Beta
×

Welcome to the Slashdot Beta site -- learn more here. Use the link in the footer or click here to return to the Classic version of Slashdot.

Thank you!

Before you choose to head back to the Classic look of the site, we'd appreciate it if you share your thoughts on the Beta; your feedback is what drives our ongoing development.

Beta is different and we value you taking the time to try it out. Please take a look at the changes we've made in Beta and  learn more about it. Thanks for reading, and for making the site better!

Wii Shortages Costing Nintendo 'A Billion' In Sales

Zonk posted more than 6 years ago | from the less-than-a-hojillion-but-still-frustrating dept.

Nintendo 290

A New York Times article from this past Friday highlights the 'problem' that Nintendo is facing: more people want to give them money than they can handle. Analysts quoted in the story discussing Nintendo's unique Wii shortage problem indicate that the company could be selling twice the 1.8 million consoles a month it ships. All told, these same individuals believe the company could be leaving as much as $1 billion on the table this holiday season. "'We don't feel like we've made any mistakes,' said George Harrison, senior vice president for marketing at Nintendo of America. He said there was a shortage because the company must plan its production schedule five months ahead, and projecting future demand is difficult. He added that there had been a worldwide shortage of disk drives that had hurt Nintendo as well as makers of many other devices. 'It's a good problem to have,' Mr. Harrison said of the demand, but he acknowledged that there could be a downside. 'We do worry about not satisfying consumers and that they will drift to a competitor's system.'"

Sorry! There are no comments related to the filter you selected.

Let's use the music argument... (5, Insightful)

Gothic_Walrus (692125) | more than 6 years ago | (#21726638)

When people try to justify downloading music, they say it's okay because they wouldn't have bought the album in the first place, which means that no money was lost in the process.

Wouldn't the same kind of logic hold here? How can Nintendo lose money on nonexistent consoles if they're already at full production?

Re:Let's use the music argument... (1, Interesting)

Anonymous Coward | more than 6 years ago | (#21726692)

That's the joy of theoretical money. If they could ramp up production, they'd make an extra billion dollars. And if I were able to work twice as many hours, I could make at least three or four times what I make now!

Re:Let's use the music argument... (5, Funny)

lukas84 (912874) | more than 6 years ago | (#21726810)

Well, a day has 24 hours and if that isn't enough there's still the night ;)

Re:Let's use the music argument... (1)

Amouth (879122) | more than 6 years ago | (#21727622)

damnit i just used all my mod points - this hits home for me and how the company i work for thinks.. you have to be a workaholic just to apply here

Re:Let's use the music argument... (4, Interesting)

CastrTroy (595695) | more than 6 years ago | (#21726704)

If people decide to buy something else instead, and never end up buying a Wii, then it is money lost. However, I think that a high percentage of people will just end up buying it later, once units become available. Also, if the buy it later, the cost to produce a Wii might have come down, and Nintendo may end up making more profit per unit. That could yield them even more money in the end.

Re:Let's use the music argument... (1)

neumayr (819083) | more than 6 years ago | (#21727122)

Huh?
Kind of ignoring the season we're in, aren't you?

Re:Let's use the music argument... (3, Insightful)

xtracto (837672) | more than 6 years ago | (#21727240)

But grand parent has a point, people who is trying to buy the Wii is people who will NEVER ever buy a Xbox or Playstation 3 (grandpas, grandmas, Joe Average without 50 fingers, etc). The fact that they can not get the Wii at this time only means that they will wait until sometime next year or later to get it. Maybe their impulse will not be very strong after christmass, but once they play it again in their friends or relative's house, they *will* like it again.

Re:Let's use the music argument... (1)

sexconker (1179573) | more than 6 years ago | (#21727294)

The Wii has been effectively sold out for over 12 months straight now.

Insatiable demand + holiday season = insatiable demand.

Food for thought (3, Interesting)

dj245 (732906) | more than 6 years ago | (#21727444)

These are all good points, but I think the extra time that people spend waiting for the wii will be spend evaluating the other options, looking at the games, deciding if it is worth it and if the cross platform games perform the same or better on other consoles. While it is true that the wii has titles and gameplay the other consoles do not, cross platform game support for the wii is downright awful. Plus while it comes with wireless internet support out of the box, practically no game uses it for multiplayer play.

When it comes down to it, for me the choice was pretty clear. Since I don't like Metroid that much and I've already completed Twilight Princess on wii, I could have a $300 mario machine with shitty 3rd party games or pay the same amount and get a PS2 with a pile of accessories and games. Is it fair to compare the mature PS2 library to the wii's? Not entirely, but the Gamecube's at end of life wasn't anything like the PS2's is now either. I don't have high hopes for seeing a wide variety of good games on the wii, aside from Nintendo published games

Re:Food for thought (1)

SargentDU (1161355) | more than 6 years ago | (#21727874)

If you already completed Twilight Princess on the wii, why would you buy another wii?

Re:Let's use the music argument... (2, Interesting)

Limb (1047158) | more than 6 years ago | (#21726848)

Because people want yo buy the wii, but can not find one. They WANT to give nintendo their money, there's just no wii's for them to get in exchange for the money. Using your example it'd be the same as someone going to the store to buy an album, only to find out that there is no more copies of the CD left, so instead they buy another bands album. It is money lost because people want to buy the product, but can not so instead they buy a competitors product instead.

Re:Let's use the music argument... (1)

somersault (912633) | more than 6 years ago | (#21727742)

There's plenty of Wii's in mainland Europe though. They could maybe redirect some to the US/UK to help satisfy demand? I got one before Christmas last year anyway so I dont mind, hehe.

Re:Let's use the music argument... (1)

MobileTatsu-NJG (946591) | more than 6 years ago | (#21726936)

"Wouldn't the same kind of logic hold here?"

No.

"How can Nintendo lose money on nonexistent consoles if they're already at full production?"

They're not filling a billion dollars worth of demand.

