Depends how you treat your stuff.  Never regretted not having it...  By the time something breaks, half the time I wouldn't remember where I purchased it from anyways.  lol

No matter how you treat your stuff, stuff breaks. I treat my things like they were made of some kind of precious plastic and things still break over time (I have one those uber Dyson vacuums and it has had to go in for repairs twice actually). Luckily, I know better and my shit is covered.

Sure, but stuff breaks a LOT more often when you treat it badly. I, too, used to work for Geek Squad, and I've seen the kinds of conditions these units are in when they "just stopped working."

BBY wouldn't sell protection plans if they didn't stand to make money on them. The thing is, it's the same as any other kind of insurance. Car insurance, home insurance, health insurance, all these companies would go out of business if they weren't more likely to "win" in the long run. The point of insurance is to protect yourself from large, unexpected repair costs.

Put it this way: Say BBY sells you a $50 product replacement plan (PRP) to protect your 360 for three years.

If you bought 1000 360s, it would cost you $50,000 to buy a PRP on all of them. Say the likelihood of failure between the end of the MFG warranty and the end of the PRP is 20% (fairly high), and the average cost of repair is $200 (I think I've heard $150 quoted here before). So 200 units need to be repaired at a cost of $200 each, for a total repair bill of $40,000. This is less than $50,000, so you lose, and BBY wins.

The problem is, customers don't buy 1000 360s, they buy one 360. If their unit fails, they're out 200 bucks, and that's a lot more than the cost of one PRP. If they buy a PRP and their unit doesn't fail, they're out 50 bucks. Mathematically, it makes sense for them not to buy the PRP, but a lot of people would rather take their chances on 50 bucks than 200 bucks. That's why a PRP makes sense.

BTW, what store are you from? I was the Senior CIA at 788.

This thread stands to piss off a lot of PS360 fans because it deals heavily in reality.

My GF works at Gamestop at she says the Wii shipments will actually stay on the shelf for 1-2 days but they still get them in weekly.

You insure your house and your car because you cannot afford to gamble with them, even if the odds are skewed in your favor.

The Best Buy numbers will be skewed much worse than above. While 20% may be a legitimate failure rate for the 360, most electronics are closer to 2%. Plus, you have to factor out units that fail during the manufacturers warranty -- which is usually the majority of failed electronics, the deal looks a hell of a lot worse. If someone were to ask me if I believed Best Buy had more than a 50% profit margin on its insurance, I'd say 'absolutely'.

You don't have to buy 1000 xobxes for self insurance to make sense. You can buy a variety of electronics. Consider the following:

Joe likes electronics and buys 10 pieces of electronics each year averaging $300 each over a 5 year period. Joe is unfortunate and has 5x the normal failure rate: 10% over 3 years. 5 of Joe's 50 items fail during the first 3 years (covered by the best buy warranty). 3 of the failures are within the manufacturers' warranty period, so those are free to get fixed from the manufacturer. Of the other two items, Joe can have one repaired for 1/4th price, and the other is aged electronics and now costs 1/2 as much. So Joe pays $275 in self insurance for your 5 failures. Let's assume the Best Buy warranties are 15% of the cost of the original hardware averaging $45 each. For 50 items, you would have spent $2,250 on Best Buy insurance. It would have cost you almost 10 times as much to buy the Best Buy warranties as it would have to pay to get stuff replaced/repaired.

Warranties are an extremely high margin item. People don't price match on warranties. They rarely plan for them. You never hear people say, "go to Circuit City because their warranty is cheaper." Warranties are like cables: you spend $2,000 on a stereo system and the sales person is telling you that you need an $80 cable. If you don't know anything about cables, you'll probably buy them. You didn't price match cables because you didn't think about them, or because you assumed they were a negligable cost. If you knew the truth, you'd get cable elsewhere...

