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[Frodo]

Are we still creating the narrative that a company would rather NOT sell a product they could be selling, just in the hope of some gaming news sites publishing an article about it that theoretically would lead people that are not necessarily interested in buying said product suddenly want one?

Just think about it for a second to see how ridiculous that sounds.


Blame Nintendo for being incompetent with gauging market interest, but please, stop with the "Fabricated shortages" bullshit.

 

[Toadthemushroom]

Is there proof in either case that the HW shortages are intentional or fabricated? I've never seen it proven that NES Classic for example can validly be said to have intentionally/fabricated shortages in order to drive demand. My understanding is that it's equally possible that the situation is as Joe writes below:

Good point, I was probably a bit too eager with my language. I think Joe makes a good point in stating that Nintendo legitimately underestimated demand for the NES Classic, though I think it was intentional, since the NES Classic exists as an IP Awareness driver, and each unit probably nets Nintendo very little income. The demand for the NES Classic links to the sort of audience Nintendo's trying to target with Switch - long term players who might have grown up with a NES/SNES or Game Boy.

 

[Booker.DeWitt]

here we go again, every week a topic like that pops up.

 

[Vanillalite]

Launch day is what it is.

Fabrication shortages and artificial scarcity is more of a long term thing than a launch thing.

So let's hold off on this until we see how this goes. Let's see how long it takes for wave 2 of units to hit stores, and if it's just a dribble vs big restock.

If you can't find a Switch over the Summer due to Nintendo just restocking with like 2 random ass units on a Wednesday then you can complain then.

For the record Nintendo has shit the bed with the NES Classic. I get undershipping at launch. No reason to have to jump through hoops now though.

 

[Chû Totoro]

lolz.

No there's no such things.

I can believe that Nintendo is very conservative so if they have many scenario they'll go for the least optimistic one so there's that.
Or you can say that they failed at their maths (maybe) but most of the time it's just that you can't produce more in a such short time frame (Nintendo or any other company).

But maybe some have proof of such practices (I'll wait... but not too long).

 

[Sword Of Doom]

Are we still creating the narrative that a company would rather NOT sell a product they could be selling, just in the hope of some gaming news sites publishing an article about it that theoretically would lead people that are not necessarily interested in buying said product suddenly want one?

Just think about it for a second to see how ridiculous that sounds.


Blame Nintendo for being incompetent with gauging market interest, but please, stop with the "Fabricated shortages" bullshit.

Kind of shows how incompetent their leadership has been that people actually believe this

 

[ChrisMahoney]

There are more Nintendo Switches available at launch at stores than any other console launch I've ever seen

 

[foltzie1]

I doubt they are withholding units but they may be playing it too safely / conservative

Then that isn't a fabricated shortage. It's a failure at worst to anticipate market demand.

At best its an unfortunate side effect of trying to not over pay for production capacity that you dont need for more than a few months.

Every major company deals with these types of constraints. iPhones sell out at launch, heck people are selling $160 AirPods in the BST thread for over $200.

 

[sixteen-bit]

Are we still creating the narrative that a company would rather NOT sell a product they could be selling, just in the hope of some gaming news sites publishing an article about it that theoretically would lead people that are not necessarily interested in buying said product suddenly want one?

Just think about it for a second to see how ridiculous that sounds.


Blame Nintendo for being incompetent with gauging market interest, but please, stop with the "Fabricated shortages" bullshit.

Corporate executives get bonuses when a product sells out.

*dons tinfoil hat*

what if the higher-ups at nintendo just want dat bonus at all costs?

 

[ocean]

A "fabricated shortage" is a gaming forum myth. It makes absolutely zero business sense. The whole "it'll generate buzz when people hear it's always sold out" or "free press about store opening lines" conversation is just plain silly.

Nintendo is a large corporation with tremendous business saavy despite their weird choices. They may misread the market at times but to suggest this nonsense is to assume the company managers are 12 year old GameFAQS posters

It's one of two things: either their supply chain management process is highly inefficient, or they're extremely wary of over committing and being stuck with millions in unsold inventory. I'd wager it's the latter.

