Okami Haundo
Member
I wish a take like this could be the first post for once, rather than just silly jokes. You nailed it.
What do companies (specifically Nintendo) gain from limited stock?
- Thread starter Avallon
- Start date
I wish a take like this could be the first post for once, rather than just silly jokes. You nailed it.
first post nails it.
manufactured supply constraints make zero financial sense and have never had a lick of proof to show that they happen.
Mindshare among potential consumers that probably wouldn't have considered a purchase otherwise if not for said demand.
Jack The Nipper
Banned
If you are a company that isn't "Nintendo" and you are selling out... you can get more out there in a timely manner and will try your best to do it. Sort of the opposite that Nintendo was doing. Obviousy the interest was well known in time to make more, they didn't want to do it cause of Switch and cause they knew what they were doing. They have been in tune with doing things to make things sell the best they can
holding off on switch presentation was just one of many and while many cried here it was an obvious choice. news gets lost by most in a short period of time. They could have made quite a bit of money on Classic but they want the whole pie on switch, not a small slice.
Fantastapotamus
Wrong about commas, wrong about everything
It's nonsense. The regular consumer, meaning people who usually don't care about playing Zelda on Day 1, is much more likely to get annoyed when it's impossible to get something instead of falling into some frenzy. The more time people have to think about a purchase the higher the risk that they'll change their minds.
That's the basics for production, you have to open certain production lines and produce a certain amount a day. For a spike in demand such as a launch you'll need to produce in advance. After the launch hype died you'd want to produce as many units as you can sell though. Otherwise you're stuck with overstock which costs a lot of money.
Opening a production line is also expensive so you can't just open them before launch and close them down after that. Most production machines have a cost between $50,000 and $500,000 and you need lots of different types of machines. Not to mention producing a new machine takes time too.
There's no such thing as artificial demand, the loss of goodwill costs are larger than the extra sales it would bring in.
Opening a production line is also expensive so you can't just open them before launch and close them down after that. Most production machines have a cost between $50,000 and $500,000 and you need lots of different types of machines. Not to mention producing a new machine takes time too.
There's no such thing as artificial demand, the loss of goodwill costs are larger than the extra sales it would bring in.
Interfectum
Member
Pretty much this.
Jack The Nipper
Banned
That is what you think and I don't agree. People may and do get annoyed but the majority of buyers will also forget their annoyance in due time. I think the presence of being sold out is going to out weigh your argument of annoyance all day, every day.
How often do people get mad at something then end up getting it anyways, I swear I have heard more frustration with apple in the last 6 years than any other phone company, how is that working out for them?
Giving in to what others is talking about and having is a lot easier than saying hell no, I remember I couldn't get one of those classic five months ago.
That is the whole basis of buying, how many have it and how many are talking/seeing it. That is the point of them building demand and talk.
Polygonal_Sprite
Member
The most sensible post in the thread.
James Scott
Banned
Didn't Nintendo make like 10M Wii U's in its first year or something crazy like that?
Also they're not always doing it on purpose. It had the biggest debute for a Nintendo system in Europe, Australia and the Americas. Should they have produced much more than than in March?
Also they're not always doing it on purpose. It had the biggest debute for a Nintendo system in Europe, Australia and the Americas. Should they have produced much more than than in March?
Booker Dewitt
Member
To avoid becoming another THQ.
MoogleMan
Member
First post nails it again.
Nintendo gains nothing from "limiting supply" and creating "artificial demand" (newsflash: they don't). Those insanely high resale prices don't net nintendo any more profit over items sold at msrp.
Production simply can't keep up with demand.
Look at the google pixel.
stock price for shares that is already sold and exchanged has no impact on Nintendo's bottom line. It only affects the investors. I suppose happy investors would make those annual meetings a bit more tolerable.
Skittzo0413
Member
Didn't we just see people in the threads about the Switch selling faster than any console/any Nintendo console in certain regions claim that it's because Nintendo nailed it this time in terms of production and supply? Rather than any increased demand for the product? Since it sold faster than the PS4 in some regions, some people merely chalk that up to Sony providing limited stock and Nintendo not doing so in this case.
