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[Trojita]

Can't really blame them after the Wii U fiasco, and to a lesser degree the 3DS.

It's expected to be conservative when the last time they overstocked it bit them in the ass.

The poorly named and advertised Wii U and the overpriced original 3DS launch are your examples?

How does everyone still not get this? Here, let me break it down for you.

Look at amiibo. First group of amiibo come out, Nintendo has it's initial shipment. It underestimates demand, and people get pissed. Bad.

So, Nintendo decides to try to fix the issue with Animal Crossing amiibo. Well, Nintendo overestimates demand. They litter store shelves for months and can't be sold for even $5 or less. This is WORSE. Stores get annoyed they are stuck with extra merchandise they can't sell. This costs Nintendo a lot of money and relationships.

Fast forward to NES classic. Does Nintendo over produce it and risk a repeat, or under produce it and if demand is high, do a second shipment? The answer is pretty clear. Watching people think it's some sort of manipulative scheme is hilarious...It's cost. Nothing else. If you over produce and misread it, you're left with a lot of leftover supply.

I've seen it time and time again with more products I can't mention. But that's how it works.

You are using the Animal Crossing Amiibo, which came out awhile later, as your example? No one wanted those Amiibos.

 

[jabberwocker]

The poorly named and advertised Wii U and the overpriced original 3DS launch are your examples?



You are using the Animal Crossing Amiibo, which came out awhile later, as your example? No one wanted those Amiibos.

Of course and there was no way to predict how many of these neses were going to sell. You can be damn sure if there's an Snes classic out next year they will be everywhere.

 

[RoninChaos]

lol

Laugh all you want. It's true. Read game over or anything about how Nintendo operates. This is how they drum up demand.

 

[jabberwocker]

Laugh all you want. It's true. Read game over or anything about how Nintendo operates. This is how they drum up demand.

It has to be good to drum up demand. So they operate by creating good stuff? It still has nothing to do with the fact there was no real way to forecast what it was going to sell.

 

[Adam Tyner]

Source?

A few I remember from the main NES Classic thread:

I'm a retail buyer and I can tell you the stores I supply received 7% of the units I ordered from Nintendo back in August.

Our indie games shop ordered through a major distributor. We got 20% of what we ordered and reportedly were lucky to get even that much.

Distributor for non-big-box retailers. Nintendo screwed EVERYONE in distribution, hard. Rep told me tons of their customers who ordered units got zilch.

(That last part was later edited out, but you can still see it in a bunch of the quotes elsewhere in that thread.)

 

[thekonamicode]

Nintendo could literally fill a warehouse and it wouldn't matter if the stores don't want it. I'm willing to bet the buyers knew about the mini well ahead of time and signaled they were cool on it, which led to a smaller production. Nintendo's "research" mean nothing when the buyers research could say otherwise.

This is just not true. I've been a buyer for 14 years and it was obvious the NES Classic was going to be a huge hit in retail chains. I put in initial orders nearly identical to our Wii launch hardware numbers, 6 months in advance, and received a paltry amount.

In fact, our initial stock was so low, there was no point in even updating our social media accounts letting customers know we had them.

 

[LordRaptor]

Wii U or 3DS?

No, a substitute good would be if Raphael was the hot toy this christmas, and there aren't enough so people buy Donatello, Leonardo or Michelangelo toys instead.

It is ludicrous to think someone wanting a NES Mini is going to buy a WiiU instead if they can't find one.

Switch?

No, an upsell would be if the NES Mini is as it is, but there is also a NES Mini Deluxe which comes with a R.O.B. amiibo, some stickers, a keyring, and other assorted cheap to make high margin tat, and costs $150.
If there were 90 NES Mini Deluxes available for every 10 regular NES Minis then you could point to this and say that the 'real' product for sale is the deluxe, and the vastly less profitable regular is just there to provide a sticker price.

It is ludicrous to think someone wanting a NES Mini is going to pay in full for a preorder for a Switch instead if they can't find one.

It seems you're suspicious of the practice of artificial scarcity in general.

No, it is a known strategy.
But it is usually a known pricing strategy, not a manufacturing one; see Veblen goods.

People in this topic seem to think you can create demand that isn't there by fucking about with supply chains, which is nonsensical - and where I question the biases of the people making these claims - because you can't create demand that isn't there.

At best you can set a price that is desirable for the largest group of people or maximise your margins by selling at the most expensive price people are willing to buy your existing stock for.

Scalpers benefit from artificial scarcity. Nintendo doesn't.
Which is why to my mind there is a huge question mark about the "artificial" part that I don't understand why people are taking for granted as true.