For one, the artificial scarcity. (0)

Besna (1175279) | more than 6 years ago | (#21727262)

Apples and oranges. Music is artificially scarce. Wii is not.

It's still artificial scarcity (1)

tepples (727027) | more than 6 years ago | (#21727922)

Music is artificially scarce. Wii is not.
The Wii hardware is patented, and the Wii firmware is copyrighted. Otherwise, the console would already have been thoroughly reverse engineered and cloned in Red China.

no one's getting any (3, Insightful)

Scrameustache (459504) | more than 6 years ago | (#21727358)

When people try to justify downloading music, they say it's okay because they wouldn't have bought the album in the first place, which means that no money was lost in the process.

Wouldn't the same kind of logic hold here? How can Nintendo lose money on nonexistent consoles if they're already at full production?
No, because no one is downloading magical Wiis and they WOULD give Nintendo that money if they could.

Re:Let's use the music argument... (1)

ZeroFactorial (1025676) | more than 6 years ago | (#21727928)

I think so.

The main point is that they can't suddenly beef up production to meet immediate demand. They have to ESTIMATE in advance, which is especially difficult if you don't know ahead of time that your product is going to be THE item for the holidays that year.

Had they beefed up prematurely and then NOT been THE item for the holidays they would have been out quite a large amount of money.

Would you rather be Sony, with thousands of unsold PS3's waiting around in warehouses, or Nintendo, with nothing to spare because your increased production rates STILL can't keep up with the demand?

As for those saying people might drift to other consoles - are you stupid or just insane? The Wii is appealing to the masses because it actually has gameplay that appeals to the average person. The Wii wasn't made for fanboys (read: future 40 yr. old basement dwellers). It was made for regular people - with friends and families that don't just sit around gaming ALL DAY.

On the whole, people who want the Wii (except wii fanboys) aren't going to drift to a fanboy console like PS3 or Xbox360.

RIAA styled math (1)

pryoplasm (809342) | more than 6 years ago | (#21726654)

Is there anyone who can still read about a projected loss and still find it even remotely believable?

Re:RIAA styled math (2, Funny)

jeffasselin (566598) | more than 6 years ago | (#21726772)

Following computer virus loss estimates, and the *AA estimates, I think we can define a new branch of mathematics, defined as the branch of mathematics devoted to making up numbers.

Re:RIAA styled math (1)

smussman (1160103) | more than 6 years ago | (#21726820)

Don't we already have that?
I'm sure you've heard the truism that 84.6% of statistics are made up on the spot.

Re:RIAA styled math (4, Funny)

pragma_x (644215) | more than 6 years ago | (#21727094)

I think those all fall under one or more branches of Bistromathematics [wikipedia.org] .

Re:RIAA styled math (1)

paranode (671698) | more than 6 years ago | (#21727234)

In this case it makes more sense. The demand is high and the supply is low. You can browse eBay and see people making good profits off of them. If those people could have walked into a store and bought a Wii at retail, they certainly would not be buying them for $500-600 on eBay. So everyone who is not willing to pay the markup just doesn't buy one, that is money lost for Nintendo.

Curious (5, Interesting)

Infinite Wave (1124173) | more than 6 years ago | (#21726676)

I just don't understand how they could not have for seen this shortage. I mean last year the same thing happened and they said then they would be ready for this year. Yet here we are. I have friends, family and co-workers asking me where they can get thier hands on a Wii. It really makes me wonder about the rumors of intentional shorting. From a business point it would make no sense to short your sales. From a marketing point however it's been brilliant. Wii is all the rage and is likely so popular BECAUSE it's hard to get. Nothing lights a fire under middle American purchasing power like that hard to get must have Christmas gift.

Re:Curious (3, Interesting)

Luminus (34868) | more than 6 years ago | (#21726862)

"[the wii] is likely so popular BECAUSE it's hard to get."

  This sounds true in theory, but is not true in practice. The majority of children don't realize that it's a hard to find item - they just know their parents tell them Santa might bring one, and he might not. Certainly they are aware that it's not readily available in the stores, but thinking back to my own childhood, there wasn't a single item (that I _remember_ at least) I wanted badly because it was hard to find. Supply and demand wasn't a huge factor for me when I was 10.

Moving further on the age scale, a 25 year old friend of mine wanted one because it sounded cool, and because of how I explained it to him. He had a Gamecube and had been a longtime gamer, but didn't have anything next gen (current gen?). He wasn't willing to spend $350+, but he'd gladly spend $250 on a clever system filled with nintendo nostalgia.

I told him he'd have trouble getting one, and he said, Oh? He had no idea. He then called 9 stores and found one. This was a month ago.

But when we move to the 30-45 year old crowd, and I can imagine that a big desire to grab anything on their part is because it's hard to find, whether it's for their kids or for themselves. You're at least right about the fact that "Nothing lights a fire under middle American purchasing power like that hard to get must have Christmas gift."

But the actual desire for the wii, for the people who will spend the most time playing it, is probably less related to it's rarity (although 12 million have been sold...) and more related to it's price and control scheme.

Re:Curious (1, Troll)

Neoprofin (871029) | more than 6 years ago | (#21727120)

I must live in the oddity spot of America.

I had a large number of friends who were pretty excited about the Wii, I know four who got them, all within the first couple months of the systems release. A couple got it fairly easily, one spent every weekend calling stores until she could find one but even that didn't take more than a month.

I also know one who still uses it. The supply of worthwhile games between Metroid and Supersmash Brawl has been such a desolate wasteland that they've all moved on. Yes the Wii is cheaper, but what am I going to do with it? I refuse to invest in a next-gen system at the prices they're sitting at especially with the continued production of new, quality, PS2 games.

Re:Curious (1)

linzeal (197905) | more than 6 years ago | (#21727272)

Average price right now for a Wii is Almost 500 dollars [amazon.com] , I live in a small town and there were 40 people waiting for 5 Wii at Gamestop yesterday. I have never seen anything like this for a game console. Half of the people waiting were over 60.

