Take a good, hard look at the electronics section of your local brick and mortar store, and you're likely to find that much like a Nintendo themed version of Groundhog Day, getting your hands on a Wii in time for Christmas is about as easy as it was this same time last year. Yes my friends, it appears that that Santa's little elves may have let us down once again. Replace the word Santa with Nintendo, and I think you'll get the point.
Of course, you can always consider the prospect of setting sail for the shark-infested waters of the online auction opportunist -- but that's hardly an attractive way to purchase a hot item at a reasonable cost. So what is left for the weary consumer to do? Unfortunately, your options are limited at this point, should you be one of the unlucky many that are now looking to secure the few available Wiis that have trickled out of Nintendo. After much colorful language, and like the rest of us, you may be wondering just why the whole supply vs. demand thing hasn't stabilized as of yet. Surely by now, Nintendo has learned to strike while the iron is hot!
Well my friends, it's just not that easy. As the Wall Street Journal likes to say, Nintendo as a whole tends to err on the side of conservatism when it comes to running their business. Not sure what they're talking about? Hit the jump and prepare to enter WSJ 101, the Nintendo chronicles.
According to "those in the know," it's all a matter of Nintendo's modus operandi.
Because Nintendo puts a great deal of focus on cash flow, it tries to keep its inventory as low as possible. Such a strategy is rare among Japanese companies, which have tended to focus on revenue growth and market share.
Stated in its simplest terms, you might say that Nintendo is keenly aware that they have limited options when it comes to falling back on bad decisions. While Microsoft and Sony both have other ventures to help cushion the blow, Nintendo is very much a one-trick pony -- a damn good one of the highest quality, but a one-trick pony, nonetheless.
There is always the chance that frustrated consumers may substitute a competitor's product in times such as these, and Nintendo is well aware of that. Earlier this year, Reggie Fils-Aime, the president of Nintendo's U.S. division, announced that Nintendo was doing everything possible to ramp up production of Wiis in order to meet increasing demand. Some may balk at this, claiming that Nintendo is purposely holding back in order to maintain customer frenzy -- but it's more likely to be that part about erring on caution coming into play once again.
There is little doubt that Nintendo is producing as many Wiis as possible in a cost effective manner, and will continue to do so. Hearing rumors that they have decided to temporarily cut back on advertising for the product tends to lend at least a little credence to this. To the naysayers, there is ammunition for their cause, as Christopher Tang, professor of supply-chain management at UCLA makes clear:
"If you flood the market, it will come back to haunt you. Nintendo may be missing opportunities by allowing other people to profit from the shortage by charging premiums but that isn't entirely a bad thing because it creates hype. Psychologically, it's better if the customer is begging for the product."
On the opposite end of the spectrum lies the other dilemma in Nintendo's double jeopardy scenario, as the WSJ points out:
"An excess supply also angers retailers, who must work harder and offer discounts to get rid of the product. The manufacturer's financial results also suffer because they are forced to lower prices or take back the products retailers can't sell."
It's literally a case of damned if you do, damned if you don't when it comes to the situation Nintendo has found itself in. Maybe the best they can do is to walk the tightrope for a while longer, and see what happens. Any sudden moves in either direction sound like they could lead to fallout. To a company that prides itself on being profitable, the least risky option is usually the most desirable one. Sadly, none of this is doing much to provide relief to parents and the rest of the public who are desperately searching for the hottest item to come out of the videogame world in quite some time. What would you do differently, if you ran Nintendo (besides buying stock in Destructoid)?
[Via
WSJ]
Contest:
1:45 PM on 12.07.2007
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If I ran nintendo, there would be free VC games that go accordingly with said game, like Mario Galaxy could come with Mario 3.
Anyways, remember last year when they gave out Super Mario Brothers for free? What do you think will happen this year?
I'd also put up a Preview channel like six months ago that let gamers check out videos for upcoming titles as well as acting as a DS demo download station.
The supply problem is going to follow them for a while, and I think the damned if you do, damned if you don't is spot on. The Wii wildly exceeded everyone's expectations, and after the disappointing Gamecube years they played it safe. Hard to blame them for that, but even with production ramping up the demand is going to outstrip the supply for the foreseeable future.
But I don't, so my Wii will remained untouched this holiday, aside from a few bouts of Wii Sports.
It just took a friend of mine 6 months to find one, he finally camped a 24 hour Walmart till they got a shipment
I really do think that Nintendo is artificially creating a scarcity. It is after all in their best interest.
Their hottest selling product is the DS, and they've made a million zillion of those things- even going the Microsoft route and relying on several production companies for the same component.
If they wanted to make more Wiis they obviously already have the logistical structure in place.
It's just that they can continue to manufacturer and sell the DS, at high volumes, to pad profit margins, and create a frenzy over the Wii.
*Salutes Nintendo* They're smart cookies!
I would love to see some new IP's hit the VC and I would love to see an opened up platform so that students could get there hands on a dev kit at little cost ;-)
So maybe it's better that Nintendo aren't pushing out half-assed versions of the Wii that they could clip together in less than a month just to meet the 'sudden' demand?
but if the DS is selling so well and they produce so many of them, wouldnt it seem logical to do the same with the wii?
Not in my mind.