Basically, the artificial demand argument (specifically for modern Nintendo) is completely a myth and appears to be ignored when people want to downplay success.
As for Amiibo, like others have said many of these Amiibo were sitting on shelves doing nothing for months or even years, and it takes time for a manufacturer to respond to an uptick in demand for an existing product.
Basically, the artificial demand argument (specifically for modern Nintendo) is completely a myth and appears to be ignored when people want to downplay success.
As for Amiibo, like others have said many of these Amiibo were sitting on shelves doing nothing for months or even years, and it takes time for a manufacturer to respond to an uptick in demand for an existing product.
Jeff Gerstmann has a little anecdote about artificial scarcity where he told a person at Nintendo "is great that you're seelling out and out of stock" and he said the person replied with "but imagine how much more we could be selling if were had the stock".
So while it seems good, it would be better for a company to not have these issues because they could be losing out on sales.
I will say my memory on the Gerstmann story is foggy, he told it on the bombcast where he had just played the switch at the preview event if anyone wants to go check it out and correct me.
So while it seems good, it would be better for a company to not have these issues because they could be losing out on sales.
I will say my memory on the Gerstmann story is foggy, he told it on the bombcast where he had just played the switch at the preview event if anyone wants to go check it out and correct me.
outunderthestars
Banned
This.
Go look at Amiibo sections. The demand for them had dried up, and then the success of BotW led to a surge in demand for the old figures.
As for the Switch, they are manufacturing as much they can. These items have small margins so bringing on additional manufacturing or moving to air freight simply is not feasible for products like these.
Though in this particular case, is just current hype.
-The 30th Anniversary amiibo were relessed in December...and were sitting in stores since, with not much movement.
-Smash amiibo were always a mix, with both Links been more common, but Zelda, Sheik and Gannondorf been a bit less common. But all are over 2 years old.
-Wolf was released individually more recently. Is part of a bundle that was still available after a year.
So is hard to gauge demand when the product is sitting there, then bought because of one game. And is not like they have pilrs of them sitting and waiting to be sent to retailers.
-The 30th Anniversary amiibo were relessed in December...and were sitting in stores since, with not much movement.
-Smash amiibo were always a mix, with both Links been more common, but Zelda, Sheik and Gannondorf been a bit less common. But all are over 2 years old.
-Wolf was released individually more recently. Is part of a bundle that was still available after a year.
So is hard to gauge demand when the product is sitting there, then bought because of one game. And is not like they have pilrs of them sitting and waiting to be sent to retailers.
but again, there is zero proof of this. we CAN make a few logical assumptions about amiibos
1) all amiibos are not equal. Mario will certainly sell more units than Shulk
2) all amiibos of the SAME CHARACTER are not the same. one would assume OoT Link would be more popular than TP Link
3) The worst case possible for toy manufacturers is to have a ridiculous amount of stock gathering dust on store shelves.
4) We've already seen (3) happen with Animal Crossing amiibos. Which one would have to believe Nintendo did not over manufacture compared to other amiibos.
So I think it's safe to say that Nintendo does err on the cautious side of amiibo manufacturing. This is further compounded by the difficulties of slotting for production in China if an amiibo turns out to be incredibly popular.
Regarding the Zelda amiibos.. I see people citing the new ones were "under manufactured", yet when I was at Target on launch...... they had a shit load of these things. At LEAST 30+ of each one (including Wolf Link). And now all are gone.
So what do you do if you're Nintendo. Manufacture enough that each store can get 50+ then? And if those are sold out, 100+? Every tier you bet on at time of manufacture is even more risk you're taking on if these things end up sitting on the shelf.
This needs to be reiterated as well. Toon Link, Smash Link, etc were WASTING away on store shelves for MONTHS. People are crying foul now over ebay prices on these, but had they bought them before BOTW hit, they could have hit any store in the country and gotten them either discounted or B2G1 free or such.
Brilliant on Nintendo's part really. It also has me thinking about grabbing Mario (and maybe Splatoon) amiibos now, before those games hit.
