Posted by A long time ago, I talked a bit about the new, upcoming Nintendo Switch. Afterward, I was talking to a friend of mine, and he rolled his eyes and said something akin to, “Hopefully this one won’t be plagued by shortages. It’s Nintendo, after all.”
It’s Nintendo, after all. What struck me as most odd was that I had resignedly agreed with him, even as I halfheartedly tried to tell myself that this time – this time – things would be different.
Fast forward a few months, and it seems like Nintendo shortages are still something enthusiasts need to contend with. But why? Why have stock shortages become something associated with Nintendo? After all, most console releases wind up plagued by shortages for at least a few months. So what makes Nintendo shortages special?
The easiest answer, of course, is that they’re just so prevalent any time Nintendo releases a product any product. But you’re over at AmbiGaming now, and we don’t deal in easy answers.
Before we continue, a caveat: this is not an analysis of the Nintendo business itself, which is sadly not something on which I can educate myself to a satisfactory level using just the internet. For a great analysis of Nintendo’s business culture, I highly suggest this article by Aether from Lost to the Aether.
The Understandable and the Not-So-Understandable
Now, I don’t have a degree in business, economics, or anything else, but Aether’s breakdown of Nintendo’s business culture makes sense. After all, Nintendo definitely has “staying power” and seems committed to running a long, well thought-out marathon. But I don’t understand where Nintendo shortages fall into that marathon. To be sure, I can forgive console shortages at the time of release. After all, Playstation 4 and the Xbox One had a shortages – as did PS3 and PS2 – for a few months (maybe a year). Comparatively the Wii was hard to come by for over two years.
And Nintendo has a long history of shortages. Way back during the NES era, Zelda II: The Adventure of Link and Super Mario 2 were part of a “chip shortage” (specific to the US, I believe), prompting the show 20/20 to produce a short segment about the video games on prime time television, which was unheard of in the 1980s. More recently, amiibos (amiibii?) were part of a now-infamous shortage, forcing prices to skyrocket as folks clambered to collect their favorite characters. And prices have stayed high, with the more popular figures selling on Amazon for upwards of USD 60.
MatPat from Game Theory had a pretty rosy interpretation as to why Nintendo might intentionally cause shortages, eventually claiming that the (originally) low amiibo prices caused a shortage due to the relationship between supply, cost, and quantity demanded. Basically, if the price of a product is low, more people are going to want to buy it, and they might purchase more than one (there is more quantity of a product demanded). His conclusion is that Nintendo priced the amiibii low so more people would have access to them, even if they had to wait until the initial hysteria wore down.
Okay, so that makes sense in regards to a peripheral like the cute amiibo figurines. But what about things like the NES Classic, priced low and then cancelled before demand was fulfilled? Or the Wii shortages? This theory also begins to fall down when the recent high-priced Switch is added to the mix. Is Nintendo’s supply chain really that broken?
I’ve tried to find more information on this, but the internet clambers all about how Nintendo purposefully causes shortages to get some free publicity.
Unfortunately, I’m almost inclined to believe them, considering some of their released statements and behaviors toward their products.
The Baffling
Let’s take the most Nintendo said that the release of the NES Classic, which is fresh in everyone’s minds. Nintendo released a statement saying that the Classic was released to draw attention to the Switch. This is – I assume – the reason it didn’t hang around for long, but why would advertising the production of a modern version of a beloved console make someone want to purchase a completely different console with an uncertain game lineup? After all, the folks clambering for a Switch weren’t really a different crowd from the one clambering for the remake of a console that was released over 30 years ago. And then, apparently surprised yet humbly bragging about how the NES Classic was so popular, Nintendo promised to produce more consoles, right before pulling the plug.
Why? I am willing to entertain the idea that the NES Classic was maybe a “throwaway” project, or even that it was a really dumb marketing move, but, to my eye, if you believe that now, in 2017, Nintendo doesn’t know how popular it is, and cannot fathom how unexpectedly yanking the nostalgia rug out from under its fans might leave some people with pretty bad burns, I have a bridge connecting Manhattan and Brooklyn I’d like to sell you.
