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John Carmack says Sony and Microsoft "should auction their own console stock" to cut out scalpers

VysePSU

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Id Software co-founder John Carmack has suggested that console and GPU manufacturers auction off their own products, in an effort to cut out scalpers.

A global shortage of semiconductors has seen many consumer electronics firms struggle to meet demand during the pandemic, and this has caused high-value items such as PS5, Xbox Series X/S and Nvidia RTX graphics cards to be targeted by resellers using bot software to snap them up.

Since PS5 and Xbox Series X/S’s November launches, scalpers in the US are estimated to have made some $58 million in profits by reselling the sought-after consoles on eBay and StockX at huge markups.

On Thursday, Carmack said he believed that Sony, Microsoft and Nvidia should cut out the intermediaries and auction off the items themselves.

While this strategy would almost certainly provoke anger from consumers, the Doom programmer said he believed that cutting out those targeting the items for profits would ultimately pay off in the long term.

“Given shortages and speculators on things like 3090 GPUs and new consoles, it seems like we really would be better off with a transparent auction system directly from the manufacturers and a more efficient market,” he wrote.

“The world of sales channels prevented that in the past, but we may be moving past that for a lot of products. There would be much indignation at reported prices out of the gate, but removing intermediaries should net out better for consumers in the end.”

In a separate post, Carmack conceded that historical evidence showed that low availability was likely valuable to the PlayStation and Xbox brands in terms of driving consumer demand, and that pricing their own products higher could damage that.

“That is probably the current reasoning, with decades of evidence to back it up, but it is at least conceivable that things actually are a bit different now than when a lot of the marketing lore was laid down,” he wrote.

With next-gen consoles still widely sold out globally, and most restocks selling out in minutes, re-seller groups have faced criticism for their role in exacerbating the shortages.

In the UK, the government’s minister for digital and culture, Caroline Dinenage, recently confirmed that officials were even discussing a proposed bill that would make console scalping illegal.

Head of Xbox Phil Spencer said in November that he believed current console pre-order models were outdated and should be improved.

In a bid to make the pre-order process less frustrating, Spencer said Microsoft had discussed giving customers the chance to put a deposit down and reserve a console with a guaranteed delivery date.

“We’ve had real discussions internally about, should I be able to reserve my slot? I’ll put some money down, I know my machine’s getting built January 20th, and I’ll get it on February 1st,” he said. “We have customers that would do that today.”

He added: “We want people to feel like there’s some consoles to go buy, and it’s not just the day where everybody gets to go pick up their console.

“I don’t know if that’s the right decision in today’s world. That’s very old world thinking, people are going to go line up outside of a store, kind of last decade thinking. I think we should challenge ourselves on that. Is that really the supply chain through the consumer that we’re talking about, that is a reality? We talked to our retail partners about this as well.”

 

Reallink

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Or they could just sell directly and maintain a database of shipping addresses and billing addresses, require that billing/shipping addresses match, hard limit of 1 unit per address, and disallow shipping to businesses or P.O. boxes. There are only so many friends and relatives who would be willing to lend their credit cards and home addresses to their deadbeat nephews and grandkids. There is no reason to auction units for price premiums, they'd be better off just raising the MSRP to $800-$1000 if they wanted to do that.
 
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Enjay

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They could do that or they could do nothing and still make money hand over fist. Easy and obvious choice there.

edit: It took a second read for me but he's actually saying they should cut out the scalpers' $3,000,000 or however much of profit buy auctioning their stock so that even if a large group of scalpers get most of the stock (which they have easily been doing now) their profit margins wouldn't be anywhere near as big.

the average consumer still gets fucked but at least it isn't as profitable for the fuckers.
 
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Or they could just sell directly and maintain a database of shipping addresses and billing addresses, require that billing/shipping addresses match, hard limit of 1 unit per address, and disallow shipping to businesses or P.O. boxes. There are only so many friends and relatives who would be willing to lend their credit cards and home addresses to their deadbeat nephews and grandkids.

I mean, yeah, there has to be a way to avoid all this shit in the future that doesn't require too much "thinking outside the box."
 