Jack The Nipper
Banned
If Hasbro can do it for such a long time, especially in the past I think Nintendo can too. Remember those days of 14 rows of of just star wars figures the wall filled to the brim? I don't think they were every in more demand than amiibos too lol
DeuceGamer
Member
Good post. I would also add that in some cases it may be that retailers aren't ordering many initially which leads them to cut manufacturing. Once that happens then collectors end up driving up the price.
Gotdatmoney
Member
Jesus christ. No it is not that simple. Something like the NES Classic was not just about making money. There are specific benefits to launching products besides "just" selling a lot. You need to keep brand awareness out even if you are not planning a huge run of product. You want to have a solid back and forth with retailers which builds the relationship and brand trust.
NES classic was never meant to print money. It was about having a holiday product and they definitely didnt internally produce it so they had a contract about how many units they wanted to produce with a manufacturer. Those things can take time to sort out and push out more stock. Which they might have if the product was meant just to be a major revenue source bit it obviously was not.
With the WiiU they over produced and ate a huge loss. They have a much stricter supply chain this time around. They dont ship out excess copies of games and make it back in bulk like EA or Activision for example. I dont think they had strong expectations for NES Classic because it wasnt a major product. It is not something they care about. That isn't malicious. That's a business model.
Come on. The Switch presentation is marketing 100%. Why wouldnt we view it as such? As I and other people have said. A tight supply chain keeps costs down at the possible expense of lost sales. It's not just malicious.
Jack The Nipper
Banned
It was made to help the switch, your right. It wasn't made to make money as I was also saying.
axisofweevils
Holy crap! Today's real megaton is that more than two people can have the same first name.
It's hard to judge. Based on the popularity of Animal Crossing, they probably thought the amiibo line would set the world alight. Same for the follow up to their best selling console ever. Meanwhile, Nintendo were conservative about the NES Classic, and boom - hot ticket item.
Launch represents a single unique event of peak demand, short time preparation and uncertainty.
Companies try to avoid to build up costly production capacity that never gets used or only for a very short amount of time (launch).
The worst case scenario for this is the WiiU where they shipped >1/5(!) of it's lifetime sales in the launch period (~1 month), because they far over-predicted it's success.
Companies try to avoid to build up costly production capacity that never gets used or only for a very short amount of time (launch).
The worst case scenario for this is the WiiU where they shipped >1/5(!) of it's lifetime sales in the launch period (~1 month), because they far over-predicted it's success.
I didn't get a Switch launch day because I had to work.
Went out the next day to Target right when they opened for normal grocery shopping and saw they had them, so I jumped on it, not knowing if I'd be able to find one later. I personally feel lucky. Probably a bad example of patience.
Same here. A coworker said Walmart had 6 at lunch on Friday. I went over at 2pm just to check. I wasn't entirely sold on a switch and was kinda hoping they would be out so I could just not get one since they would be gone for months. But they had 1 left on the shelf, so of course I got it.
Gotdatmoney
Member
I don't believe the NES classic was made to help the Switch. I believe it was to have a holiday product in a down year. And also to leverage a catalogue of strong IPs which is new to Nintendo's corporate direction.
None of this is bad. None of this is artificial demand.
KojiKnight
Member
Beanie babies. Start collecting the latest now and maybe they'll be worth something. Meanwhile, Nintendo makes a ton of immediate profits. 50 to 50 different people, or 50 to one person who resales it are all the same.
ha... as a star wars figure collector.. your post isn't exactly accurate. Take any given figure series (say 3.75"), and outside of a fresh stock refresh, since I've been collecting as an adult (going back to the orange card relaunch in 95 or so), Star Wars figures have never been pouring off the shelf. There are SPACES for them.. and after enough weighted refreshes there are usually 8-9 pegs filled with the high volume case characters (like Jar Jar from Ep1 series 1). but that is just the nature of collectibles sold in weighted cases.. when you get 1.6x jar jar figures per an average of every other figure in the case, and people aren't buying those ones, they will fill up the pegs after enough refreshes. Yet Darth Maul would be gone almost as soon as being pulled from the case.
but more often than not.. with star wars (or most successful figures) the case is you see like 5-6 pegs filled randomly with over-produced/low-selling figures from the cases.. and everything with actual demand empty.
and how hasbro survives.. is in a case of 12 figures.. the weighted figure might be like 4.. with the remaining 8 going to like 5-6 figures. Hasbro got paid for all 12 figures.. and the store sold 9 figures (counting 3 unsold weighted figures).. after 5 refreshes there are 15 peg warmers.. but the store still sold 45 figures. which is easy profit.