While a shortage in the early days of Nintendo is understandable, as they could not have known how popular they’d become, Nintendo must know that when they release a product now, game enthusiasts go bananas over the news. Cynically, I’m inclined to think that Nintendo likes the drama; shortages keeps them in the news (for free), and pads out their sales over a longer period of time as people wait for their beloved console to finally be available.
But Athena, I hear you type. Why would people keep buying their products if they are purposefully causing shortages to benefit their quarterly reports?
Let’s assume for a moment that this is actually what they are doing. If anyone has more insight into Nintendo’s head, please let me know in the comments! But, for now, let’s proceed like this assessment is true.
If this is truly Nintendo’s plan, then the answer to the question of why is that we let Nintendo treat us this way. No matter how long we have to wait, we will wait for our Nintendo product. We will wait for our Switches. We will still open our wallets when a Nintendo product becomes available, even if it’s months (or years) after launch. This is a business plan that hasn’t failed them, so there is no reason for them to change. We have accepted that shortages are just “Nintendo being Nintendo,” and keep buying their products.
The Solution
Honestly, I don’t know what the solution is. Nintendo plays their business plan close to the vest, as it were, so without the full story, I can’t surmise a way to fix the problem. But with the whispers of a SNES Classic beginning to reach fans’ ears, I will be interested to see how Nintendo handles their next sure-to-be-a-hit release.
What do you think? Are people too hard on Nintendo for their shortages? Does Nintendo really not have a handle on their supply chain? What else might be causing these brand-specific shortages? Let me know in the comments!
Thanks for stopping by, and I’ll see you soon!
~ Athena
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I’ve often wondered if Nintendo realise just how popular they are. They’ve been household names in the games industry for years, surely in that time they would have learned from their past problems with supply and demand? The fact that they haven’t suggests they are either really naive or they’re doing it on purpose.
The cynic in me thinks it’s the latter.
Thanks for another great post!
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Right? I really want to give them the benefit of the doubt, but I think they can be very shrewd when it comes to the decisions they make. Thanks for commenting; I’m glad you liked the post!
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I like Nintendo, but they definitely play by their own rules and don’t learn from past mistakes. We’ve seen it with their approach to supply and demand and also their treatment of fans who post videos/livestream their games. I often wonder what it would be like if Nintendo embraced a new social media strategy to communicate with the public more akin to Sony Playstation.
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They do tend so seem like dedicated isolationists, and they definitely guard their products jealously. It would be an interesting move if they did that; it would really throw a wrench into how they handle their business, I think!
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Yeah, it’s an interesting one, isn’t it!?
There are certainly business-ey type reasons for maintaining a limited supply – but there are also plenty of business-ey reasons for matching demand too, so it’s perfectly possible to make either an argument that they’re being fairly astute, and/or incredibly stupid.
Take the console itself – you can argue that human nature makes people want what they can’t have, so limiting supply makes a console something of a monkey on collective backs, or that some people might anticipate a limited supply at, say, Christmas, and abandon their wait and see approach to pre-empt that scenario (as per what I said in my latest piece). Equally though, you can also argue that somebody might decide they’ll get the console – but finding they have to wait, or arse around trying to find one – will either decide “bollocks to this…” or even involuntarily go through a natural “cooldown” period and decide that, actually, they’re not that bothered.
And take 3rd party support. On the face of it, you’d think that a limited ecosystem would certainly be a factor in developers deciding whether it’s worth the effort and expense to make Games for any given Nintendo console (i.e. best case scenario, we can only sell x if *everybody* with the console buys it) – and there’s plenty of anecdotal evidence suggesting that people don’t buy a Nintendo console because of their limited 3rd party catalogue, thus creating a vicious cycle. Yet, the flip side of that (and particularly important given Nintendo’s Game Developer + Console Maker position) is that precisely because Nintendo consoles aren’t swamped with a bajillion games, they’re actually ensuring that their own games nearly always sell well, thus increasing profit/decreasing risk in that area.
So yeah, it’s quite hard to actually decide if they’re being brilliant, stupid, or even quite nefarious when they pull this kind of stuff. My guess would be that it’s a bit of all three – plus some other stuff they’ve figured out over three decades of being in the Gaming, erm, game.