RJMacready73

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It's beyond a fucking joke in the UK, you haven't a hope in hell of snagging one without hitting refresh at fuck knows o'clock... Who does that? I sure a shit can't be arsed with it, i don't see why Amazon, Game, Currys, Argos etc don't simply let you place a fucking order for one and then ship it when it becomes available, limit it to one order per address per credit card and that's you done until the supply sorts itself out it's a fucking no brainer ffs, first come first served
 

D.Final

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It's beyond a fucking joke in the UK, you haven't a hope in hell of snagging one without hitting refresh at fuck knows o'clock... Who does that? I sure a shit can't be arsed with it, i don't see why Amazon, Game, Currys, Argos etc don't simply let you place a fucking order for one and then ship it when it becomes available, limit it to one order per address per credit card and that's you done until the supply sorts itself out it's a fucking no brainer ffs, first come first served
True
 
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kyliethicc

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I fucking own Knack 2 cmon Cerny put me at the front of the line. I got the cash ready bro

 
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Goro Majima

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Can someone explain Carmack's position like I'm 5 years old? I don't understand his point at all. Miners would still buy them at astronomical prices. Simply their break even point gets longer.

Well it’s a way to ultimately charge everyone more and eliminate scalpers. Instead right now it’s whoever can buy the product at below market value but still at MSRP the fastest with the intention of either keeping it or flipping it.

If it’s anything like ebay, then the prices would be weirdly stable but there would thousands and thousands of units going for whatever price. It’d basically be a way for manufacturers to reap the benefit of the true market value of the console while ensuring a slightly more consistent supply by pricing some people out - but maybe not by $500 above MSRP.

It’s less likely that people would then take those units and resell them because they probably couldn’t get as much profit off one unit. So combine the auction method with “one per credit card” or whatever then it becomes a lot more challenging.
 
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Lanrutcon

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Can someone explain Carmack's position like I'm 5 years old? I don't understand his point at all. Miners would still buy them at astronomical prices. Simply their break even point gets longer.

I think that if, for example, Sony sells them to the consumer themselves they have actual visibility and control over the sales. As opposed to selling a bulk amount to some middleman and not knowing if those are going to be sold without restrictions or whatever. It's about control and transparency.
 
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TransTrender

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Well it’s a way to ultimately charge everyone more and eliminate scalpers. Instead right now it’s whoever can buy the product at below market value but still at MSRP the fastest with the intention of either keeping it or flipping it.

If it’s anything like ebay, then the prices would be weirdly stable but there would thousands and thousands of units going for whatever price. It’d basically be a way for manufacturers to reap the benefit of the true market value of the console while ensuring a slightly more consistent supply by pricing some people out - but maybe not by $500 above MSRP.

It’s less likely that people would then take those units and resell them because they probably couldn’t get as much profit off one unit. So combine the auction method with “one per credit card” or whatever then it becomes a lot more challenging.
Yeah this still sounds terrible for your average human being and if you're doing my mental gymnastics then it normalizes paying waaay over MSRP for stuff. Surely this will be exploited and your average human will always pay more in the end.
 

TransTrender

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I think that if, for example, Sony sells them to the consumer themselves they have actual visibility and control over the sales. As opposed to selling a bulk amount to some middleman and not knowing if those are going to be sold without restrictions or whatever. It's about control and transparency.
I didn't read it that way.
People will still scalp them and no product will enter normal sales channels for normal humans.
 
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Sejan

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It would be simpler just to have Sony and MS allow you to back order consoles with your your PS or MS account. Put some priority system in place to ensure that only systems can only be ordered once per household/account and only accounts that meet some arbitrary standard can order to keep people from making endless accounts (achieve a trophy/achievement, the account has been logged into a system in the past, etc.)
 

Lanrutcon

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I didn't read it that way.
People will still scalp them and no product will enter normal sales channels for normal humans.
I don't know about that. Current system sure isn't working, and Carmack is generally considered a pretty smart lifeform/biological supercomputer amongst the hyperintelligent neo-humans that were genetically seeded as part of the coming alien invasion. I'm not going to rule out his suggestion, given that he might be our new overlord one day.
 
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Virt McPolygon

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Carmack has been at Facebook long enough to have some screws loosen, resulting in him appearing on Joe Rogan's show, and now suggesting this console auction idea.
 

