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[tearsintherain]

Other companies are really good about reacting quickly - if one unit starts selling out fast, they immediately turn around and tell Foxconn (or whoever) to double, triple, etc production lines and scale back on other items.

Unfortunately everything Nintendo does requires like a month of decision making and internal agreement, I think thats probably the biggest reason why you see them react so slow to... everything.

Other companies also gauge pre orders and react appropriately, whereas Nintendo just seems to think of pre orders as a promise but not something to use for any sort of forecasting. Airline companies, Dell, Apple, etc have massive data analytic departments that are able to forecast demand based on history, I doubt Nintendo has anything like that or is even interested in it.

 

[tearsintherain]

delete, duplicate post

 

[brawly]

They want the news to say "Nintendo Switch sold out everywhere!".

 

[Mercador]

You should really read this article.

People knows that Nintendo stuff is scarce, the opposite would be Ubisoft games. If you see a switch or a rare amiibo, you have more chance to make an impulse buy.

Is Nintendo is doing it on purpose, that's the question. I don't think it's the case but at the same time, it allow them to keep prices high because the demand is there.

 

[Haunted]

Its better to underestimate production than overestimate.

Basically.

Nintendo is a conservative company. They aren't perfect at estimating demand or the popularity of their products. There's no big conspiracy.

 

[LegendofLex]

What benefit does Nintendo get from this? Sure, the products are in-demand, but without enough supply to meet said demand, the only ones profiting are the scalpers.

Many have claimed artificial scarcity, especially when it comes to amiibo/NES Classic/Etc. Am I missing something here, or is it just a case of actually not being able to keep up with demand?

amiibo are probably the most ridiculous thing to keep in stock because of how much shelf space they take up vs. how quickly the popular ones go.

There's no way the amiibo situation is artificial scarcity. It's Nintendo not wanting to produce a ton of amiibo that can't all fit on store shelves at once (it's not free to have excess unshipped units). For consoles, it's Nintendo not wanting to repeat the 3DS/Wii U issue where excess stock actually ended up sitting unsold on store shelves for awhile, limiting future orders while also losing Nintendo money for the first time since they entered the console business.

 

[LordRaptor]

You should really read this article.

I mean.... maybe you should as literally the first sentence is

Artificial scarcity describes the scarcity of items even though either the technology and production, or sharing capacity exists to create a theoretically limitless abundance

When it should be self evident that a piece of consumer electronics has technological, production and capacity restrictions to its manufacture that inherently prevent infinite abundance.

 

[LordKasual]

Customers are generally more likely to make impulse purchases when stock is limited.

Yep.

Also, artificial demand also gives artificial value. People will view their "scarce" consoles are more valuable than they really are.

Which in turn helps Nintendo sell the angle that they offer an experience so unique that everyone just has to have one

which in turn helps sway otherwise on-the-fence buyers to purchase one as well

 

[Marty Chinn]

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

Isn't Hasbro a good example of it not just being Nintendo? How quick were they able to respond to the demand for Rey figures? Not quickly at all.

 

[bman94]

Nintendo makes too little stock, Wii happens
Nintendo makes too much stock, Wii U happens.

Damn if yoy do damned if you don't.

Amiibo situation is usually a moot point. After the initial launch, there's usually a fuck ton of them a few weeks or a month or so later.

 

[Kintaro]

Nintendo makes too little stock, Wii happens
Nintendo makes too much stock, Wii U happens.

Sony maintains a good supply, PS4 happens.

 

[GinoFelino]

first post nails it.

manufactured supply constraints make zero financial sense and have never had a lick of proof to show that they happen.

I wish a take like this could be the first post for once, rather than just silly jokes. You nailed it.

I aim to pleas WAIT what

 

[Nickle]

Gaf publicity.

 

[wildfire]

What any company gains is not overpaying on production of extra units that's it. They don't want to accidentally eat the costs of making more than there is demand.

 

[ArtHands]

Yep.

Also, artificial demand also gives artificial value. People will view their "scarce" consoles are more valuable than they really are.

Which in turn helps Nintendo sell the angle that they offer an experience so unique that everyone just has to have one

which in turn helps sway otherwise on-the-fence buyers to purchase one as well

But how will these on-the-fence buyers purchase one if there's no stock?

 

[Hello? This is Hailun!]

Nothing. It's a conspiracy theory.