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There is definitely a level of quality-control when you do everything in-house, and of course then you don’t have to split the profits, either! And, like you mentioned, while some people may walk away, I think there are plenty of people who will still buy the products even if they have to wait. It’s been a business plan that’s worked so far, after all.
Cynical me just can’t fully believe that Nintendo doesn’t realize how popular they are, so I wonder if this is just their plan, and they’re sticking to it.
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I’m sure all the people who buy up all the stock then sell them on eBay for 6x the price think it’s great.
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I’d love to kick those pieces of work right in the sack, to be honest. But then I remember that 1) people who buy from them at those inflated prices are idiots who enable and even encourage other people to behave like that, and 2) Nintendo themselves cause that gray-area market to emerge by not producing enough supply to meet the demand, even when it cuts into their own earnings.
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But Nintendo must not care. They’ve already sold those 50 units, so it doesn’t matter that some person removed twice from them is buying from a 3rd party seller. They already made their profit. Nintendo does seem to cause it, so maybe they put their marketing plan about the consumer, because it’s not hurting the company.
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Of course – they made their money and they don’t care. Just seems odd to limit a product when demand is so high. The inflated prices are only going to those sellers – Nintendo doesn’t even get to capitalize on it. Strange behavior but at least explainable.
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Aether had a good explanation about production shortages, but my question is why they still go on for so long… And they are for every Nintendo product…
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Yeah, I’m sure. It’s a pretty sweet deal for them, and Nintendo doesn’t care since they’ve already sold those units…
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I understand it from a business perspective, but only to a certain degree. Nintendo really takes the hype-machine to the next level by severely limiting how much they produce. I consider it a trade-off between selling less hardware and software overall, but spending much less on marketing, as the hype surrounding the (un)availability does enough of a job in the sales department.
The part that chaps my ass is that they are just making fans get screwed, and resellers rich. It’s pretty ridiculous and the fact that people pay these awful people 3-5x the MSRP for something they “need” to have makes me nuts. If they didn’t buy them, the resellers wouldn’t buy then to resell. Instead, you basically need someone on the inside to get anything at MSRP. Pretty ridiculous if you ask me.
I think I’m still just really bitter about the NES Mini, a thing I will never have because I refuse to spend that amount of money (and don’t think anyone else should enable resellers, at that…).
The thing is – these aren’t concert tickets. There isn’t some finite number on how many they can produce, on a long enough timeline at least. They don’t expire or go back – they just need to be a lot less stingy about making their own products so that people can, you know, enjoy them.
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I definitely agree. If the scalpers didn’t get any business, they’d stop buying so many units… At some point, I wonder which one will win: love of Nintendo or a hatred of getting screwed again and again.
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My knowledge of business is practically nonexistent, so this and the articles you linked were pretty illuminating.That said I am still going to give my opinion as if I knew a Lean Process from Adam 😛
I’ve often wondered if the NES Classic bait-and-cancel was something similar to what Starbucks does when they expand their business to a new country. When Starbucks tried to gain terrain in European and Latin American countries with a café culture, they set up way too many stores in close proximity and offered low prices, and once they blasted the competition they started closing stores and raising prices.
*adjusts tinfoil hat*
My almost-conspiracy theory is that Nintendo did this not only because of maximum efficiency and free publicity, but also to strike against emulator hobbyists and businesses, particularly now that it’s pretty easy to 3D print a NES-looking case (https://all3dp.com/1/raspberry-pi-nes-case-pi-3-nintendo-case-retropie/).
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Interesting. I thought Starbucks was’t doing well in Europe, though? Just because of the cafe culture you mentioned.. I’ll have to check into that.
So you think that releasing the NES Classic was a way to keep people from emulating their games? That’s a fascinating idea… But wouldn’t they then have to produce *more* Classics so more people could purchase them, therefore cutting into the emulator’s customer base since qualified Nintendo games would be made available?
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No, it isn’t doing well, and it certainly did not work at all in Italy and France. Still though, about 10 years ago Starbucks really caused a a bit of a mess in some countries. Specifically, I remember the case of some Spanish cities losing a lot of old and traditional stores thanks to this strategy. And the model did work in some of the bigger cities of México and Perú (and Venezuela before things went south), but not so much in the rest of Latin America.