Re:Curious (0)

Anonymous Coward | more than 6 years ago | (#21727714)

Mario Galaxy, Trauma Center 2, Zach and Wiki, Guitar Hero 3...

Wiki? So why is it protected? (1)

tepples (727027) | more than 6 years ago | (#21727956)

Zach and Wiki
Shouldn't a "Wiki" game let the player edit all the levels?

Re:Curious (0)

DrLang21 (900992) | more than 6 years ago | (#21726930)

It's fairly obvious to me that they are intentionally holding back. They know that the competitors to the Wii do not have anything that's the equivalent to the Wii. The type of interaction is different, the types of games are different, and in many cases, the type of people playing are different. So by setting production to meet nice hefty profit goals each quarter, they can draw out their income and keep the demand going. As long as demand is going, game development won't go stale either, giving them that source of royalties as well. Granted, I'm no business expert, but this makes perfect business sense to me.

Re:Curious (1)

AmaDaden (794446) | more than 6 years ago | (#21726960)

I remember reading somewhere about what Nintendo had to say about the shortage. It went something along the lines that knew it was coming but to prevent it they would have to open up a new factory. If the shortage is only for this holiday the cost of opening a new factory would not out weigh the money they would make. Also the factory would only be able to open after the holidays. So they went with taking the conservative road on it by not opening a new and hoping for the best. At the moment they are at full production. You can see that because if you REALLY need one you can get it, after going through the normal holiday hell. You will have to either camp out on expected ship days, get a bundle, or neurotically check web sites. I have a friend who just got one by going the web site route.

Re:Curious (1)

ultranova (717540) | more than 6 years ago | (#21728348)

You can see that because if you REALLY need one you can get it, after going through the normal holiday hell. You will have to either camp out on expected ship days, get a bundle, or neurotically check web sites. I have a friend who just got one by going the web site route.

Here in Finland, I could get one just by walking to the nearest store and forking over 260 euros, if I had that much :(.

Re:Curious (5, Informative)

Fozzyuw (950608) | more than 6 years ago | (#21726968)

I just don't understand how they could not have for seen this shortage.

They saw the shortage and they knew it was going to happen. The people running Nintendo's financial and business planning know what they're doing and probably have spreadsheets of predicted outcomes.

The problem is reaching the best profit margin. (Reminding of an old computer game in High School business class) Nintendo could build spend money on 100 new factories and pump out 100 million Wii's in one month to satisfy demand. But what happens when the month is over? Nintendo is left with 100 factories with 1000's of works sitting around picking their noses. Effectively, they'd start hemorrhaging money in keeping said factories with the only recourse to sell the factories.

Otherwise, they're now pumping out millions of of systems a month that no one is buying, because demand was just satisfied in one orgasmic explosion. All those systems are being pushed into storage, which costs money. Now, we look at something like the PS3 and all the design/model changes it had. If a design/model change happened to the Wii, it'd have to firesale it's entire stock to make way for the new stuff.

It's a balancing act and Nintendo has the benefit of pop-culture status with the Wii. The "OMG, there's a Wii on the Shelf" shock (thanks to customer experience and news media hype) practically guarantees an impulse purchase, if for no other reason to tell their friends they finally found a Wii (even if they just got a 360/PS3 as a gift).

Also, Nintendo increased output (that started 5 months ago) to *help* meet holiday demand but as there is with super popular things, there can only be a reasonable amount of product produced. Demand can come in spikes (holidays), but production simply cannot be spiked like that. It takes time to make a product, but takes an instant to create demand. And unlike the 360 or PS3, the Wii hasn't had time to stock up units for the holiday rush as it's been more-or-less sold out since it launched.

Cheers,
Fozzy

Re:Curious (3, Interesting)

bleh-of-the-huns (17740) | more than 6 years ago | (#21727312)

You hit the nail on the head there with the shelf shock statement. I had been going into local electronics stores whenever I happened by them, for about six months, asking if they had wii's in stock, of course the answer had been a solid no for 6 months, till the day someone said yes.. and I was confused for a min about what to do. Naturally I bought the wii.

The problem I came across, is that even though I played it for the first week or 2 (this was about 6 months ago too), after that it lost its playing appeal when I was home alone and with the wife (who hates it because the controller is not exact enough and she cannot play with it without getting pissed off). These days, I only play it in party conditions and when we have friends over for dinner. Its a great social game console, but beyond that I find it no fun to play. Unlike my old xbox (non 360), which I can sit and play alone all the time.

Ever heard of contract manufacturing? (0)

Anonymous Coward | more than 6 years ago | (#21727888)

No one needs to build factories any more. All you have to do is to use the same outsource manufacturers like everyone else in the industry. There is no excuses for not meeting demands if that's what they want to do.

Do you think for a minute that MS has their own factories coming from a background of software vendor?

Two words: Contract Manufacturing (1)

StandardCell (589682) | more than 6 years ago | (#21727890)

The assertion that Nintendo would build an entire factory to satisfy the console demand is ludicrous. They would and should simply hire a contract manufacturer like a Foxconn or Solectron or Sanmina and get the product out. If quality issues are that important, they can put their own support in-factory to ensure that their standards are met. It's done on a regular basis in the electronics industry.

What you also don't take into account in your analysis is how pent-up demand means lost dollars on licensing revenue. Each system that gets sold nets Nintendo additional dollars from the 3-5 games that will be purchased with the system. Don't forget things like additional Wiimotes, Nunchuks, the online classic game store, and other content. That doesn't even include the good press to see you tromp your competitors by another whole factor of their sales and the subsequent pop to Nintendo's stock price. In short, it makes no sense to delay revenue because basic finance demands money in now is better than money in later, particularly among a very fickle public who may very well buy a 360 or PS3 basic system and not look back no matter what the cachet of the Wii may be.

This is simply an example of Nintendo's poor launch planning that is persisting more than a year since the console's introduction. The product managers ought to be fried for not contingency planning.
 