 

[filly]

Basically, if you want a switch, get that preorder in. You can always take it back if it doesn't deliver the games on launch and by the sounds of it sell at a profit if its not for you... if your into that sorta thing. Nintendo doesn't leave you with much choice if you love their product and you want it on day one. The wii was low on stock for half a year. I think this is the real reason why Zelda is speculated to be delayed until June - install base and to give them time to go full cycle with stock shortage and supply.

 

[spineduke]

N

No, it is a known strategy.
But it is usually a known pricing strategy, not a manufacturing one; see Veblen goods.

People in this topic seem to think you can create demand that isn't there by fucking about with supply chains, which is nonsensical - and where I question the biases of the people making these claims - because you can't create demand that isn't there.

At best you can set a price that is desirable for the largest group of people or maximise your margins by selling at the most expensive price people are willing to buy your existing stock for.

Scalpers benefit from artificial scarcity. Nintendo doesn't.
Which is why to my mind there is a huge question mark about the "artificial" part that I don't understand why people are taking for granted as true.

You can incite people who are on the fence to impulse buy if the narrative is that supply is limited and hard to get hold of. That's the whole psychology with limited quantities. Long term you sell batches while keeping the media spotlight on your company that's always emptying out and highly in demand. Persistent high demand and media attention over the years > big launch sales. Why is this hard for you to understand?

 

[LordRaptor]

Persistent high demand and media attention over the years > big launch sales. Why is this hard for you to understand?

Because this is a cheap toy nostalgia cash-in aimed at the gift giving christmas market.
It's a one and done sale; there's no upsell.
There's no evergreen tail. Its hugely seasonal, and missing the biggest retail sales spike of the year is just lost sales.

We're not talking abstract consumer theory; we're talking about a specific product.
One that if you really want one after the christmas rush is over you are not going to have any problem finding whatsoever.

 

[Parapraxis]

So it's 10 days till Christmas and the damn thing is still nigh impossible to find. At this point Nintendo is definitely losing possible earnings. I still think it's manufactured scarcity, but I think they have overdone it this time.

 

[SumptuousLemur]

The NES Classic Edition isn't an evolving platform, so Nintendo is leaving money on the table right now.

However, Switch is their new platform and incredibly vital to their sustainability. If they can't meed demand for Switch then they are not only leaving customers empty handed for awhile but they are stunting growth for their new platform.

 

[LiveFromKyoto]

So it's 10 days till Christmas and the damn thing is still nigh impossible to find. At this point Nintendo is definitely losing possible earnings. I still think it's manufactured scarcity, but I think they have overdone it this time.

"We'll hold out until 4:30pm December 24th, then suddenly make them available & make billions, no, trillions!" It's time to give it up already, anybody should be able to see the conspiracy is bunk by this point.

And in retrospect this is the video that probably made me give up on Sterling, it was just too needlessly cynical & spiteful. I get that you need to be over the top to rise above the crowd & get attention for for clicks, but if you overdo it, it starts to reflect worse on you than your target.

 

[Parapraxis]

"We'll hold out until 4:30pm December 24th, then suddenly make them available & make billions, no, trillions!" It's time to give it up already, anybody should be able to see the conspiracy is bunk by this point.

And in retrospect this is the video that probably made me give up on Sterling, it was just too needlessly cynical & spiteful. I get that you need to be over the top to rise above the crowd & get attention for for clicks, but if you overdo it, it starts to reflect worse on you than your target.

Can you explain phenomenons like Furbies, Hatchimals, etc?

They definitely use scarcity to drive up demand no?

 

[LiveFromKyoto]

Can you explain phenomenons like Furbies, Hatchimals, etc?

They definitely use scarcity to drive up demand no?

So they could sell at Christmas.

Nobody running a $34 billion dollar company is engineering a grand conspiracy to spike demand and then not supply it until it's gone.

 

[Parapraxis]

So they could sell at Christmas.

Nobody running a $34 billion dollar company is engineering a grand conspiracy to spike demand and then not supply it until it's gone.

They are in the exact same situation as Nintendo. They created huge demand and failed to supply enough.

Also, conspiracy or not, Nintendo is missing the boat here, so I guess they are just incompetent.

A Message From Hatchimals

The consumer response to Hatchimals has been extraordinary, exceeding all expectations. This is a special season and we don’t want anyone to be disappointed, nor do we support inflated prices from non-authorized resellers. While additional product will hit retail shelves in December, we anticipate this inventory will also sell out quickly. We have increased production and a whole new batch of Hatchimals will be ready to hatch in early 2017. In the meantime, we have created an online resource center at Hatchimals.com/NorthPole to help kids and their parents during the wait. We are also partnering with some of our retailers to develop pre-sale and/or rain-check programs for redemption in January. We will continue to update with program details as they become available.

