Even at $600 the Wii is a must-have gift this season

November 30, 2007: 1:58 PM ET

By Yi-Wyn Yen

If you can't track down a Nintendo Wii this holiday season, you're not alone. Nintendo has not been able to keep up with the demand for its mega-hit console. Now thousands of desperate consumers who can't find the Wii on store shelves have turned to web outlets like Amazon (AMZN) and eBay (EBAY), where they're paying a premium to get one.

"We're seeing an unprecedented demand for a console," says Billy Pidgeon, a gaming analyst with IDC Research. "This is the killer gift this season. And if you're lucky enough to get a Wii with Guitar Hero III, that would be the ultimate."

The Wii's popularity and shortage has not only made it harder to find, but also more expensive to buy than the Xbox 360 or PlayStation 3. Since Black Friday, almost 5,000 Wiis were sold at an average price of $420.50 on eBay and some with extra games and controllers have been purchased for more than $600. On Amazon, new Wiis are starting at $490 plus shipping. The console retails for $250. Both Microsoft (MSFT) and Sony (SNE) dropped prices for their consoles to boost sales this year. Microsoft lowered its entry-level 360 by $50 to $349 while the PS3's low-end line retails for $399.

"Price alone won't move hardware," says John Taylor of Arcadia Research. "This isn't about price or what's available, but what people are willing to play."

The Wii's fun factor has made it a hit among the mass market compared to its more technologically-advanced rivals. The Wii uses a controller that requires players to simulate swings and punches to play video games. "Clearly, consumers place a higher value on accessible, fun games such as Wii Sports or Carnival than on high-definition graphics and leading-edge processing power," says Lazard Capital analyst Colin Sebastian.

Though Nintendo increased production by 80 percent since its November 2006 launch, executives warned in October to expect a holiday shortage. Last week the company sold 350,000 Wiis, which gave Nintendo its highest one-week U.S. sales total since the console was released. Nintendo of America president Reggie Fils-Aime said that the company would not be able to keep up with demand until "early next year."

"The challenge is in demand, not supply," Fils-Aime told Fortune in October. "We planned optimistically for the launch, but no one could have foreseen how much more popular Wii would be than any other system in memory."

Taylor says the best way to find a Wii without paying above retail is to contact store managers at gaming shops like GameStop (GME) or box retailers like Wal-Mart (WMT) and Best Buy (BBY) early in the week. "You want to call on a Tuesday or Wednesday and find out when the new Wiis are coming in," he says. "Usually new games arrive on the trucks Monday night or Tuesday. If you wait to the weekend, you'll find those shelves empty."

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