Re:Curious (1)

poot_rootbeer (188613) | more than 6 years ago | (#21727974)

Nintendo could build spend money on 100 new factories and pump out 100 million Wii's in one month to satisfy demand. But what happens when the month is over? Nintendo is left with 100 factories with 1000's of works sitting around picking their noses.

I wouldn't expect Nintendo to double the size of their production force to deal with the current demand. But I do wonder why they didn't start planning at this time last year to raise production capacity by 10% or so -- a relatively low-risk increase which probably STILL would have led to this year's consumer frenzy, but with increased gross sales and greater customer satisfaction.

If a design/model change happened to the Wii, it'd have to firesale it's entire stock to make way for the new stuff.

I think there's something to this. Look at how Nintendo began selling the DS Lite 18 months after introducting the original DS, and the Gameboy Advance SP 2 years after the original Gameboy Advance. Wouldn't surprise me at all to learn that Nintendo has been working on a revised version of the Wii hardware (different colors maybe?) and has been avoiding overproducting Mark I consoles to prepare for a forthcoming re-launch.

Re:Curious (0)

Anonymous Coward | more than 6 years ago | (#21726986)

But according to the article Nintendo could be selling twice as many consoles as they are now. They could be selling hundreds of thousands more consoles than they are selling now and still have a shortage to the point where consoles wouldn't be available in stores. If it was really an intentional shortage, I think this is what they would do.

Re:Curious (2, Informative)

pushing-robot (1037830) | more than 6 years ago | (#21727044)

Yes, but tons of people also thought that the Wii was a fad and demand would drop off in the middle of 2007. Factories are damn expensive, and Nintendo didn't want to sink billions into a manufacturing blitz only to have production lines sit idle when the "novelty wore off". They've still dramatically increased production, but they've done so at a more cautious rate.

The Wii is in uncharted waters: More than a year after its release, it's still selling twice as fast as any console in history. It's silly to think that this is all - somehow - part of Nintendo's sinister master plan.

Re:Curious (0)

Anonymous Coward | more than 6 years ago | (#21727078)

It really makes me wonder about the rumors of intentional shorting

It is intentional, but it also makes sense: they could make enough consoles for everyone if they spent billions of dollars to build 1000 factories and staff them to run 24x7. But what do they do with the factories and workers once everyone has a Wii?

The other solution is to outsource your console construction to Mexico and China like Microsoft did.

Re:Curious (1)

CastrTroy (595695) | more than 6 years ago | (#21727110)

There were rumours that Microsoft did the same thing with the XBox 360 when it first came out. Seems like it didn't work out all that well for them, as their system has been out for twice as long, and has less units sold.

Re:Curious (5, Insightful)

MobileTatsu-NJG (946591) | more than 6 years ago | (#21727162)

"I just don't understand how they could not have for seen this shortage."

In the space of a year, Nintendo sold 14 million consoles. That's more than the 360 sold in 2 years. Historically, consoles don't hit 10 mill in a year.

"It really makes me wonder about the rumors of intentional shorting."

The Wii was a surprise hit. The surprise wasn't that it's a hit, but that it was such a massive hit. Even the biggest Nintendo fanboy wouldn't have expected nearly this many sales the first year. The Playstation didn't even manage that and Nintendo's last couple of consoles didn't even come close.

Re:Curious (1)

Pharmboy (216950) | more than 6 years ago | (#21727654)

I think you nailed it. Everyone is looking for a conspiracy when the facts are simply that the unit is THE most successful, ever. You can't "plan" that.

Hell, even retirement homes are buying Wii systems as fast as they can get them. I don't think the PS3 or 360 will see that kinda demographic broadening.

Re:Curious (1)

xero314 (722674) | more than 6 years ago | (#21727200)

When Nintendo said they would be ready for it, what they meant was they would be ready to profit. what is happening is that Nintendo isn't hardly shipping any units, just enough to make it appear that the product is available in stores. Instead they are setting up hundreds of Ebay accounts and selling the hardware directly to the customers through auction. This allows them to charge the same price as Sony and MS with it appearing like they have the cheaper console, while making 4 times the profit they would have with their MSRP.

If you don't beleive me then check out this [ebay.com] stack of Wii's which is more than any Best Buy has received all year.

Ok there is my conspiracy theory of they day. Enjoy.

Re:Curious (1)

MenTaLguY (5483) | more than 6 years ago | (#21728224)

Those are scalpers, dude.

Re:Curious (1)

xero314 (722674) | more than 6 years ago | (#21728278)

Those are scalpers, dude.
Sure they are.

Not Really... wider market appeal (1)

binaryspiral (784263) | more than 6 years ago | (#21727226)

It really makes me wonder about the rumors of intentional shorting. From a business point it would make no sense to short your sales. From a marketing point however it's been brilliant. Wii is all the rage and is likely so popular BECAUSE it's hard to get. Nothing lights a fire under middle American purchasing power like that hard to get must have Christmas gift.

I don't think the shortage is perpetuating itself... it's only a byproduct of mass market appeal.

This game console appeals to people outside the normal game console demographic. I've seen Wii's in nursing homes, day care facilities, church groups (with adults and children), and actually on my parent's wish list.

None of these groups would be on the PS3 or XBox 360's radar... but the Wii's appeal literally knows no boundaries.

Re:Curious (1)

Wdomburg (141264) | more than 6 years ago | (#21727448)

I just don't understand how they could not have for seen this shortage.

They grossly underestimaed sales. Analyst forecasts were way short as well, so it's not like they were alone in that. They introduced a significantly different product marketed to a much wider demographic than the industry addressed previously. I would have been surprised if their projections were correct since it was essentially just an educated guess.

And while it was good for sales and installed base that they didn't suffer the typical depressed sales in the summer months, it also means they lost the opportunity to warehouse additional stock for the holiday season. And because of the lead time required to expand capacity they're pretty much stuck.

I believe that the current plan doesn't actually call for any additional production increases. Additional production wouldn't come online before the holiday anyways and the current production rate of 1.8 million units per month is comfortably ahead of non-holiday sales even discounting that latent demand will decrease over time.