Day one scarcity is one thing. Apple can't build enough iPhones to supply every single day 1 order when a new phone is out, because sales are front loaded and you don't want to pay for manufacturing capabilities which can deliver 3 million phones a day when that output will only be necessary for a week. The rest of the year they'll be selling under that, so you pay for manufacturing capabilities suited to average sales volume instead of the peak. You do your math right and shortages subside after 2-3 weeks unless there's a major upset from a critical supplier.

In Nintendo's case where items like the NES Classic seem to be perpetually scarce? It's not a grand master plan. It's leaving money on the table. A result, I wager, of committing to the lowest possible manufacturing output rate baseline in order to hedge their risks against a product flop.

TLDR. Nintendo isn't intentionally provoking shortages because they're not morons; it's more likely they commit to smaller orders with manufacturing suppliers because they're risk averse and want to avoid over supplying.

 

[AniHawk]

I haven't seen this discussed and was simply wondering if it was acceptable because this is a Nintendo thing. I checked to make sure it wasn't just gamestop and it isn't, several other retailers are reporting the same thing. Nintendo is only allowing an extremely limited number of preorders for the switch system and it doesn't currently look like we will be receiving any additional units outside of preorders. Either they aren't expecting it to do well outside of their hardcore fan base or they are with holding units to manufacture demand. Either way I'm not sure it's a good move on their part.

you know what would be helpful here are actual numbers.

all we know is that 2 million units are being set for launch worldwide. if we don't have a feel for how many preorders have been placed, it's really hard to say one way or another that nintendo is intentionally trying to drive demand by artificially creating a shortage.

 

[The Hermit]

Haven't seen it discussed huh?

This is what I thought

I think he meant it wasn't discussed enough I.e. 1000 times

 

[Graphics Horse]

I'm not sure why this thread if Nintendo-specific really, I see an equal amount of lamentation over the fabricated hardware shortages for the PlayStation VR. For instance, the device is "sold out" on both Amazon UK and GAME right now.

The difference with PSVR is Sony has to expensively breed a certain exotic species of hyena from which they extract the eyes to make the lenses, it's a very time consuming and expensive process and not just three pieces of plastic like the Switch is.

 

[Woffls]

This is discussed a lot.

We don't know if it's fabricated, or just Nintendo being conservative. I don't think they were expecting anything like the numbers NES Classic sold through, especially when the precedence for such a console doesn't really exist. I'm a bit perplexed at how they've not managed to just go ahead and order some more, but I don't really know their supply chain.

If the Switch presentation has told us anything, it's that Nintendo is still a big dumb whimsical elephant.

 

[z0m3le]

Ps4 and xb1 both sold only 2m in their launch month iirc.

 

[Acerac]

Some of the shortage is genuine (nes classic) some is purposely caused (Wii U recalls) but all of it is annoying for consumers.

 

[Rncewind]

lolz.

No there's no such things.

I can believe that Nintendo is very conservative so if they have many scenario they'll go for the least optimistic one so there's that.
Or you can say that they failed at their maths (maybe) but most of the time it's just that you can't produce more in a such short time frame (Nintendo or any other company).

But maybe some have proof of such practices (I'll wait... but not too long).

Well i dont know about Nintendo, but saying there is no such thing is beyond dumb. Artificial Shortage or aka a limited product is a legitimate business strategy since decades

 

[GamerJM]

Nintendo got burned by the Wii U launch when units just didn't shift, so they're being more conservative.

It's not fabricated hardware shortages, it's them being conservative because it bit them in the ass last time

This makes sense, but I just wish they'd.....produce somewhere in between. Or better, move up their timeline so that they allow preorders earlier, allowing them better estimates for how many to produce.

 

[maxcriden]

Either they aren't expecting it to do well outside of their hardcore fan base or they are with holding units to manufacture demand. Either way I'm not sure it's a good move on their part.

