PlayStation shortage fuels 'gray market' imports

Demand for the PlayStation Portable creates a thriving underground market, with devices selling for more than triple list price.

Culture
LONDON--Gadget lust is in full bloom at the electronic retailers on London's Tottenham Court Road, where "gray market" Japanese imports of Sony's new PlayStation Portable bring in more than three times the official price.

"We sell plenty of these--usually 10 or 20 a weekend," said a salesman at MBA Technologies, a shop in London's consumer electronics retail district, as he reached under the counter for one of the sleek portable gaming devices that the store is selling for $577 (300 pounds).

Sony has been churning out millions of PSPs--a multimedia device that the company hopes will be a breakthrough hit on par with Apple Computer's iPod--but has been unable to keep up with demand. In addition to games, the PSP plays movies and digital music files and also displays photos.

Earlier this week, Sony was forced to push back its European launch date by several months to ensure there are enough units for the U.S. launch next week.

The staggered global release of the PSP has created a thriving underground market for the devices.

Retailers like MBA, which receive their PSPs from Asian wholesalers, are not condoned by Sony but are not illegal either. Nevertheless, the shop sells its PSPs from under the counter, available only if customers request them. The paperback book-sized device is encased in a Sony box covered in Japanese text.

Sony Computer Entertainment Europe, the division responsible for PlayStations in the region, declined to comment.

The PSP went on sale in Japan in December, retailing for $190 (19,800 yen), and supply is still tight. On opening day, gamers were limited to buying one PSP each and recruited homeless people to stand in queues, according to press reports.

Only one store only displays a PSP on Tottenham Court Road in central London, where there are dozens of electronics stores scattered amid shops selling designer stationary and chic folding chairs. The second-hand retailer Electronics Exchange said it has sold about a dozen in the last two weeks at $576 (300 pounds) each.

When the PSP first came out in Japan, importers scrambled to get their hands on units which they resold in the United States for $500 or more--prices that dedicated gamers were all too happy to pay.

But as the U.S. launch approaches, prices have fallen dramatically, a trend that will probably take place in Europe as well.

According to a page on Amazon.co.uk, the device is due to be released in Britain on June 24 with a price of 179.99 pounds. Sony has said it will sell the devices in America for $249 as part of a value pack that includes a copy of the movie "Spider-Man 2."

"The market perceives, and probably rightfully, that there is going to be product available," said Mark Argento, a games analyst at ThinkEquity Partners.

One U.S. importer, National Console Support, started the PSP Value Pack at more than $510 but has dropped it twice to $380.

Story Copyright © 2005 Reuters Limited. All rights reserved.

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