Looking at google trends It's actually reasonable to say the makers of Hatchimals have been caught off guard by the popularity of the toy.
Sept 25th is where the first significant interest in the things was shown.

https://www.google.ca/trends/explore?q=hatchimal

Nintendo should have seen the success of Nes Classic coming a mile away.

https://www.google.ca/trends/explore?date=today 12-m&q=nes classic

 

[FinaruDensetsu]

Wow people still believe in this kind of "conspiracy"? That's really giving Nintendo way too much credit. They are just stupid and rarely learn any lessons, that's the cause.

 

[border]

Hanlon's Razor -- "Never attribute to malice that which is adequately explained by stupidity"

Nintendo just grossly underestimated demand. The idea that they would undersupply retailers during the Christmas season in favor of some Q1/Q2 2017 payoff is pretty ridiculous on the face of it. People that can't buy the NES Classic in December will just forget about it by the end of next month.

 

[spineduke]

Wow people still believe in this kind of "conspiracy"? That's really giving Nintendo way too much credit. They are just stupid and rarely learn any lessons, that's the cause.

I wouldn't label it as a "conspiracy" - more like their standard operating procedure.

Nobody can be in the business decades long as Nintendo and still make the same supply mistakes over and over. The underlying motivations attribute to aligning their goals with minimizing overproduction costs as some of you have stated, while keeping their profile in the media spotlight and creating a prolonged demand that keeps the tail end of their products going on for a long long time. The Classic NES will most likely sell strong, in and out of seasons.

 

[ramparter]

I believe it was a combination of underestimation and their policy of undershipping - Nintendo doesnt like seeing their products price dropping. They rather undership than overship.

A friend of mine suggested a month before nes classic release to wait until stores sell them out for 30€ - lol idiot I know. Guess thats one of the things Nintendo wanted to avoid.

 

[border]

Nobody can be in the business decades long as Nintendo and still make the same supply mistakes over and over.

Of course that's possible. We're talking about a company that is just incredibly conservative about their production runs, and doesn't want to get stuck with a bunch of unsold inventory. Nintendo are a bunch of relentless penny-pinchers, so to me it totally makes sense that they would err on the side of under-production rather than over-production.

 

[Lord of Ostia]

Based on the info that they only shipped like 200k of the product, I think it's obvious at this point they just underestimated demand. They probably had the manufacturing pipeline set up with the announcement, which was when retailers were still lukewarm to the idea. They announce, have a huge upswell in interest for it they didn't plan for, and have to put in more orders for them...which can't be filled until after Christmas most likely. That seems the most likely scenario, anyway. Still pretty dumb, and if they had done preorders they could've estimated demand better and more quickly so maybe this wouldn't have happened.

 

[JoshuaJSlone]

I wouldn't label it as a "conspiracy" - more like their standard operating procedure.

Nobody can be in the business decades long as Nintendo and still make the same supply mistakes over and over.

When they release thousands of items, it would be a miracle to not bungle things up big sometimes. We've seen it go both ways.

Based on the info that they only shipped like 200k of the product, I think it's obvious at this point they just underestimated demand.

Where did that come from? I'd find it pretty hard to believe, considering they sold more than that just in its first few days of availability in Japan.

 

[Cheerilee]

Where did that come from? I'd find it pretty hard to believe, considering they sold more than that just in its first few days of availability in Japan.

http://www.neogaf.com/forum/showthread.php?t=1325592

November's NPD report is out today, and it turns out that the Nintendo Classic Mini sold an estimated 196k in the United States in November

According to Media Create reports, first week sales in Japan were 262.961

There was also a supposed insider mentioned in that thread who said on twitter that their sources told them that Nintendo wasn't above creating shortages to manipulate the market (and confirmed that that's what they try to do with amiibo), but that's not what happened in this instance.

According to them, Nintendo didn't think the Mini would be a hit. They thought it would be a dud. They could easily have learned otherwise by making any effort to gauge demand, but they didn't care to learn otherwise, because to them the Mini was a dud that wasn't worth their attention. It wasn't part of a strategy to drive Switch demand or push Wii U/3DS, it wasn't part of anything.

NOA is apparently pissed internally right now, because their most conservative estimates (now that they've finally bothered to have estimates) show that it would have given them a much-desired boost over the holiday season. Now they have to deliver bad holiday results and have egg on their faces while doing it, because there was something they could've done about the situation but they were too ignorant to do it.