It's possible they'll have additional waves of preorders, right? The staggering could be done less to manufacture demand and more to give multiple opportunities for purchase. There may even be additional units available to those who line up at certain stores day one rather than preordering. They may also want to stagger release through March in order to make units available to those who aren't hardcore gamers who knew it preorder imminently. That is to say, I don't think this is an uncommon or malicious practice necessarily. They've said they're producing 2M units for launch with the option to make more if demand is there. We don't know how long that demand will take to be recognized or for those additional units to then be produced. As Joe mentioned above, Nintendo have become very conservative in supplying product; once bitten, twice shy. So, with only 2M planned units, there could potentially only be 500K available in NA on day one. That's not a ton. But, the very fact they've said they can increase supply to meet demand gives hope they're optimistic to provide more if the demand is there.

 

[CeePhour]

Again, I don't understand the use of the word "artificial" here. Could someone explain?

Artificial

 

[DigitalRicket]

I doubt they are withholding units but they may be playing it too safely / conservative

This is Nintendo. They've always played it safe / conservative. And only more so recently as their hardware hasn't been selling the way it used to, so they are hedging their bets and making sure they aren't losing money before they know something is a sure thing.

 

[Jaded Alyx]

Ps4 and xb1 both sold only 2m in their launch month iirc.

In the holiday shopping season

 

[Nerazar]

Wow. Now we have to dig up some conspiracy theories, great.

So: is every product at launch which sells well part of a "fabricated hardware shortage"?

 

[Macleoid]

Has op responded with any real numbers, the names of the 'other retailers' or anything other than his wee anecdote?

 

[always crazy bacon]

I take issue with your use of the word "fabricated". What videogame hardware/software shortages aren't man-made?

Are you saying that Nintendo is sitting on a stock pile of systems that have been manufactured that they do not want to sell? Because that would make no sense. They'd lose money housing those systems.

You are absolutely correct, the idea that there are warehouses full of stock being held back. All that money tied up in stock, not out there making money through software sales, it's just in no way reality.

Nintendo are conservative and they just don't make enough simply because they wont expose themselves to that much risk.

I work in manufacturing, I've worked in one of the factories that Microsoft used to make Xbox 360. I can tell you that when there was the push for the NXE in 2008 they had completed stock piled up in the corridors of the factory offices just trying to meet demand because they could not ship in a week as much as they could overproduce to meet demand.

The conspiracy theory of manufactured shortages with Nintendo needs to stop. I worked also with a high-level sales executive and he in a few cases did use manufactured shortages. He explained to me that for that you only need to ship 1% less than the orders to be effective. Nintendo are way passed that.

 

[OsirisBlack]

Can you provide some sort of source for these numbers OP? I've seen people here say that their Gamestop is getting upwards of 50 or 60 consoles at launch, which doesn't seem all that limited to me...

east coast gamestop 929 area code 45 preorders allowed total no units outside of preorders currently. In comparison we had over 100 xb1 day 1 preorders and never hit a point where we couldn't take a preorder.

 

[Acerac]

Wow. Now we have to dig up some conspiracy theories, great.

So: is every product at launch which sells well part of a "fabricated hardware shortage"?

Seriously, Nintendo is just terrible at gauging demand. Don't assume malice when ignorance is a perfectly viable explanation.

 

[AfterTheFall]

Maybe they will also release an app to substitute the console.

Brutal.

 

[z0m3le]

In the holiday shopping season

Yeah 2m doesn't sound bad considering xb1 and ps4's sales, then Reggie said that those are for the first 3 weeks of March, meaning he expects a new supply before March's end

 

[Orayn]

Hanlon's razor, dude. They're certainly incompetent in other areas, no need to assume a brilliant evil scheme in hardware.

 

[ocean]

Well i dont know about Nintendo, but saying there is no such thing is beyond dumb. Artificial Shortage or aka a limited product is a legitimate business strategy since decades

If you've got a monopoly? Sure. Think the diamond industry. There's academic study about patent laws being a form of artificial shortages. But creating a non-luxury product intended for mass retail consumption in a competitive market and intentionally limiting your sales for word of mouth and press is frankly absurd.