Re:Curious (1)

ELProphet (909179) | more than 6 years ago | (#21727966)

1. Intentional shortage
2. Reduce marketing spending
3. Hype via "Lone-Ranger" marketing
4. ???
5. Profit!

Re:Curious (1)

mcsqueak (1043736) | more than 6 years ago | (#21728120)

From a business point it would make no sense to short your sales. From a marketing point however it's been brilliant.

No, hype without the ability to deliver is a stupid marketing tactic (full disclosure: I'm a professionally employed marketing goon).

The whole point of marketing is to increase sales. The only reason companies desire hype is that it can help sell more units (which, if their manufacturing is on target, they'll have available in semi-reasonable quantities). However, Nintendo is already selling their maximum volume produced each and every month. 'Hype' in this case just leads to frustrated consumers and lost sales. Some of these people will return at a later date to purchase a unit, but there will be a percentage that will not. If I was Nintendo, I'd be worried about this.

I cannot believe that this shortage has been engineered by Nintendo on purpose. There is no company that would short themselves THIS many units and THIS much money, especially right before the end of the year. Keeping a product this hard to find for this long is stupid, not brilliant. This type of hype and product scarcity should be maintained only in the opening weeks. What I think is going on is that Nintendo is betting the cost of opening a new plant to manufacture more Wii's would not pay off in the long run as demand drops. We'll see if this holds true.

Looking back at how the Gamecube did, I doubt Nintendo expected to sell this many Wii's and didn't plan their manufacturing accordingly... no conspiracy here IMHO, just a failure at proper planning.

Aftershocks (4, Insightful)

Fozzyuw (950608) | more than 6 years ago | (#21726744)

All told, these same individuals believe the company could be leaving as much as $1 billion on the table this holiday season.

The question I have is, ok it's $1 billion this holiday season but what about the after affects of the holiday? How many people who are dying to get the Wii (but can't) will still go and buy it in Jan., Feb., Mar.? My guess? A lot. Considering they've been doing it since Nov. 2006.

It reminds of the pirated music idea. A person who pirates music(or movies) isn't necessarly going to be buying said music(or movies). Thus, one cannot say that pirating is a 1:1 effect on sales. Likewise, you cannot say that people who cannot buy a Wii as a gift for the holidays will not buy one after the holidays. Theoretically, if the Big N satisfied demand in December, they would then loose all those Q1 2008 sales. So, what's the point? The real question is, if those who want a Wii, but bought a 360/PS3, will still buy a Wii in the future?

Cheers,
Fozzy

Re:Aftershocks (1)

MechaBlue (1068636) | more than 6 years ago | (#21726948)

Great points.

Some more thoughts:
- Of the $1 billion in sales, how much of that is profit? At 20%, that's $200 million in profits.
- What are the costs of ramping up production? If current facilities are churning out as many as possible, stepping up production may be expensive.
- How long will the increased production be needed?

Of course, this all ties into what you were saying about people buying Wiis in 2008. Especially since certain retailers (and Nintendo?) offering rain checks for them.

Last year, there was talk about the shortage being a result of Nintendo not wanting to scale up production because increase sales wouldn't justify the increased production costs. It wouldn't surprise me to see the exact same situation this year and possibly next year, too.

Re:Aftershocks (1)

LoverOfJoy (820058) | more than 6 years ago | (#21726970)

There's definitely no 1:1 ratio but the lost sales are real. I'm not even talking about people buying a 360/PS3 instead.

If I'm planning on spending $X00.00 for my kids for Christmas and I had hoped to spend it on the Wii and Wii related products, then if it's sold out, I MIGHT give my kids an IOU for the wii and give it to them next month...but the remaining money I would have spent on extra controllers and games will now be spent on something else because I can't bear to give them temporarily useless products for Christmas.

Come January/February I won't magically have more money to spend on all the extras. At best I'll have skimped on Christmas enough to buy the console and an extra controller and that's about it.

Re:Aftershocks (0)

Anonymous Coward | more than 6 years ago | (#21727082)

"Loose" and "lose" are not interchangeable.

Re:Aftershocks (1)

Fozzyuw (950608) | more than 6 years ago | (#21727290)

"Loose" and "lose" are not interchangeable.

Thanks, I often make these spelling/grammar mistakes and never properly proof read. I just phonetically spell something out without thinking twice or looking back. I'll look out for it in the future (along with my other popular misspelling waist and waste). It's a dumb mistake and I like being called out on it to change my habit.

Cheers,
Fozzy

Re:Aftershocks (0)

Anonymous Coward | more than 6 years ago | (#21727866)

Don't apologize to grammar/spelling Nazis. Fuck them for not being able to pull there head out of their collective asses long enough to realize that they're retarded for thinking that everyone everywhere cares about ZOMG! a mispelled word!!!

That's write... Fuck you grammar nazis. Fuck you write in you're ear. People make mistakes. Deal with it.

Re:Aftershocks (1)

CastrTroy (595695) | more than 6 years ago | (#21727154)

Exactly. They've been going since November 2006 without anybody being able to find one anywhere. If they can keep that momentum up for a year, why not until March, April, or even next Christmas. The only point at which any of this will be hurting Nintendo is when they aren't able to see every single unit within days of it hitting store shelves.

What are people buying instead? (2, Insightful)

HockeyPuck (141947) | more than 6 years ago | (#21726802)

If a $Billion is being left on the table, where are people spending it on? 360? PS3? Or how about this new fangled , environmentally friendly device called:

GO OUTSIDE AND PLAY!

Includes such games as Real World TENNIS (indoor and outdoor versions available)
Real World BOWLING (available at a bowling alley near you).

Both games come with a bonus titled called, GETTING FRESH AIR.

*please do not frame me if the Wii is you only source of activity b/c of age/disability/religion/sex/creed/political stance.