HoodWinked

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it's far too pragmatic, it would never work.

right now everyone hates the scalpers and sony/microsoft get some of the heat but a far less amount.
if they auctioned the console all the hate would suddenly be laid on sony and microsoft.

it would kill the scalper though, because the auctioned consoles would always increase to match whatever the scalpers would sell at. But the scalpers would be priced out because they also need to pay seller fees + acquisition costs.
 

baphomet

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it would kill the scalper though, because the auctioned consoles would always increase to match whatever the scalpers would sell at. But the scalpers would be priced out because they also need to pay seller fees + acquisition costs.
no, the scalpers will push the price of the auctions up, buying them all well above retail, only to turn around and sell them at an even higher price when they're no longer available.

supply is the only thing that is going to end the reselling market.
 
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Fredrik

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It's beyond a fucking joke in the UK, you haven't a hope in hell of snagging one without hitting refresh at fuck knows o'clock... Who does that? I sure a shit can't be arsed with it, i don't see why Amazon, Game, Currys, Argos etc don't simply let you place a fucking order for one and then ship it when it becomes available, limit it to one order per address per credit card and that's you done until the supply sorts itself out it's a fucking no brainer ffs, first come first served
Yeah it’s the same in Sweden, someone said even if you’re on a list it isn’t sure you’ll even get one this year.

It’s bullshit! And I’ve gone full on cranky mode now. I’m skipping it until they make a bigger SSD or Pro revision! Hopefully they have fixed this shittiness by then so I’ll try getting a launch unit then instead. But with my luck I’ll probably miss that as well and miss the whole gen!

I haven’t been able to buy a new graphics card either but I’m at least on a somewhat positive list there with an estimated two months waiting. I’ve considered buying a whole new PC instead to get the graphics card I want... It’s madness but that seems to be easier. If the estimated delivery dates are correct that is...
Oh well, a 1080ti still works except for raytracing, and I’m using Geforce Now for RT in the meantime for controller games.


It would be simpler just to have Sony and MS allow you to back order consoles with your your PS or MS account. Put some priority system in place to ensure that only systems can only be ordered once per household/account and only accounts that meet some arbitrary standard can order to keep people from making endless accounts (achieve a trophy/achievement, the account has been logged into a system in the past, etc.)
That’s a good idea! Sounds like buying through the Apple Store app

Carmack’s auction idea sucks though. I don’t have the time or energy to be that active. I just want to go to an online store and calmly place an order and then I expect the thing to arrive when it’s my turn, hopefully within a month or less.
 

NinjaBoiX

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It's beyond a fucking joke in the UK, you haven't a hope in hell of snagging one without hitting refresh at fuck knows o'clock... Who does that? I sure a shit can't be arsed with it, i don't see why Amazon, Game, Currys, Argos etc don't simply let you place a fucking order for one and then ship it when it becomes available, limit it to one order per address per credit card and that's you done until the supply sorts itself out it's a fucking no brainer ffs, first come first served
They want you back on the site every time stock becomes available to keep you engaged.
 

HoodWinked

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no, the scalpers will push the price of the auctions up, buying them all well above retail, only to turn around and sell them at an even higher price when they're no longer available.

supply is the only thing that is going to end the reselling market.
ya there's alot of small things that would affect it.

if they auction these consoles at intervals so that they continuously sell there wouldn't be a good time for scalpers to create a spike in price. if the consoles auctioned at $1000. Scalpers would need to sell them for at least $1200 for a profit. that is too much of a gap that they'd buy from them.

if they auction the consoles in waves then ya i guess they could create the situation you've described but at this point the price is so high for the resellers that this also means there are fewer and fewer buyers making it even more difficult to offload the scalped consoles.
 

Fredrik

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They really should limit purchases of the consoles to one per customer.
They’re already doing that, in Sweden at least, but I think scalper bots use different addresses from all people in the scalper groups or something. It’s clear that it’s not working at least.
 
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dave_d

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Can someone explain Carmack's position like I'm 5 years old? I don't understand his point at all. Miners would still buy them at astronomical prices. Simply their break even point gets longer.
Pretty much use an auction system to effectively raise the price to get units to people more willing to pay a higher price. Then as units get sold the auction system would slowly reduce prices over time. This is in contrast with the current system where Sony, Microsoft, Nvidia, and AMD try to guess an appropriate price by setting an MSRP and then reducing it to a lower MSRP. (IE using the market to set the real price.)
 