You want word of mouth? Get the product into people's hands.

 

[DAREALGUMMY]

Yes, how has this issue NOT been talked about?

 

[Korigama]

I see their inability to provide enough supply for their products within launch windows unlike pretty much every other first or third-party company, be it hardware or special editions, as less a result of calculation as opposed to incompetency.

Hanlon's razor, dude. They're certainly incompetent in other areas, no need to assume a brilliant evil scheme in hardware.

This.

 

[AR15mex]

OP,

If you want to make money you need to sell your product. I do not believe that a company like Nintendo will leave money on the table to create "artificial shortages". That is not business wise, and knowing how greedy Nintendo are for their products; I do not believe is the case with the switch.

The Wii sufferred from this like for almost a year and the 100 million sales units prove it.

 

[Mokujin]

Mismanaged supply chain? Probably.

Arificial shortages? Highly doubt it.

 

[NightwingRebirth]

OP, this has been discussed way too much.

Also, you kinda answered your own question in your post.

If you're aware of the sales numbers of the Wii U and have at least taken one business class in high school, you really wouldn't have needed to make this thread.

 

[wwm0nkey]

2 million units world wide, I'm surprised it didn't go sooner and that most stores had 20-30 units to preorder

 

[maxcriden]

Good point, I was probably a bit too eager with my language. I think Joe makes a good point in stating that Nintendo legitimately underestimated demand for the NES Classic, though I think it was intentional, since the NES Classic exists as an IP Awareness driver, and each unit probably nets Nintendo very little income. The demand for the NES Classic links to the sort of audience Nintendo's trying to target with Switch - long term players who might have grown up with a NES/SNES or Game Boy.

Thanks amigo. And, to your point about NES Classic being an IP awareness driver, I think we are yet to see what the profit margins are like for it. I see where you're coming from but I think there are potentially two caveats. Number one, for those made aware by NES Classic but unable to get the darn thing, that has a negative knock-on effect vis a vis future Nintendo products, and then number two, as I said I'm just very interested to know what kind of margins Nintendo has on this product. If the net income on each is more than we expect (who knows what kind of deal Nintendo got on the manufacturing or parts, perhaps it was worked into a deal with the plants they use for amiibo or consoles), then that will give us a better idea of their expectations vis a vis IP awareness, profit or both.

 

[DinoBoo]

Maybe they will also release an app to substitute the console.

Oh my god.

 

[outunderthestars]

Haven't seen it discussed huh?

This.

They are an extremely conservative company that doesn't know how to forecast sales very well. There's no ulterior motive.

Also this.

 

[DeathoftheEndless]

TLDR. Nintendo isn't intentionally provoking shortages because they're not morons; it's more likely they commit to smaller orders with manufacturing suppliers because they're risk averse and want to avoid over supplying.

Yeah, that about covers it.

 

[PrimeBeef]

Can you provide some sort of source for these numbers OP? I've seen people here say that their Gamestop is getting upwards of 50 or 60 consoles at launch, which doesn't seem all that limited to me...

It's very possible that by the time the Switch's insides were finilized to the time needed to ship only 2 million could be made and packed ready to ship. That would have nothing to do with estimates.

 

[Peltz]

when you are manufacturing 1000 switchs an hour, but people are buying 1500 switch an hour, thats a natural shortage.

when people are buying 1000 switch an hour, and you can make 1000 switchs an hour but decide to just make 500 an hours just to "create" the illution that all people want this product

Okay, here is why your argument makes no sense. If you are making 1000 switches an hour but people are buying 1500 switches an hour, that is still not a natural shortage. You can always pony up more cash to increase your manufacturing capabilities.

In other words, your first scenario is the same exact thing as your second scenario except it doesn't have the conspiratorial non-factual spin.

"Natural" manufacturing shortages are only real in circumstances where NATURAL resources are scarce. An example of a natural resource are metals, diamonds, plants, water, food, etc.