 

[Mercador]

I mean.... maybe you should as literally the first sentence is


When it should be self evident that a piece of consumer electronics has technological, production and capacity restrictions to its manufacture that inherently prevent infinite abundance.

My point was on "games" itself, not consoles. Sorry, I wasn't clear enough.

 

[kitchenmotors]

I'm glad most gafers don't run a business because you'd guys go bankrupt in a hurry.

This is always the take away from these threads.

 

[Shig]

If some rumors are to be believed, big bonuses for management. Being overly conservative and selling out is better in home office's book than overestimating demand and having leftovers sit on shelves.

I kind of get the logic, but it's serving a real shit sandwich to customers that just want to walk into a store and buy the fucking product. There should be decent stock waiting on shelves for a few months or so, everyone that's interested in something isn't "I'm going to hunt for this thing until I find one" interested. They're leaving a lot of casual interest on the table by playing this hide-and-seek shit, I know several people that would have snatched up NES Minis during the holidays but have left that intent in the dust since Nintendo made it a chore.

 

[Birgitte2004]

I don't know if Nintendo utilizes artificial scarcity or not, but people claiming it doesn't exist are being willfully ignorant.

There's a reason why sellers pull the "Only 20 left! Order now!" schtick, and it's not because the item is truly limited. It's because it works on some people.

 

[LordRaptor]

My point was on "games" itself, not consoles. Sorry, I wasn't clear enough.

The artificial scarcity in videogames is solely on the digital side, and is better known as "anti-piracy measures".

There is inherently no "artifical scarcity" in the terms of the wikipedia article you yourself linked regarding physical goods, because they all have manufacturing restrictions that are automatically not artificial.

 

[oti]

Supply and Demand. Nintendo is super conservative. They'd much rather undersupply than oversupply. If supply is too high prices will fall. Retail will sit on stock (opportunity costs) and will try to get rid of it. Nintendo wants to avoid that at any cost. We're talking about a company that is able to sell most of their games at full price years after their release.

If supply is too low prices will rise. That's not a favourable situation either but it's still better than seeing your products being devalued. Imagine a main Mario game for half price in the first year even. That would be a disaster for Nintendo.

 

[Azerare]

Nothing, the whole thing is made up by guys with tinfoil hats

This. People who think nintendo makes artificial scarcity are dense.

No one has really had interest in their stuff till now.

 

[Version 3.0]

Customers are generally more likely to make impulse purchases when stock is limited.

Yes, more units will sell when fewer units are available to sell. Because fuck math.

Sorry, but the only way this works in Nintendo's favor, in reality, is if an item is readily available, but the public perception is that it's hard to get.

And that can't be forced. It will only happen if real demand is high. Then you can get some bandwagoners excited who might not be otherwise. But you can't just pretend demand is there in order to create demand. All you're doing is frustrating the customers who are actually interested.

 

[eme]

This. People who think nintendo makes artificial scarcity are dense.

No one has really had interest in their stuff till now.

Were you alive for the Wii?

 

[Mercador]

The artificial scarcity in videogames is solely on the digital side, and is better known as "anti-piracy measures".

There is inherently no "artifical scarcity" in the terms of the wikipedia article you yourself linked regarding physical goods, because they all have manufacturing restrictions that are automatically not artificial.

You are right, my bad. Though, printing cds is not really a manufacting issue in my book, it's more to keep them in a warehouse that costs money.

 

[Version 3.0]

I don't know if Nintendo utilizes artificial scarcity or not, but people claiming it doesn't exist are being willfully ignorant.

There's a reason why sellers pull the "Only 20 left! Order now!" schtick, and it's not because the item is truly limited. It's because it works on some people.

You're missing the key difference. The "Only 20 left! Order now!" schtick is a lie. Nintendo's items like Amiibo, the NES Classic, etc were actually hard to get for at least a while. In the case of the NES Classic, Nintendo completely missed the boat on Christmas.

Maybe someone should tell Nintendo that actually shipping only 20 units isn't part of the schtick.

 

[Canucked]

Nintendo is probably supply constrained. But let's not pretend that they didn't want to sell out on day one. It looks great all around. If they were concerned about stock they would have waited.

 

[Tinfoilhatsron]

Nothing, the whole thing is made up by guys with tinfoil hats

Creating fake demand is a real thing man.

Limited edition super rare!

 

[Steve Youngblood]

Yes, more units will sell when fewer units are available to sell. Because fuck math.