Re:What are people buying instead? (5, Funny)

plague3106 (71849) | more than 6 years ago | (#21726868)

I'm spending it on mercury, then dumping it in the local lake. On the way home, I run over squirrels and cute bunnies.

Re:What are people buying instead? (1)

Sciros (986030) | more than 6 years ago | (#21727022)

Dude you can do that with unmanned vehicles nowadays from the comfort of your own home. I really don't understand why going outside or driving around is at all necessary for this, and frankly I recommend avoiding it because if you mistake a moose for a bunny you'll at least be ok yourself.

Re:What are people buying instead? (1)

steveo777 (183629) | more than 6 years ago | (#21727116)

At least you're doing all that in the FRESH AIR.

Re:What are people buying instead? (1)

MarioMax (907837) | more than 6 years ago | (#21726998)

> Both games come with a bonus titled called, GETTING FRESH AIR.

Fresh air doesn't always exist outside, especially in a heavy urban environment. I know a few people that got harsh lung diseases because they went jogging outside in a major city. The doctors told them they would need to stop going outside, or they wouldn't be healthy again. Kind of ironic, don'tcha think?

Re:What are people buying instead? (5, Funny)

Chris Burke (6130) | more than 6 years ago | (#21727070)

Includes such games as Real World TENNIS (indoor and outdoor versions available)

I'm not sure where you are, but up here in the Northern Hemisphere it's winter when Christmas time comes. Even as far south as Texas playing outdoor sports is not something most people, even athletic, think is a good idea.

As far as indoor, while it may be a helpful, I don't know many kids who are going to think "fitness club membership" is an awesome gift.

bowling alley... FRESH AIR.

You know in my word association, "fresh air" makes me think "bowling alley" just before I think "corner dive bar".

Re:What are people buying instead? (1)

ChefInnocent (667809) | more than 6 years ago | (#21728116)

To add to this comment, let me say my local tennis courts have 4" of snow on them (other locations have more) with a sheet of ice below that. If the snow didn't imped the ball from it's normally regular path, I'm sure the extreme sport of ice tennis would put some folks off from it.

Re:What are people buying instead? (4, Funny)

MobileTatsu-NJG (946591) | more than 6 years ago | (#21727392)

If a $Billion is being left on the table, where are people spending it on? 360? PS3? Or how about this new fangled , environmentally friendly device called:

GO OUTSIDE AND PLAY!
I hear ya, man. I wish I could impose my views on everybody in the world, too.

Re:What are people buying instead? (0)

Anonymous Coward | more than 6 years ago | (#21727796)

About that whole GETTING FRESH AIR thing...have you ever been to a real bowling alley?

Re:What are people buying instead? (1)

moderatorrater (1095745) | more than 6 years ago | (#21727996)

a bowling alley near you...come[s] with a bonus titled called, GETTING FRESH AIR
I don't know what the bowling alleys are like where you live, but this is a patently false statement from all of my experiences.

Re:What are people buying instead? (1)

lucabrasi999 (585141) | more than 6 years ago | (#21728222)

Includes such games as Real World TENNIS (indoor and outdoor versions available)
Real World BOWLING (available at a bowling alley near you).

Both games come with a bonus titled called, GETTING FRESH AIR.


Fresh air? In a bowling alley?

Re:What are people buying instead? (1)

hoover (3292) | more than 6 years ago | (#21728332)

I'd mod your comment up if I had points right now, but you forgot about the bonus "to go" foot fungi you pick up in those old, rented bowling shoes ;-)

Nothing new from Nintendo... (1)

Dmala (752610) | more than 6 years ago | (#21726806)

Nintendo has been doing this since the very first days of the NES. In the beginning, I think the lesson of Atari's "ET parking lot" was fresh in their minds, and they didn't want to get stuck with warehouses full of crap they can't sell. These days, I have to think that they've figured out that the long term benefit of the frenzy that is created far outweighs any short term losses.

Re:Nothing new from Nintendo... (1)

Grave (8234) | more than 6 years ago | (#21726994)

Not to mention that with demand so high, they have a great bargaining chip with retailers.. Oh, you're not selling enough of game X, so we're not going to ship more Wii's until you ramp up sales. Sure, retailers make almost nothing on a Wii sale, but people buying Wii's generally also buy games and controllers along with them, thus making a shipment of Wii's very important.

Re:Nothing new from Nintendo... (1)

jimicus (737525) | more than 6 years ago | (#21727414)

Nintendo has been doing this since the very first days of the NES.

For over a year post release?

Re:Nothing new from Nintendo... (1)

Dmala (752610) | more than 6 years ago | (#21727846)

Actually, yes. From what I've read and what I recall, there were holiday shortages of the NES for several years running in the mid-to-late 80s. They kept it going for quite a while with well hyped releases (Zelda, SMB2, etc.) that would cause a big spike in demand.

1bil (-1, Redundant)

Anonymous Coward | more than 6 years ago | (#21726830)

"We will loose.... 1 BILLION DOLLARSSSSS" *pinky to the mouth*

absurd (-1)

bigdavex (155746) | more than 6 years ago | (#21726946)

The whole thing is completely warped. We have this whole system set up to handle this. It's called price. Nintendo and the retailers could charge a bit more and the problem goes away. But no, they can't just sell a product they want a marketing scheme.

Re:absurd (1)

philspear (1142299) | more than 6 years ago | (#21727130)

Well, it's easy to play armchair CEO in hindsight and say they should have charged more so they could have gotten that theoretical 1 billion. Of course, it's hard for me to understand the criticism when 1. if they had done that, it might be they're losing a billion in unsold consoles, which would be a much bigger problem than having a billion dollars more to expand, and 2. you're talking about raising the price of the wii. That would be nice for nintendo's investors and stock holders, but is anyone here either of those? No? Then let's be happy the price is too low than too high and hope that "marketing scheme" catches on. Phil

Re:absurd (1)

bigdavex (155746) | more than 6 years ago | (#21727244)

Why the past tense? Is there any real reason they couldn't start charging more now? Not really.