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It makes me laugh, its like people never looked to use e-Bay to mark up their price or there has never been console supply issues before. I remember in the run up to Christmas 2005 360's selling on e-Bay for £1,600 and that's in 2005 because guess what? They were supply issues. We just have to wait until AMD can sort their issues out
 

sono

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"A global shortage of semiconductors has seen many consumer electronics firms struggle to meet demand during the pandemic, and this has caused high-value items such as PS5, Xbox Series X/S and Nvidia RTX graphics cards to be targeted by resellers using bot software to snap them up."

"John Carmack says Sony and Microsoft "should auction their own console stock" to cut out scalpers"

No John, you are missing the big picture

Sony and Microsoft should give bots for free to everyone
 

Vae_Victis

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All that would do is cut out some scalpers and make the money difference directly to the manufacturer. It would neither make the products more easily available, or make them cheaper on average. In fact, there is a decent chance that scalpers would still try to buy from the auctions to resell at an inflated price through different channels (because most people would simply not be bothered to enter and follow week-long bidding war for a console, regardless of the money involved), making the final average price for the user even higher than now (you'd be effectively paying for someone to follow the auction in your place).

But apart from that, how does that work with retailers? Sony and Microsoft probably don't have the infrastructure to sell efficiently straight to customers all over the world, and even if they did, cutting out stores to sell to customers millions of items shiped in large boxes would require more expenses there in terms of storehouses, logistics and personnel.

All in all, this sounds like an impractical idea to make Nvidia, Sony and Microsoft more money at the cost of "istitutionalizing" the scalping issue, and turning them into the scalpers. It would be a greedy, short-sighted solution to the "problem" of companies not being able to squeeze out every last penny customers might be willing to pay for a product; but for customers, it would fix absolutely nothing and possibly make things even worse in the long run.
 
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BigBooper

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Why do people think they want to solve it? If the retailers wanted to stop scalping, they would. If the manufacturers wanted to stop scalping, they could either sell direct or require the retailers to have a queue that the manufacturer would set up for them.
 

Enjay

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Why do people think they want to solve it? If the retailers wanted to stop scalping, they would. If the manufacturers wanted to stop scalping, they could either sell direct or require the retailers to have a queue that the manufacturer would set up for them.
It took a second read for me but he's actually saying they should cut out the scalpers' $3,000,000 of profit buy auctioning their stock so that even if a large group of scalpers get most of the stock (which they have easily been doing now) their profit margins wouldn't be anywhere near as big.
 

Edokataki

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I don't understand why someone would think that either Sony or Microsoft would care about the situation, it's not like scalpers buy the consoles and destroy them to make everyone angry, they just resell them at a bigger price and people buy them. So in the end of the day the consoles end up in the customer hands. The only good solution would be if you could buy these consoles like you buy new cars ( put some money upfront and they give you a date when you will receive the product and then you can pick up the product if you disclose the payment). Simple and easy and you won't get frustrated why the store page does not load or why you can't press buy or waste hours trying and in the end you see the site homepage message that the console is sold out for now.
 

BlitzerRadic

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Carmack is a smart guy, but obviously doesn't understand how scalping works. His idea would only decrease the amount of consoles sold to consumers and raise the resell market cost even higher.

No, Carmack is right. An auction exposes the true market price. A scalper can't win an auction and expect to flip it at higher price higher than what the market is willing to pay.
 

Alcibiades

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I think the best strategy would be to temporarily allow/encourage retailers to do forced bundles anywhere from $500-$1000 of console + games and accessories, with nothing at greater cost than combined MSRP.

Or something like minimum 3 games purchase + 2 accessories.
 
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UnNamed

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Someone has to explain to me how the programs scalpers are using work.

Because in theory you could use a system 1item/1credit card because normal people have just one card. So there is trick to use multiple cards, right?
 
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hemo memo

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Sony and Microsoft should force retailers to a console per customer and a better system to detect bots.
 

michaelius

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Can someone explain Carmack's position like I'm 5 years old? I don't understand his point at all. Miners would still buy them at astronomical prices. Simply their break even point gets longer.
Fuck poor people pretty much. At least now if you have bit of luck you can buy one