Sorry, but the only way this works in Nintendo's favor, in reality, is if an item is readily available, but the public perception is that it's hard to get.

And that can't be forced. It will only happen if real demand is high. Then you can get some bandwagoners excited who might not be otherwise. But you can't just pretend demand is there in order to create demand. All you're doing is frustrating the customers who are actually interested.

I think it can theoretically make sense if there's aggressive re-shipment strategies. Like I can see how one large shipment split into 3 smaller shipments might be a better strategy for a number of reasons vs. just shipping everything you have at once. Mind you, I'm not a logistics guy by any stretch, but let's say we've got a million Switches sitting in a warehouse 30 days out from launch that need to get to stores (I know this isn't how it works but just let me run with it). Let's say our numbers guys estimate that we can easily sell 750,000 of these on launch day. Do we ship all 1 million and hope the other 250,000 find a home? Maybe.

But you might be able to push fence-sitters over the edge a bit if you create a sense of urgency with regard to the purchase. Further, by not shipping everything right out of the gate, it will be easier to gauge where demand is actually at before committing more units to specific retailers/regions.

Mind you, none of this is actually reflective of how the supply chain works in the real world so I'll admit that I'm just kind of meandering about aimlessly as I discuss hypothetical situations. I'm just arguing that I can understand why in some scenarios holding back inventory might make sense. Of course this is only true if there is additional inventory to sell. If it's going to take months to ramp up production to the scale they need to meet demand, it obviously isn't some master marketing gimmick to not sell hardware.

You need to get the hardware into people's hands so that they can buy software and accessories. That's where your money is. Not in news pieces about how marked up eBay sales are going for.

 

[thechristoph]

"But I want it noooooowwww!" - the thread.

They're not going to make 30 million Switch consoles at once and store them in a shed for distribution when stores have shelf space.

Also, America is huge. It's a minor miracle that a nationwide launch is even possible.

 

[Jest Chillin]

Yes, more units will sell when fewer units are available to sell. Because fuck math.

Sorry, but the only way this works in Nintendo's favor, in reality, is if an item is readily available, but the public perception is that it's hard to get.

And that can't be forced. It will only happen if real demand is high. Then you can get some bandwagoners excited who might not be otherwise. But you can't just pretend demand is there in order to create demand. All you're doing is frustrating the customers who are actually interested.

Being sold out creates the perception that something is hard to get. Limiting supply raises the liklihood of being sold out. This is literally what happened with the Wii as the console had an exciting idea that was poorly implemented on the vast majority of the software. The Wii was *not* a good system overall (software being a HUGE issue) but it still sold massively. Why?

 

[The Lamp]

Right, but how does that help the company. It seems like that would just benefit scalpers.

If they only need to meet X sales in a year to meet their goal, maybe they would rather be conservative by risking squeezing demand to meet that goal steadily over time than risk the cost of over-supplying.

 

[Azerare]

Were you alive for the Wii?

Yes. Care to elaborate more on your point or are you going to just drive by post?

 

[Steve Youngblood]

Being sold out creates the perception that something is hard to get. Limiting supply raises the liklihood of being sold out. This is literally what happened with the Wii as the console had an exciting idea that was poorly implemented on the vast majority of the software. The Wii was *not* a good system overall (software being a HUGE issue) but it still sild massively. Why?

It was selling more units than hardware that preceded it for years. I think people aren't thinking things through completely when they make the argument that it's all supply constraint. I mean, sure, if they just went crazy and said "flood the market with as much hardware as the factories can produce as quickly as possible to meet the backlog of demand," it's possible that this might have had a detrimental impact on the mystique of the console. But there's also this crazy notion that the key to success is just to deliberately undership by a wide margin to manufacture demand.

If they were shipping two and three units at a time so as to keep up the illusion of scarcity, they wouldn't have sold the numbers they did. Overshipping something like this is bad, but that doesn't automatically mean that intentionally producing too little quantity is some magic bullet to success.

 

[Into the Light]

They want the news to say "Nintendo Switch sold out everywhere!".

Artificial Demand.(as others have said)

Also they want Switch on ebay for $1,0000 it makes the news.

 

[LordRaptor]

Creating fake demand is a real thing man.

Limited edition super rare!

Fake demand doesn't exist, if you don't actually want something you don't want something irregardless of how cheaply it is available for or how few copies there are in existence.