That type of shortage simply doesn't affect the videogame industry. All shortages in videogame hardware are due to misaligned projections, investments and planning.

 

[Godzilla's Left Toe]

"Hey Kimishima we have a 3 million nes classic and 5 million NS what should we do?

Kimishima-"Stick them in a warehouse and let's create hype and not money "

 

[The Albatross]

How you know 100% its true?

This was Nintendo's policy in the 80s and early 90s, to short supply retailers who had already made inventory purchases, and use their market position to get (in effect) short-term no-iterest loans from retailers. They did it with the NES and SNES, which worked brilliantly for the NES, basically getting money up front for a promise of console deliveries, and then intentionally under-delivering, and using the upfront money as a no-interest loan. While it initially worked for the SNES, it allowed Sega to become a market force with the Genesis. Sega aggressively distributed the Genesis to retailers, despite Nintendo trying to prevent them to (threatening retailers that if they sold Sega products that they weren't allowed to sell Nintendo products), but this ultimately backfired for Nintendo and earned ill will from major American retailers like Toys R Us and WalMart. Sega wouldn't have existed in the capacity that they did without Nintendo illegally using their market cloud in the 80s and 90s.

So, this was their expressed policy in the 80s and 90s, it stands to reason that they still did it with the NES Classic.

It's not that they have millions of NES Classics in a warehouse. It's that they intentionally do not produce enough hardware to meet demand. The short-term loan system isn't there anymore, as power has shifted from producers to retailers over the last 20 years for a company like Nintendo. Nintendo also still operates under the broken idea of short selling for hype, as well, to make something seem hot. It backfires almost every time. But, it's not like Nintendo is some market genius or an impenetrable force of industry expertise. They continually show an unwillingness to adapt to new business and consumer trends in the market, and then make up for continual losses with one or two big wins that the market begs for (e.g., Pokemon Go, Super Mario Run, Mario on DS, NES Classic).

 

[outunderthestars]

"Hey Kimishima we have a 3 million nes classic and 5 million NS what should we do?

Kimishima-"Stick them in a warehouse and let's create hype and not money "

Yep. This is not how business works.

This was Nintendo's policy in the 80s and early 90s, to short supply retailers who had already made inventory purchases, and use their market position to get (in effect) short-term no-iterest loans from retailers. They did it with the NES and SNES, which worked brilliantly for the NES, basically getting money up front for a promise of console deliveries, and then intentionally under-delivering, and using the upfront money as a no-interest loan. While it initially worked for the SNES, it allowed Sega to become a market force with the Genesis. Sega aggressively distributed the Genesis to retailers, despite Nintendo trying to prevent them to (threatening retailers that if they sold Sega products that they weren't allowed to sell Nintendo products), but this ultimately backfired for Nintendo and earned ill will from major American retailers like Toys R Us and WalMart. Sega wouldn't have existed in the capacity that they did without Nintendo illegally using their market cloud in the 80s and 90s.

So, this was their expressed policy in the 80s and 90s, it stands to reason that they still did it with the NES Classic.

Except that retail orders don't work this way anymore. Retailers don't pay for product until after delivery (usually 30, 60, or 90 days after delivery).

 

[Orayn]

Okay, here is why your argument makes no sense. If you are making 1000 switches an hour but people are buying 1500 switches an hour, that is still not a natural shortage. You can always pony up more cash to increase your manufacturing capabilities.

In other words, your first scenario is the same exact thing as your second scenario except it doesn't have the conspiratorial non-factual spin.

How does one go about instantly, seamlessly scaling production to exactly meet demand?

 

[ClearData]

i am guessing that Nintendo is going to ride the demand curve for most of the year culminating in a ramp up this holiday. I hope for their sake that after the pre orders are filled there is still demand or they will be in trouble.

 

[Peltz]

How does one go about instantly, seamlessly scaling production to exactly meet demand?

You can't. Production management is a very deep and difficult discipline.

 

[Aostia]

nothing sells hardware like having not hardware to sell

exactly
this fabricated shortages is a meme