You’re too right, what I said would make sense if Nintendo kept a continued production or decided to put out a limited stock of consoles every [x] amount of time. But if it made sense it wouldn’t be a conspiracy theory, no?.
On a less nutty note, Nintendo’s actions are obscure as hell. Beyond hyping people and the advantages of limited production (a niche market, better quality of their product) and limited growth (no need to hire more staff, worry about inventory or about locating their excess stock), I am not sure I can see why they did what they did with the NES.
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I’ve heard so many excuses for Nintendo’s deplorable stock behavior. Some say they are just a frugal Japanese company who plays it safe. Others say they just don’t realize how popular they are. There’s also the theory that they do it on purpose to create artificial demands. I for one am sick of it, no matter what the damn reason is. Nintendo has held me by the childhood nostalgia for a long time now. I finally feel that hold slipping with all their stock stupidity. I love the SNES (my first console) and I’m not even sure I want to buy the SNES Classic anymore (well stocked or not).
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This is a real problem that they might have to contend with. After all, most manufacturers deal with supply chains and things, and while consoles usually experience a bit of a shortage when first dropped, it seems more prevalent with Nintendo. Maybe it’s because they sell a wider variation of products. Who knows? I know I began my long love affair with Sony during the GameCube era, because I was tired to having to re-start my collection over and over again, so I pretty much still slip into Nintendo-land for Zelda and not much else at this point, which is sad because they have some really solid products!
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As we’re talking about this, do keep in mind that production of any type is way more complicated that people realize. Particularly in the case of complicated hardware systems, in which Nintendo would be relying not just on their capacity, but the capacity of all the companies developing components for the system. It’s not necessarily just a case of selling more equaling more money, either, as there can be a point in which you see diminishing returns, which in the case of Nintendo’s goods I would expect to see come as prices for additional production rise when going over a certain amount.
I think consoles are in a bit of a different situation than anything else. Especially in the case of the Switch, which I wouldn’t expect anyone, Nintendo included, to expect it to be in as much demand as it has, especially after their experiences with the Wii U and the 3DS. In any case, opposed to most major technology releases, consoles both require significant development time but aren’t more expensive for early adopters, which, from an economics standpoint, would stretch out the timeframe in which they’re working with their supply and demand curves. Assuming rate of production is limited by financial or logistic concerns, console manufacturers, if they know they’re going to sell out of their first several production batches, would be faced with the choice of either releasing the first batch when it’s ready knowing it’s not going to be able to fill demand on its own, earning money and starting the continuing buzz about the product, or just warehousing the product until they can comfortably fill the initial demand, which is more expensive, riskier, and delays them earning money and building a library off of it. If we assume that they can just easily speed up their production without causing logistics problems or increasing costs, sure, it should be easy for them to ship it off, but I don’t think that’s very realistic, and there’s little incentive for them to sit and stockpile otherwise. Sure, they’re doubling production now, but I imagine that’s come with a change in estimations, and is probably more expensive for them than they’d like.
As for the production shortages with the Amiibos/NES Classics/Etc., eh. I think a lot of that stems from dealing with an uncertain demand, given that these were completely new product lines for them, and their recent major releases before then did not go off well for the completely opposite reason. Even though demand for the NES Classics may yet be high, I would guess that they ran the numbers and found that it was not going to be a sufficiently profitable venture for them any longer, either costing them too much in staff/production or having too high an opportunity cost for them to keep it going.
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See, this is the type of information that is hard to come by on the internet under the cacophony of hatred toward Nintendo.Like I said, I can forgive console shortages; most consoles experience them when first released, for the reasons you mentioned. It just seems like there is a pileup of shortages that people can’t forget, usually relating to the Amiibos/NES Classics/etc. But one thing that I’m still not understanding it for, saying the NES Classic – are they really so stupid as to think that’s not something their fans would want? Why did they not crunch the numbers then and figure that it wouldn’t be cost effective to produce them long-term? Why *lie* and say they would increase production, and then pull the plug on the project? Their perpetual surprise at their popularity just seems a little strange to me.