Re:absurd (1)

KDR_11k (778916) | more than 6 years ago | (#21727580)

That would be horrible PR. Besides, they make money on games sales and those need units sold, not profit made from hardware.

Re:absurd (1)

bigdavex (155746) | more than 6 years ago | (#21728076)

Besides, they make money on games sales and those need units sold, not profit made from hardware.

That's self-fulfilling. They could be making more money on hardware. They can't sell more than all of the Wii hardware that exists, so they could bump it up a bit and not miss out on software sales. I suspect that the market price isn't _much_ higher than retail, or else they'd be increasing the price with some subtle bundling.

Re:absurd (1)

NonSequor (230139) | more than 6 years ago | (#21727816)

Consumers view price increases negatively so price increases can do damage to public perception of a brand which can reduce the long term profitability of a product.

WII = TEH BEST!!1!one (-1, Redundant)

Anonymous Coward | more than 6 years ago | (#21727080)

Seriously, has any gift ever been *the* hot gift TWO holiday seasons in a row?

And somebody thinks Nintendo is doing something wrong? Yeah, right!

My karma is so high that... (1)

Sciros (986030) | more than 6 years ago | (#21727202)

"Wii shortages" heh heh heh

Yes that's right I went there. Again.

Anyway I had a thought... isn't this a very good time to advertise the HECK out of the, um, DS? Considering it's cool, makes a good gift, is also appealing to "casual" gamers, and is available? A solid marketing campaign for the DS right about now could sway some people who otherwise will purchase a 360/PS2/PS3 because a Wii is nowhere to be found.

Re:My karma is so high that... (1)

Turn-X Alphonse (789240) | more than 6 years ago | (#21727330)

The DS gets more marketing in the UK than the Wii. I'd say it's 2/1 towards the DS on TV adverts. Nintendo sponsor the Friday night comedy slot on Channel 4, every 15 minutes 2 adverts for the Wii or DS play (one before and after the break). So it's not like the DS is unadvertised.

The problem is the DS isn't innovative any more, it's been sold on cute games like Nintendogs and learning games like Brain age, so it's aiming at the 'intelligent' and 'casual' side of the casual market, the Wii is aimed at the 'family' part of the casual market, it's difficult to match the two or link them (no casual will buy a DS to play a Wii game)

Re:My karma is so high that... (1)

Sciros (986030) | more than 6 years ago | (#21727458)

Well, there's no need to "link" them in the sense that you mean. After all, if Nintendo has concerns about people going out and purchasing a 360 instead of a Wii then we're not really talking about the "family-oriented, casual" market strictly.

Nintendo's competitors aren't "innovative" in the sense that the Wii is, but if their product is available and Nintendo's isn't then for many that's a moot point. And in the US I don't see a whole lot of DS advertisements, at least not as many as I think I ought to be seeing with that being Nintendo's only available system in stores at the moment and it being the holiday season.

Re:My karma is so high that... (1)

techpawn (969834) | more than 6 years ago | (#21727504)

isn't this a very good time to advertise the HECK out of the, um, DS

Also, the DS can be used in with the Wii you REALLY wanted and will eventually buy anyway

Re:My karma is so high that... (1)

moderatorrater (1095745) | more than 6 years ago | (#21728054)

The DS is the highest selling gaming device period. It needs advertising less than the Wii does.

Re:My karma is so high that... (1)

Sciros (986030) | more than 6 years ago | (#21728356)

My logic detector isn't picking up any readings!! The Wii can be advertised to high heaven right now but no more units are going to be sold because none are available for purchase. The DS might be highest-selling but Nintendo is likely to move even *more* units if they can keep those who might otherwise opt for a 360 or Playstation this holiday season on "their side."

How to create an artificial demand (1, Insightful)

navygeek (1044768) | more than 6 years ago | (#21727266)

First off, don't misunderstand the subject line - there is definitely a high demand for the Wii, artificially inflated or otherwise. This is due, in part, to two major factors: the novelty of fairly well done motion control and the accessibility of the console to a significantly wider user base than the typical 'hardcore gamers'.

That said, Nintendo is not 'losing a billion in sales' - they are, in fact, creating 'a billion in sales'. Okay, so the knee-jerk reaction is 'huh, stores are always sold out, I can't get one, they're losing my money - how are they creating sales'. Ironically, the question is its own answer. By restricting sales to North America, keeping the influx of consoles at a relatively low number - compared to actual demand - Nintendo is creating a sense of scarcity. This perceived lack of Wii increases the immediate demand for the console, virtually ensuring that new product delivered to stores will sell out within a day or two - three or four at the outside.

This has the effect of creating a stronger the secondary market on E-bay, Craigslist, or the classifieds. People are willing to snatch them up at ridiculous prices in order to get one NOW, rather than wait a week or two for the next shipment and try to get one then - bird in the hand. This leads to further 'gotta have it' frenzy.

By keeping production where it's at - does anyone REALLY believe they couldn't kick it up a few notches? - they are ensuring that the initial sales life of the console continues for a good long time. During which time they can maintain the price for the console itself, the accessories, and the games. It's a cash cow, a print-your-own-money machine. But the instant they jack up production and flood the market to satisfy all the demand - real and hyped - the consoles start lingering on the shelf longer, it's no longer the console to own, the novelty wears off and sales slump. Why on Earth would they want that!

Re:How to create an artificial demand (0)

Anonymous Coward | more than 6 years ago | (#21728150)

By restricting sales to North America, keeping the influx of consoles at a relatively low number

Restricting numbers shipped to North America? Source? If you have a set number of items shipped and you have to split up that number GLOBALLY - how do you NOT limit numbers to any given country? Should USA get 1.5m a month while the rest of the world goes Free For All for the last 300k?

By keeping production where it's at - does anyone REALLY believe they couldn't kick it up a few notches? - they are ensuring that the initial sales life of the console continues for a good long time.