If you do actually want something, but have convinced yourself that you hate a company and never want any of their products but keep feeling that you actually want a product made by that company "artificial demand" makes for a convenient bypass for all that cognitive dissonance because you get to pretend like you were jedi mind tricked into wanting something you didn't actually want.

 

[Steve Youngblood]

Scalpels are customers too

Kind of. The nature of this type of product does not actually guarantee that an attempt at scalping will remain a sale. I go to Target for lunch today. I see a Switch in the case. Cha-ching! The pupils of my eyes turn to dollar signs as this is easy money. I buy the unit, go home, and prepare my eBay listing where I set a reserve for $500.

At this point, sure, that's a sale. But let's say I've misread the market. The tales of bent docks and dead pixels and worse Zelda performance in dock mode, etc. have taken their toll and demand drops off a cliff. I have no luck selling it, and it's clear that other listings are only moving at or below MSRP. Oh well, still a sale right? Nope. This thing is going back to Target and I'm getting every last penny refunded to my card.

 

[jroc74]

Artificial demand

This. Marketing buzz.

 

[oti]

This. Marketing buzz.

lol

You think "marketing buzz" is something investors care that much about?

 

[LegendofLex]

Being sold out creates the perception that something is hard to get. Limiting supply raises the liklihood of being sold out. This is literally what happened with the Wii as the console had an exciting idea that was poorly implemented on the vast majority of the software. The Wii was *not* a good system overall (software being a HUGE issue) but it still sold massively. Why?

The problem with this logic is that we know what Wii shipments were. https://www.nintendo.co.jp/ir/library/historical_data/pdf/consolidated_sales_e1612.pdf

Even as Nintendo kept shipping more, it kept selling out.

It was selling better than any of their previous home consoles, which means they were shipping more than any of their previous home consoles. If they were shipping more consoles, they weren't using an artificial scarcity strategy.

A lot of the ideas I see thrown around about why Wii was successful are like climate change denial in that they require that you ignore the available data.

 

[jroc74]

lol

You think "marketing buzz" is something investors care that much about?

Maybe, maybe not but the company behind the product might. Or the store selling it.

Ever seen a store trying to generate hype by having lines for Android phones before the Galaxy S line took off? Some looked really pathetic, nothing like the lines for iPhones.

But they tried. I really doubt it was real supply issues.

Fake demand doesn't exist, if you don't actually want something you don't want something irregardless of how cheaply it is available for or how few copies there are in existence.


If you do actually want something, but have convinced yourself that you hate a company and never want any of their products but keep feeling that you actually want a product made by that company "artificial demand" makes for a convenient bypass for all that cognitive dissonance because you get to pretend like you were jedi mind tricked into wanting something you didn't actually want.

While that can be true....artificial demand is a thing.

I'm not a shoe person. Going to work one weekend there was a huge line outside a show store. I have no idea how the demand or supply was for these Nikes. But the line hanging around the corner created a buzz. And had ppl talking.

When I got to work I mentioned it and it started a 1/2 hour conversation about the shoes and shoes in general.

Its a real thing, even if you arent interested.

 

[Deku89]

The problem probably comes from their production mentality rather than creating artificial demand. They are very conservative in making sure they make a profit and not having too much stock sitting on the shelf (cash flow and such). It's a way they can compete with other businesses without having all the expensive structure of larger companies (like Apple, Sony, and Microsoft). Sure, they can underproduce on products like the Wii, NES Classic and amiibo, but systems like Wii U and Virtual Boy didn't bankrupt them.

Remember, before the Wii, the Gamecube sold way under expectations. amiibo and NES Classic were side products testing the waters.

 

[LordRaptor]

I'm not a shoe person. Going to work one weekend there was a huge line outside a show store/ And I have no idea how the demand or supply was for these Nikes. But the line hanging around the corner created a buzz. And had ppl talking.

When I got to work I mentioned it and it started a 1/2 hour conversation about the shoes and shoes in general.

Its a real thing, even if you arent interested.

The counterpoint is that you did not join that line even though there was obvious demand enough for a line to form because you are not 'a shoe person'.

If supply and demand worked like people in this topic think it does, you'd have joined that line because holy shit must be good, look at the line!

 

[blame space]

Nintendo is in this weird spot. they make like 20 robin amiibos and they sell out instantly and start going for $50 on the secondary market. so they make more robins and send them out in time for Christmas and now they're in the bargain bin.

systems were truly ridiculous around Christmas. they were seriously struggling to get any 3ds hardware to stores for people buying gifts, and when they did come they sold out instantly. we all know the demand for the NES classic was horribly underestimated. I'm not even sure if they're making any more or if people are giving up.