Like I said, I’m wholly on board with supply chain issues for main consoles. Maybe it’s their attitude that just rubs me the wrong way.
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Sloppiness, largely. I’ve been on the transmission end of things that have to be recanted later on plenty of times, and those statements seem familiar to me. Either the people making the announcement and the people making the decision weren’t communicating properly, or they released a statement before the decision was finalized. Either way, they really shouldn’t have, and you’d expect a company so notoriously closed-mouthed to be better about it.
Then again, I could just be looking at it through my lens. I’ve learned to assume incompetence before I assume malice when it comes to the bad things organizations do, and that’s usually ended up being more accurate for me.
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Nintendo is a very conservative company. This isn’t a new occurrence for them either, they been conservative for nearly their entire existence. They sell almost all of their products at a profit, even at their launch, something that companies like Sony and Microsoft struggle to do. Additionally as part of their conservatism they manage their cash very closely. Production of consoles obviously costs an outlay of money, to manage their cash flow as closely as possible they try to make what they can sell and don’t attempt to flood their channels.
Obviously for fans like us that are missing out on getting amiibo, or a Switch, or a NES Classic, it’s an annoyance and we all play arm chair business planner arguing that if they just put more out there then people would buy them. But if they didn’t plan conservatively, it’s possible that some of their missteps could have sunk the company a long time ago. I’ll take having to wait a few months for a new system as opposed to them not being around anymore.
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I agree that launching a huge console like the Switch will result in shortages. A lot of consoles deal with that problem, because they are trying to minimize risk. I’m completely on board with that. But what’s amazing to me is that it’s Nintendo that has the reputation of running out of things. And it’s Nintendo that straight up said they’d increase production of the NES Classic before halting the project because… reasons that they didn’t tell anyone. I don’t pretend to know how to up production or all the details that go into creating a business plan, but maybe it’s the mishandling of the issues that just rub people the wrong way (that is, not commenting on them other than to humbly brag a bit).
Like I said, whatever their plan is, it works. We’ll have to deal with shortages, and products being pulled for reasons that are not explained, etc etc. At the end of the day, it’s Nintendo, and you’re right – everyone will wait for it.
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They are really bad a communication, which I attribute to why they have a bad rep. The NES Classic is a really weird piece for them, I think they were honestly taken aback by the success of it and then the Switch hit and they had to make a production line choice, get more of their $300 device that is their focal point for the next handful of years on to shelves or get more of their $60 device that has a limited half life due to nostalgia and a low grade yield on profit. From a business standpoint, it is a truly simple decision but from a fan perspective, it sucks. A lot.
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Although I’m not a big fan of Nintendo’s shortages, I understand the conservative stance they’re coming from.I wouldn’t be 100% sure that people would want amiibo of characters like Little Mac (I did and I love it!) or Wii Fit Trainer. So it makes sense to not make a lot. Same goes with NES Classic. While it sounds like a no-brainer that people would want a miniature Nintendo, we have to remember that the Wii U sold like coldcakes (that’s the expression, right?). Coupled with rumors that they can’t produce because they’re in line behind Apple for parts, I’m not surprised that we don’t see a lot of systems in the wild.
What I don’t understand is why they would discontinue popular items. The NES Classic, if produced regularly, could lead to many more sales, especially since people are so hyped about it. I get that they want to focus on the Switch, but there surely is room for both, right? I mean, Nintendo has long been focusing on two systems for the past several decades. And then when the NES Classic was announced to be discontinued, we only got a handful of final units. I got lucky and finally got one of the last few, but I’d certainly be a lot saltier were not the case. Anyway, my point is that I understand holding back on making lots of units initially, but I don’t get why supply is rarely increased to match the hype demand.
Great post as always!
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I like that: “selling like coldcakes.”
One of my biggest complaints is that we don’t know the reasoning behind decisions. It would make sense if they said that the NES was no cost-effective at the price they were selling it at – it would still be annoying, but at least it would make sense. Even if they outright said it would be a limited edition, that would have been fine. But dropping a console to promote another console, then promising more production, then halting production is just baffling to me. I’m glad you got an NES Classic, though 🙂
I agree; they knew how many pre-orders they had for the Switch… did they really think that they wouldn’t sell even that number??
