christmas? Most of them will end up traded in to Gamestop / EB Games (I know they're the same thing).

Whatever, if the demand is there for people to buy it that way, go for it.




It's time to play....
By DigitalFreak on 11/15/2006 11:33:36 AM , Rating: 2
another round of Rape the Consumer!




Free 40" LCD
By Ralph The Magician on 11/15/2006 12:04:21 PM , Rating: 2
Given the current price for PS3s on eBay, you'll probably be able to clear $2,300 for a PS3, so that 40" LCD bundle is actually pretty good. I might hit that up latere today.




Rich Kids
By TimberJon on 11/15/2006 1:23:40 PM , Rating: 2
You also have the whiney, daddy I have to have it kids, or teens.

Daddy is richer than anyone and doesnt feel the need to wait around in line to get one. He wont even delegate it to a lesser peon at work. Instead he tells them to find him one to buy online. And there I am selling a nice PS3 bundle for over $3000. The sucker will buy it because of convenience and his inability to grasp the concept of "cost".

So yea, like the other guy said, rape em good! Supply and demand baby.





By johnsonx on 11/15/2006 3:22:18 PM , Rating: 2
http://ads.ocregister.com/interactive-ads/ocr/imag...

The 20Gb unit with 8 games is $980, and the 60Gb with 8 games is $1080. Not quite so bad, if you can get one of course.

While I had no intention of getting in on this PS3 scalping frenzy, I now am a bit tempted to drive to my local Fry's early Friday morning to see if I can get one and then Ebay it.




Huh??
By dwalton on 11/15/2006 5:10:19 PM , Rating: 2
"The story also states that "pre-order terms are dictated by Sony to CompUSA,"......While Sony has said that it does not encourage nor support the act of bundling, surely it will help improve U.S. tie ratios with system sales."

How can you not support or encourage bundling if you are dictating pre-order terms for bundling?




Haha retailers
By gramboh on 11/15/2006 8:22:28 PM , Rating: 2
Can't really blame Sony for this one, it's the retailers, although the bundle with Sony only HDTVs is a bit odd.

Oh well, I'll sit back at laugh at the people who continue to be Sony fanboys and waste the savings they earned working at Gamestop to buy all this awful crap.

Why not just wait until the damn thing has adequate supply in 2-3 months? There aren't any compelling launch titles anyway.




"Resort to" in the title...
By Lord Evermore on 11/16/2006 4:31:07 AM , Rating: 2
...makes it sound like the retailers couldn't find any other way to get people to buy them. Though I suppose it could refer to needing to use bundles to insure that they manage to make a reasonable profit beyond the minimal one on the console itself, so they all don't just get sold with no games or accessories to people taking them to eBay (the assmunches). Or maybe just a way to make sure that fewer people even come in to buy one. Or maybe they're all just assholes who don't care if we can't afford it.




By VooDooAddict on 11/15/2006 8:50:38 PM , Rating: 1
Personally this burns me as I had planned on just buying the Wii, Zelda, component cables and some extra Wii-motes. The plan was to pull an all-nighter to get a non-pre-ordered Wii. Then head over to Gamestop to pickup all the accessories with my ludicrous store credit.

From both the perspective of retailers and consumers. I see this as a good thing.

This lessens the impact of the eBay effect and makes it so that customers who would spend absurd amounts to get the hardware in the opening days are getting more for their money. They could spend $700 on ebay for a Wii OR they could spend $700 for a Wii with a big bundle. This in the end has more money going to business machine that supplies us with new games.

Again ... think of yourself as a parent shopping for Christmas. You either spend $700 on eBay to get a Wii ... or you buy a bundle for $700 and have a load of small gifts to put under the tree. Bravo retailers.

My 2 cents on the HDTV bundle ... Better then a large forced game bundle. It will drastically improve the experience over a standard def TV. While for many of us Bluray isn't the big selling point ... some people are looking to make the jump to HD movies.




Best Buy?
By JazzMang on 11/15/2006 10:55:40 AM , Rating: 2
You might remember last year Best Buy got in trouble for doing that with the 360.
Their company policy has changed and they are NOT allowed to do this under ANY circumstances, so I think your best bet is BB.

Just FYI.




Moderated
By Albahad on 11/15/06, Rating: -1
Moderated
By Albahad on 11/15/06, Rating: -1
Take em to the cleaners!
By Beenthere on 11/15/06, Rating: -1
"It seems as though my state-funded math degree has failed me. Let the lashings commence." -- DailyTech Editor-in-Chief Kristopher Kubicki











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