I have to agree with this. I have heard several non-gamers talk about the Switch because of the fact that it's sold out.
Also, the NES classic was going crazy on my facebook over Christmas with tons of non-gamers because it was impossible to find and was going for $200. There was a page started for local people to post when certain stores were getting shipments.
Gotdatmoney
Member
All consoles sell out at launch. It's been 1 week.
Fantastapotamus
Wrong about commas, wrong about everything
What part do the Illuminati play in this?
Glass Shark
Banned
This. Artificial scarcity is not a thing in consumer electronics. Nintendo and other companies make as many devices as they can in order to reasonably meet expected demand based on their research. They probably err slightly on the side of caution, leading to a lot of situations where product is hard to find rather than having loads of boxes on a shelf they can't sell.
Everyone says it's artificial scarcity, but I don't buy it. The Switch had, by all accounts, plenty of stock on launch day. I think there's more demand than they were expecting, to be quite honest.
Nintendo has literally always manufactured less than we'd want. It's a very conservative strategy. The Wii U had stock on shelves for more than a year, and they obviously do not want that to happen again. That simply ties up their cash flow and puts them in jeopardy if they don't sell through. They are an incredibly conservative company, financially. Probably the most conservative video game company right now.
As for amiibos, same thing, but probably adding to that they have a limit to how much a supplier can produce, and don't want to make runs have overstock (which tends to happen anyway, with some of the less sought after amiibo -- like Animal Crossing).
Just my two cents.
Nintendo has literally always manufactured less than we'd want. It's a very conservative strategy. The Wii U had stock on shelves for more than a year, and they obviously do not want that to happen again. That simply ties up their cash flow and puts them in jeopardy if they don't sell through. They are an incredibly conservative company, financially. Probably the most conservative video game company right now.
As for amiibos, same thing, but probably adding to that they have a limit to how much a supplier can produce, and don't want to make runs have overstock (which tends to happen anyway, with some of the less sought after amiibo -- like Animal Crossing).
Just my two cents.
This.
And that's what they did with Wii U, produce 10 million based on initial sales after which the consoles sat miserably in stores and warehouses for years. Which is costly for stores (taking up storage space means square meters which are not remunitarive) and also making it so Nintendo couldn't capitalize on improved efficiency of production or new games to bundle, thus further making the product undesirable. It was a very big financial burden on Nintendo.
I didn't track every console launch so I'm not sure about all of them, but I bought two PS3s, one to keep and one to sell, and I wound up returning it to the store because no one would buy it unless I sold it at a loss.
Steve Youngblood
Member
In the theoretical sense artificial scarcity can fuel an added sense of urgency to buy when shipments are out. But in order for that theory to make sense there would need to be coordinated efforts to ship additional stock at known times that you can capitalize on. Let's go back to the NES Classic. Let's pretend that 1 or 2 weeks before Christmas, Nintendo managed a huge shipment of additional stock to sell. They probably wouldn't have had time to manufacture that much just in response to launch demand, so it could reasonably be argued that they held back stock to create an artificial demand for the "hot" product.
In that scenario, it makes perfect sense. But that's not what happened. The item was impossible to find through Christmas and still remains that way. The real answer was that this simply wasn't an item they prioritized.
With the Switch it won't be clear what their strategy is until a few months in. They maintained before launch that they would be able to quickly react to demand, so we'll see what happens. A launch sellout happens frequently though with even semi-popular gadgets. So the fact that you can't waltz into your local retailer and buy a Switch is hardly indicative of incompetence or shady market manipulation.
In that scenario, it makes perfect sense. But that's not what happened. The item was impossible to find through Christmas and still remains that way. The real answer was that this simply wasn't an item they prioritized.
With the Switch it won't be clear what their strategy is until a few months in. They maintained before launch that they would be able to quickly react to demand, so we'll see what happens. A launch sellout happens frequently though with even semi-popular gadgets. So the fact that you can't waltz into your local retailer and buy a Switch is hardly indicative of incompetence or shady market manipulation.