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Nintendo products tend to depreciate in value far slower than other companies. I think they produce limited quantities to keep demand/prices high. You are screwed when it comes to hardware, but at least when it comes to games in this digital age you have the option of downloading software that is out of stock.
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Thanks goodness for small favors! haha I tend to be a little more cynical when it comes to business practices, so I’m inclined to believe your assessment of their long-term strategy.
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Nintendo, to this day, remains one of my favorites in terms of content produced – sure, it doesn’t appeal to everyone and I get it! But most of what I see from them is innovative (though very flawed at times) and funny – talking about games and consoles.
It seems like they take a risk with ideas for consoles but then they act like “Maybe it wasn’t such a good idea…let’s produce only half of what we were expecting”.
People being too hard on Nintendo? Uhm, don’t think so, since their own statements are confusing and/or contraditory sometimes. It’s expected, I’d say.
And now, this article reminded me I didn’t get a NES Classic (and also: NES Classic didn’t bring my attention to Switch, it had the opposite effect)
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They are a very innovative company, and I can completely understand being concerned with sales for a product that is so unlike what else is out there, but, with the exception of the Wii U, none of their other consoles have performed “poorly.” You’re right that the sticking point is how they communicate. Whatever real production issues they have are just inflamed in the public’s eye when they say confusing things.
I didn’t get a NES Classic, either, if it makes you feel better. I’m back to hunting for copies of games to replace the ones my sister has now 😉
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You’re right! But the public also overreacts a lot (specially if they don’t like Nintendo already). Also… I just wish they were a bit more straightforward with their customers.
Well, I do have an old NES somewhere – but sadly, it doesn’t work anymore 😐
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Me, too…
In addition to eventually (finally) posting about my recording set-up, I’m going to be posting about attempting to fix my NES. Ugh so many hurdles for some good, clean, retro-gaming! haha
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There was a point before Nintendo released the Switch and their stock was flagging that I sincerely hoped they would close their hardware division and make their games for other consoles! Now I own a Switch and god damn you Nintendo, I hate you as much as I love you.
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Right? I’d love if I could play all the Zelda titles I love on my Playstation! But alas, this gamer will just have to wait for prices to come down a little more… Love and hate, indeed!!
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I had to stop at Best Buy for a new pair of headphones, and since I was there, I figured I’d ask about the Switch. Of course they didn’t have any in stock, and the sales person told me they have no idea when they’ll get any in like literally. Nintendo apparently sends them using UPS and they just arrive when they want to. This isn’t the case with all retailers though. Mr. Panda gave me a tip that Toys R Us was going to get a shipment in Friday morning. I couldn’t make it to the story unfortunately, but some are aware of when they come in, and information travels.
My point is Nintendo seems to do what they want, and what they want is to not have products sitting on the shelf (from what I’ve heard). I have NO IDEA why they do this, because it is the most irritating business practice ever, but it’s almost like we (their fans) are in an abusive relationship with them. They pull this nonsense so when they are “good” to you aka you find one of their sought after products, you feel obligated to buy it, because who turns down catching a unicorn? The Big N is beloved enough and in such high demand that most people aren’t going to say “Ef you!” due to that popularity and the desire to either cash in on the nostalgia or to have bragging rights that you managed to obtain one.
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Yeah, it seems to be a sad truth that people will buy Nintendo products no matter what. I saw a (admittedly horrible) comparison between Nintendo and an abusive significant other, that no matter what they do, you go back because you just can’t stop loving them. It really made my blood boil a bit, because – although I’d rather be dealing with Nintendo than an abusive significant other – the point is a valid one… They can absolutely do whatever they want.
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I’ve seen and though the same thing. It’s irritating, but it’s not the fault of the victim for coming back; it’s the fault of the abuser for being abusive, and I mean the Big N, too. They’re doing this all for their own gain, but they’d still gain if they treated their fans right 😦
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Reblogged this on DDOCentral.
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Hey, wow! Thanks!
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