That $80 cable is literally worth less than $5. I guarantee that Best Buy buys its generic 6' HDMI cables with gold plated leads for less than $3, and then they mark them up to $30 or $40 or even $100. The in-store warranties are the same -- an in-store warranty on the Wii would probably cost Best Buy less than $2.00 on average. And yet Best Buy charges something like $25.00.

Where are you getting this 2% figure?  I've seen the P&L sheets, and that's way low.

You're right that for most electronics, the margin is going to be higher than the scenario I depicted above.  I intentionally chose a high failure rate to show that BBY still wins in that scenario.  But the margin isn't "10 times your expected cost" either.  You're looking for something closer to 2x your expected repair cost, on average.  Some products will be higher, others will be lower, depending on the reliability of the product, the cost to repair the product, and the price BBY thinks people will pay for a service or replacement plan.

You're right about not having to buy 1000 Xboxes to be better off skipping the plans, though.  For most people, it makes sense to skip the plan on cheap electronics, and buy the plan on expensive electronics (if the repair costs for those electronics are high).  Car insurance and health insurance make sense because cars are worth tens of thousands, and hospital bills can be even higher.  Similarly, if I were to buy a huge $5,000 plasma, it would probably make more sense for me to get the service plan than if I were buying 10 pieces of electronics that cost $500 each.  It all depends on how expensive the service plan is compared to how much is at risk if the product fails.

You're right about cables, too.  A USB cable costs less than a dollar.  A gold-plated USB cable costs less than 3 dollars.  BBY's price is about $25 for a regular cable (if you can even find one -- our store stopped carrying the cheaper ones) up to $35-40 for a gold-plated cable.

I've actually never disagreed that anyone that sells a warranty makes money off the warranty since they're selling essentially air and every now and then a replacement, but it's still nice to cover your ass since electronics break all the time whether or not you take extra good care of them.

Back from work today, very little sales data to report (the only systems I sold were DS's, two of them).

A young boy came in very excited because he'd just gotten a PS3. He decided to purchase Motorstorm. His friend (or perhaps cousin) next to him had a Wii: the young PS3 owner said he might get one sometime, but he's confused by the control scheme. This mirrors a post I made earlier in this thread, although in this case, the boy really seemed more just uncomfortable with the newness of the Wii remote, and not genuinely dissatisfied with it.

One thing I've been keeping track of for my last 4 shifts are PS3/360 use: we have a PS3/360 stations set up with demos and such, as many stores do. We do not have Wii system set up -- just a television that shows Wii games being played. I've counted (as best I can) how many people play which system; I found that 26 people picked up the Xbox360 controller, while 20 people picked up the PS3 controller. I will continue tracking this as time goes on. Obviously it's not perfect science, as I'm sure I miss the occasional customer, but that really shouldn't detract from either system particularly; logically I should miss an equal amount of customers using both systems, over time.

I can confirm now that Ratatouille for the PS3 will not be carried in Toys R Us stores: we have it available for the PS2, PSP, Xbox360, Gamecube, DS, Game Boy Advance, and Wii. I cannot say with any certainty yet if this means the game does not exist on the PS3 or if we're simply not carrying it. I also noticed that the Ratatouille game is made by Disney.

And as another point, I want to emphasize -- or reemphasize, again, for another time -- that my sales figures are not intended to reflect the figures of the NPD. There are several reasons why they deviate: first, we're largely a store for kids. Twenty five year olds don't come in to our store to buy video game systems (we do get some adults who buy the PS3/360/Wii for themselves, but not many teenagers/early twenties people). Second, we simply get more Wiis than most other companies: having talked to several people at Gamestop/EB, they seemed to get 10ish a week, while we  would get 15-25. That's an important difference, too. 

PS: The platforms for Ratatouille: 360, PS3, Wii, Xbox, GC, PS2, PC, GBA, DS, PSP.

I believe Shrek 3 was the one that didn't even have a PS3 version.

It didn't. And yes, our own upcoming title list had PS3 Ratatouille on it... and the game didn't show up. Which is why I'm not sure if we simply decided late that we weren't going to carry it, or the game was nixed altogether.