It's better for both retailers and Nintendo to have high demand and low supply. This ensures that almost all available product is purchased by consumers.
If they instead had relatively high supply and low demand then a lot of Wii units would be setting unbought on store shelves. This would in turn cool demand.
Nintendo would then be forced to develop a multi-SKU approach much like Sony or Microsoft to make the Wii seem once again desirable to the consumer.
Just my two cents.
I think Nintendo will keep the production on the Wii low for a few more years, just to keep the demand high, and to make sure there isn't a big display of Wiis sitting around being unsold.
Frankly, I'll buy a Wii when it takes no effort to go out and buy one. 360 and PS2 are doing a fine job at keeping me occupied right now.
Now if I was running the show? I'd release at least double the amount of games VC releases every week; Abolish friend codes; Remove region coding so our friends in Europeland can play our games, and we can play games from Japanland; and try to establish better partnerships with 3rd party developers.
The first couple of months with my wii were great. I had a blast with Wii sports and Twilight Princess but the excitement died down very quick. Nowadays I don't play it enough to actually have a reason to keep it, unfortunetly. Other than VC titles I haven't really played my wii since Prime3. Even Mario Galaxy isn't holding my interest. I think I've played 3 hours of it at the most.
All I know is I want the money I could get more than I want my wii just sitting there. If I do end up selling it, my plan is to buy a new one in a few years when the price goes down and there are more games worth playing.
1. Kill region coding and ensure that EU regions get the same, if not better treatment than the US.
2. Buy off all the modchip makers to use their tech and ideas to make region-free compatibility better.
3. Nullify the stupid update that removes the capability to play .mp3 files.
4. Make some new franchises ffs, we need some new heros of the non-Link and Mario variety.
5. Oh yeah, and buy back Rare:D.
I hear people asking and whining for Wiis in my sleep.
Here, i just went back to get the link:
http://news.bbc.co.uk/2/hi/business/7132935.stm
HUH?
also, Christopher Tang.
Your comments are pretty unfounded.
"The playstation had nothing on the N64"
Utterly false. Playstation sales = 102.49 million sales while the N64 had 32.92 million approximately as of March 2005 (latest sales I could find).
"the PsP is inferior in every way to the DS"
Also not true. The psp does plenty of things much better than the DS. Nintendo has been king of the handhelds for a long time. For the PSP to sell half as many as the DS is a huge feat. And successful at that.
No company with any sense is going going to withhold supply just to create a buying frenzy. There's no warehouse filled with hidden Wiis just like companies weren't stockpiling Cabbage Patch Dolls and Tickle Me Elmos in years past. They're selling as many as they're making. Could they set up more factories? Certainly, but they have to look at the big picture. The current Wii craze isn't going to last forever; at a certain point it'll trickle off. I'd wager they still are taken aback at the demand for the system. They don't want to be left with more manufacturing facilities then they need. They're being conservative, but there's no conspiracy here. Nintendo, MS, and Sony make the best decisions they can with the information available to them, but often times they under or overestimate how things actually work out. I'm sure Sony was expecting they'd be first place in the handheld and console market at this point. If there was a no-risk option to get Wiis in the hands of every shopper who wants one, you'd bet your ass Nintendo would take it.
If you release too many Wii's into the marketplace, and everyone buys one this year, who will buy one next year? Not nearly as many, so you sell a a few (by last years standards), more Wii's than last year, and make more money than last year, and watch your stock price rise, as you ARE showing growth as a company technically.
Watch your DS sales decline because...well, everyone has bought one. You start to release your Wii's that you could have sold last year, or at least order the right amount to be produced. You then announce new DS hardware for the holiday season, and watch that fuck frenzy take place of the Wii vulture hunt.
Now you're shoring up growth again with the handheld market. As you can finally grow the Wii userbase with the guarantee that people will be hunting down handhelds again.
In essence, as a retailer...FUCK nintendo.
So Nintendo can't just build more factories to get more Wiis. They have to change existing contracts, or enter new contracts, to get more Wiis. This means negotiating with manufacturers, trying to predict how many Wiis you're going to need when (because if you need less than the contract says, you pay penalties, and if you need, you'll have to do the whole sing-and-dance again). Then, the contractor has to build the factories, or repurpose existing factories.
It's easy to complain about Nintendo, and they're obviously not doing the optimum they possibly cut, but it's important to remember that this is a tightrope walk for everyone involved.
Also, for all the conspiracy theorists thinking Nintendo is intentionally keeping production down? It's cool to complain, but at some point, you should consider reality, too. Console sales are a beneficial circle. More sales make a console more attractive, because they lead to more games. And for the Wii, more sales lead to more people exposed to the Wii at their neighbour's or friend's place, which leads to yet more sales. Nintendo definitely wants to sell as many Wiis as possible, as soon as possible.
12/07/2007 14:03
Hate to break it to everyone, but ALL game consoles are toys.
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NOOOO!!!!111!!1!!!!!1
Wii is for kiddies. I breakout The Darkness for PS3. That bit about mafia men using demons to do his bidding is some serious biznaz. It's essentially a history class.
I remember a couple years ago a friend of mine was the first to use the line on me and another, about how he likes the PSP and not the DS because he likes "more mature" games. What a fucking knob.