Keeping Current Production - Can you guarantee that sales numbers will continue for a year? Years? I don't think anyone will say it WILL continue at this pace. If you can't guarantee sales numbers - what makes you think a company is going to risk the capital to invest in a new factory only to have demand die off (at least die off below the max production numbers of plant #1)?
How do you keep the "Initial Sales Life" going?

But the instant they jack up production and flood the market to satisfy all the demand - real and hyped - the consoles start lingering on the shelf longer, it's no longer the console to own

The question tho... is what other items do we have to compare to? I don't think "Tickle Me Elmo" stayed on the "Shit Hot" List from Christmas to Christmas. Name another item that's been this hot for this long. Pogs, Elmo, etc... Christmas leads to a spike then back to normal. Wii has never dropped to normal.

Cost nothing (1, Redundant)

Kroc (925275) | more than 6 years ago | (#21727394)

No, this has cost Nintendo precisely 0. They have not /lost/ a billion from the bank because of the shortage, they have simply not earnt that money.

The Wii is popular, and profitable. They've lost nothing, only potential sales.
Sony could only dream of such a thing. PS3 availability was good even days after release, as Penny Arcade proved

Something not right (1)

Maximilianop (903017) | more than 6 years ago | (#21727426)

Increased production cost for uping the production factor?

Since when mass production was a cost increaser?

Re:Something not right (1)

jim.hansson (1181963) | more than 6 years ago | (#21728006)

overtime cost.
if you stress a production line in my experience it usually gets less effective

They make a pill for that... (1)

russlar (1122455) | more than 6 years ago | (#21727474)

Wii shortage? Sounds like a personal problem to me.

Production Ramp Up (3, Informative)

rlp (11898) | more than 6 years ago | (#21727556)

They've ramped production from 500 thousand / month at release to 1.8 million / month now. That's a pretty sizable production increase. More importantly, I'm not hearing news about DOA units, so they've (so far) avoided compromises in quality while more than tripling production. So, yeah, they completely messed up on demand forecasting. As far as the production ramp-up, I think they've done well.

Re:Production Ramp Up (1)

Ang31us (1132361) | more than 6 years ago | (#21728096)

Dude, I LOVE your object-oriented signature! Everyone who truly wants a Wii knows how they can get one. I stood in line for 12 hours for the midnight launch in Times Square (November 18th into the 19th, 2006) to get mine. Any hardcore gamer that wants one and does not have it is a total pansy ;-) . I also agree with the earlier threads on how the un-met demand is actually making Nintendo more $$$ in the long-run. When the system launched last year at $250, it cost more to produce it than it does this year. Now the Wii still costs $250, but instead of making $50 per system, Nintendo is likely to be making $75 per system. The big N's forecasts are probably for profit, while taking demand into account. Since this is Slashdot, Go Wii!!!

What happened to ramping up? (0)

Anonymous Coward | more than 6 years ago | (#21727674)

I understand the argument for not meeting the insane demand at the holidays because you won't be able to keep up that level of production throughout the year - but here's where that argument breaks down. If Nintendo is currently at 100% manufacturing ability in all of their factories, they're doing something WRONG. Holiday surges are exactly the reason you don't run at 100% capacity. You RAMP UP for the holidays to meet the extra demand, then go back to your standard rate after it's over. All it costs you is the labor for getting more workers in over the holidays.

Re:What happened to ramping up? (2, Insightful)

CrashPoint (564165) | more than 6 years ago | (#21727904)

All it costs you is the labor for getting more workers in over the holidays.
Right, because those workers are magical elves who simply will new Wiis into existence. It's not as if you need to build factories for them to work in or components for them to assemble.

think of the consumers.. (1)

stormguard2099 (1177733) | more than 6 years ago | (#21727920)

Ok, so if a "hardcore" gamer goes into a store, looking to purchase a wii but they end up having to come back over and over again in hopes of getting one they are going to really consider if the ps3 or 360 are really that bad. That makes sense to some degree but I don't really see too many people that were on the fence waiting a good year to change their minds. It seems like if someone was just waiting to get a wii since launch, they would have broken down by now. I know a lot of people who want wiis but wouldn't even consider another console because it's not what they want.

If grandma or soccermom goes looking for a wii but doesn't find it, they aren't going to grab another console no matter how cool gears of war is. I'd say a fair share of the casual gamers that are after the wii aren't going to buy another console if they can't get a wii, they are just going to either wait or go spend that money else, completely outside of the gaming market.

Where the Wii is (1)

brkello (642429) | more than 6 years ago | (#21728010)

Just go look on ebay...there are thousands on thousands of them for sale. The reason why no one can get a Wii is because these resellers are buying them in bulk as soon as they can their hands on them. This is inflating the demand for them beyond reality. don't believe me? Just go to ebay and search for the Wii. There are plenty of them out there.

*sigh* (4, Insightful)

bigattichouse (527527) | more than 6 years ago | (#21728030)

Step 1: Read Peter Senge's Fifth discipline [wikipedia.org]
Step 2: Understand that the Wii is a perfect example of the Beer distribution game [wikipedia.org]
Step 3: Realize that demand is at least ONE ORDER of magnitude smaller than reported.

Case in point: Person X goes to store 1 and asks for a wii, then proceeds to search through store(s) 1-10 ... they may even place orders at each store... when person X gets a wii, they cancel all other orders. So "10" orders really was 1 order.

If Nintendo attempts to fill the "Billion" in orders, they will greatly overshoot and end up with a flooded market that can't get rid of the damn things. Slow and steady wins this race, a few million in sales lost over the entire potential beats the crap out of overshooting with 100 million dollars worth of hardware sitting on shelves, or ending up in landfills [wikipedia.org]

landfills (1)

British (51765) | more than 6 years ago | (#21728230)

I highly doubt excess unsold Wiis would end up in landfills(literally or metaphorically). IIRC Atari made more copies of the ET game than there were 2600 consoles sold. Wha, you gonna buy TWO copies of the same game? A console itself is different.
Load More Comments
Slashdot Login

Need an Account?

Forgot your password?