I'm not a conspiracy theorist, but i have noticed that the hunt is a significant part of why some people keep looking for these items. it's a status thing, to get a galaxy new 3ds xl for Bobby for Christmas or whatever. that's gonna happen with lots of hard to find things, though, and to have these things readily available would almost certainly be more profitable.

 

[The Lamp]

The counterpoint is that you did not join that line even though there was obvious demand enough for a line to form because you are not 'a shoe person'.

If supply and demand worked like people in this topic think it does, you'd have joined that line because holy shit must be good, look at the line!

Supply and price definitely affect how much people want something. If I'm on the fence of buying something/I'm mildly interested, and I find out that the item is super rare, and I see it in a store, I'm going to be more incentivized to take the plunge to not risk being unable to find it when I want it.

 

[LordRaptor]

Supply and price definitely affect how much people want something. If I'm on the fence of buying something/I'm mildly interested, and I find out that the item is super rare, and I see it in a store, I'm going to be more incentivized to take the plunge to not risk being unable to find it when I want it.

Elasticity of price demand depends on there already being desire for a product - and this is where scalping comes in.
Because its a value proposition of "Oh, so you want it? How much do you want it?"

If the answer is "I don't", there is a price elasticity of zero.

 

[New002]

Supply Chain and cost estimation vs demand. You don't want to over produce and have shit sit in a warehouse where storing your product you already manufactured is costing you more than actually dumping it. Control your output, control you cost and revenue then adjust if the market demand requires it.

Artificial demand is a thing but it's not this wide spread tactic people think it is. Especially in the fucking toys market where hits are not long burners generally.

I wonder of some people who think its artifical have ever worked in a factory where your product literally is sitting on the shelf. Its fucking stressful. And depending on the industry you dont want to build excessively ahead of schedule. You get problems with mass manufacturing before hand.

I agree with this, which has lead me to the conclusion that Nintendo simply sucks at the bolded. My guess is they are so, so conservative with their numbers that they keep shooting themselves in the foot. The problem is they don't seem to learn and adjust for future launches.

 

[Version 3.0]

Being sold out creates the perception that something is hard to get. Limiting supply raises the liklihood of being sold out. This is literally what happened with the Wii as the console had an exciting idea that was poorly implemented on the vast majority of the software. The Wii was *not* a good system overall (software being a HUGE issue) but it still sold massively. Why?

So you didn't like the Wii, therefore it only sold because people were tricked into buying it. Of course.

It's only been pointed out about a billion times, but I'll re-iterate the actual facts: Nintendo shipped more Wiis out to retail than any console in history. It was literally the fastest selling console ever, for about its first 3 years. Nintendo didn't "limit supply". They literally supplied more units than had ever been done before.

I'll say again: there has to be actual demand for a product for "artificial demand" to make any meaningful contribution. We're talking about products that sell millions here, not some shopping channel piece of garbage marketed to a tiny shopaholic slice of the populace.

And to answer your question: Wii Sports was a fun game that really took off. That's what sold the Wii. People weren't playing it because they felt special for finding one.

 

[Jest Chillin]

The problem with this logic is that we know what Wii shipments were. https://www.nintendo.co.jp/ir/library/historical_data/pdf/consolidated_sales_e1612.pdf

Even as Nintendo kept shipping more, it kept selling out.

It was selling better than any of their previous home consoles, which means they were shipping more than any of their previous home consoles. If they were shipping more consoles, they weren't using an artificial scarcity strategy.

A lot of the ideas I see thrown around about why Wii was successful are like climate change denial in that they require that you ignore the available data.

Not only is that form pretty hard to interpret, it says sales, not shipped. When I worked at Gamestop in the companies highest selling region at the time and restocks of Wii's were months apart and racked up to 2 per store at most.

No other console had such supply issues even when selling out. So at that point the only thing that makes sense in Nintendo is constraining somewhere. And they are. The reason is not limited to "hype" though, it's multifaceted. But it is a decision that they make to risk their console being hard for consumers to get rather than having a major production investment and units sitting around waiting to move.

It's business. And while MS and Sony take the big production investment strategy, Nintendo takes the console unavailable strategy. Either strategy can work or backfire due to a number of factors. It's just a choice the company has to take a risk on.