PSFan
Member
Well, heaven forbid that I am able to walk in to a store and buy a product off the shelf. That's supposed to be the purpose of a store.
If a company doesn't want their products to sit on shelves, then I guess they don't want shoppers to buy their products.
Fantastapotamus
Wrong about commas, wrong about everything
Especially because they make additional money on Software. With most other products, you sell them once and that's it. But Nintendo doesn't only make money on hardware, they also make money on software. The more hardware out there, the more software they can sell. It makes absolutely zero sense to artifically limit that, especially if it's in March and only for one week or so.
Sakura
Member
Ideally you want demand to be as close to supply as possible.
But ultimately, more demand than supply is better than more supply than demand, because if you have products just sitting on shelves not selling, then that's wasted money. Nintendo's problem is they seem to be a little too conservative in wanting to avoid having more supply than demand, and they end up having more demand than supply.
Artificial scarcity doesn't help them and it doesn't make sense. They don't make money off products not selling.
But ultimately, more demand than supply is better than more supply than demand, because if you have products just sitting on shelves not selling, then that's wasted money. Nintendo's problem is they seem to be a little too conservative in wanting to avoid having more supply than demand, and they end up having more demand than supply.
Artificial scarcity doesn't help them and it doesn't make sense. They don't make money off products not selling.
Gotdatmoney
Member
PS3 is one of the most failed initial launches of a console in some time. (Obviously wiiu was way worse). The system made a beast recovery though.
360, PS4, X1, Wii, Switch all had stock problems at launch. It's not a conspiracy.
Glass Shark
Banned
Go take a look at the thread in Off Topic about the Garth Brooks Target exclusive box set. Hundreds of thousands of these things sitting on clearance racks across the country leading to a bad look for Target and for the manufacturer. Nobody correctly estimated demand, and they spent a huge amount of money manufacturing product nobody wanted to buy. That leads to the retailer attempting to sell product at a discount, which results in less money for everyone involved.
It makes total sense for them to err on the side of not enough stock rather than too much. The trick is getting that "not enough" gap as small as you possibly can during the launch window. Nintendo seems to have done a fairly good job on that with the Switch. Demand is solid, but not outrageous. You don't generally see the Switch going for $1000 on eBay because people are rabid about it. (They fucked it up royally with the NES Classic, however.)
JoshuaJSlone
Member
They want enough there for people to buy their products, but not so much that the boxes are gathering dust or getting sold at half price. Especially for something like amiibo where they've got over a hundred of the damn things and demand is different for each, getting the right amount is tricky. I've only bought them when they've been heavily discounted due to oversupply, and I'm up to nearly 20 now.
Steve Youngblood
Member
You're misunderstanding what he's saying. He's not arguing that it's bad to have any saleable quantity on hand for people to buy. He means it in the sense that you don't want to strictly plan for the high-end estimates and wind up with scenarios where there's 100 Switch consoles on Best Buy's store floor that aren't moving. It's not good for Best Buy or Nintendo.
Jest Chillin
Member
Artificial constraint isn't aimed at the "regular consumer" but at the lower-than-casual consumer i.e. what happened with the Wii. Scarcity drew news coverage which drew the interest of people who had no previous inclination to buy a console at all, let alone a Wii. I saw this first hand, working at a Gamestop throughout the Wii's lifetime. People would constantly come in asking about it, outright saying it must be an awesome platform if it's always sold out.
Of course the comments about a financially efficient supply line (lower upfront cost and less chance of stock sitting around) are true as well.
So I believe Nintendo is trying to play a balancing act. It's not just constraint to drive hype and it's not just keeping production cost low and preventing flooding stock. They want to walk the tight-rope of providing enough stock to earn a good return but keep supply low enough for lower production costs and selling out in high demand markets to generate news that can peak the interest of joe public.
SatoAilDarko
Member
Mario and Sonic at the Rio Olympics 2016 came out last June for Wii U.
It's now $100 for a new copy and not much cheaper for a used one.
The fuck?!
It's now $100 for a new copy and not much cheaper for a used one.
The fuck?!
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