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Xbox 360 'Must Sell Out' on Release Day
tlhIngan writes "According to a Norwegian retailer (as reported by Gizmodo), Microsoft's making some peculiar demands during the XBox 360 launch. In particular, each retailer is to get 20 XBox 360 consoles (6 core editions, and 14 premium editions). However, to get the full allocation, they have to ensure they will sell out on the day of release (December 2nd over there)! Plus, each console must leave the store with at *least* two games each. Is Microsoft marketing like the beanie babies again - using 'Sold Out!' as a way to hype the popularity of their machine? It may appear to be, since Microsoft recently slowed down production of the XBox 360 as well."
Then shouldn't they give a lower amount of X-Boxes to the stores? Like, maybe 15 or 10?
Either way, this is pretty dumb of Microsoft, but I suppose it could work for people who haven't read this article. After all, generally, sold out = damn good/necessary/useful, right?
Oh Microsoft, you clever bastards.
Y helo thar
Oh well, I feel for people who want one on launch day, but for the first time ever I think I won't be one. I'm probably gonna hold off until Halo 3 to pick up my 360.
And of course, I'm getting a Revolution the day it comes out, if I'm here in the States. :-D
I understand that life's not fair, just why is it never unfair in my favor?
"each console must leave the store with at *least* two games each."
In other words they are FORCING the $700+ bundles that stores like GameStop are trying to force on customers, except Microsoft is ensuring that EVERY retailer in the country does this so that consumers have no choice. Nice.
Sounds very much like the retail chains' requirements, not Microsoft's.
Another possible reason they are doing this is that they want to get the machines only in the hands of the hardcore gamers and Xbox fans. Doing so will generate a lot of positive buzz. Along with the beanie baby type marketing mentioned, it could result in a huge second push of sales. That seems a bit far-fetched and conspiracy like, but you never know when it comes to MS marketing.
This sounds silly, but the traditional way to "sell out" of an item is to lower it's price. Keeping the price high by artificial fixed prices means that it's hard to "sell out".
I briefly considered buying an Xbox360, but then I saw the price. Forget it. My 3 year old computer provides enough game power for my needs. Maybe I'll buy a used console in a year or two.
94% of Repubs and 21% of Dems voted to renew the Patriot Act
Is this really so lofty of a goal for Mircrosoft to set for their new system. Retailers should have no issue finding 20 reservists for the system. This is similar to the numbers of reservists for most other consoles (XBox, GC, PS2) and is probably a very small portion of the consumer base for any given retailer.
Each customer must also purchase 2 games. It's obviously a given that everyone will be buying at least one game (Halo 3) and then why not any of the other promising titles that come out with the release. Most (if not all) gamers like to diversify their playing experience.
The big issue here is the money of course. The premium system already will run $400 and games (I haven't checked the exact price yet) will probably run the standard $50. Anyone who is going to shell out the $400 (or $300) for the system will probably manage to scrounge up another $100 for two games.
I'll be surprised if Microsoft doesn't manage to sell out the 360 on the first day.
Plus, each console must leave the store with at *least* two games each.
I'm pretty sure this is illegal in a lot of places. (at least in the nehterlands)
I guess I don't really need to buy an Xbox 360, given the shortage and all.
each shop or chain has to sign an agreement saying that they will sell out of all 20 consoles on the release date (which is December 2 over there).
Wonder what the penalty is if the retailer can't sell them all?
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Will they have some goons at stores to force people buy Xbox360:s if they don't seem to sell on their own? Traditionally, lowering the price is the way to increase the sales but I guess Microsoft believes in "New Economy" or what ever the cool kids believe in these days.
Now not only are gamers going to be forced to buy price-inflated bundles yet again, but the store won't even sell them the system if they don't drop another $100+ right then and there for two other games. I suppose if you're set on being a first adopter you'll find something you want but if you really don't care for the release titles and would rather save the extra $65 for Halo3 or something, well tough titty you're out of luck, no system for you.
Console manufacturers need to find a better way to make back costs w/o screwing over the consumer. If I want to buy just a plain console, one controller and a single game of my choosing then I should be able to. Bundles just artificially increase system prices so M$ can take less of a loss on first-sales. This is no way to treat the customers who are your primary supporters (the first-to-have crowd), although they tend to buy at any price - only making it easier for M$ to take advantage of them. And the artifical scarcity tactic only disgusts and insults me as a consumer. Either sell your product or don't but screwing around with supply to inflate demand only serves to alienate and disappoint people who are already interested in buying your product. Sorry for the rant.
-- I'm not a pessimist, I'm a realist. It's not my fault that life sucks so much. --
Plus, each console must leave the store with at *least* two games each.
A thief grabs an Xbox 360, tries to run away. Security holds him. "Sorry mister, but I'm not allowed to let anyone leave with an XBox 360 and less than two games for it!"
Justice is the sheep getting arrested while an impartial judge declares the vote void.
Well it just looks like Microsoft is making use of what marketing research seems to be telling us about human behaviour. Things that are in short supply, no matter the cause, tend to be valued more. There also seem to be more than enough hardcore gamers to create buzz on the first day no matter how much those first 20 360s cost or what the bundles are. You'd think that if people know they're being manipulated this way, they would choose not to participate, but in the end, people want what they want. So it really doesn't matter how artificial the manipulation is, some shops are still going to be mobbed.
But, given all of the above, they could still come out weak like the PSP launch if they're not careful. As the mantra goes, it's the games that really matter. If they get things like Perfect Dark Zero out on launch day then they've got a shot at a strong launch, if not there will be plenty of 360s on the shelves on days two and three.
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Think about it: they sell all their X-boxes to the idiots who have to have this new plaything the minute it gets into the stores. These people will whine and bitch about the faults it has. MS has time to correct the faults, and then all of a sudden the X-box is available for everyone, and most people are happy with it.
-- Cheers!
So a report from one shop owner suddenly applies to massive retailers and small retailers globally? I'll believe it when I hear a similar report coming from Wal-Mart, Target or EBGames (or whatever they're called now).
For all we know, Microsoft simply wants this one retailer to sign to this agreement because they ordered an unusually high number.
Microsoft is the distributor of the product. Target, Best Buy... etc. order and pay for the units at a fixed negotiated rate, right? Yes they want software sold but what do they care if all 20 get sold the first day or not? The demand is there and their bill is paid. It's not like they are getting a percentage of first day sales... they should be getting their money up front from the retailers. Plus, wouldn't they want THEIR launch games to go with the console rather than just ANY of the titles at launch? It will be sold out regardless. Demand in the US and Japan will sell it out almost immediately. If Norway can't sell enough consoles, big deal.
I'm not clever enough for a sig...
Forcing bundles is a common retail tactic. EB has been doing it for years. Anyone remember the Game Doctor that they forced you to get with your PS2? I do. I was one of the poor bastards that was forced to sell it to you. As far as MS is concerned, if you pre-ordered an Xbox360 you can walk out of the store with JUST the console. But that isn't up to MS, if the pre-order is at GameStop or EB. In that case, you have no choice. And a Norwegian source? Give me a break. How far do you need to go to get bullshit? -- K-rig
I really don't give a frosty crank about the system. It's the games that matter, and there's nothing out there right now that makes me want to go buy a 360 so I can play it. Right now, I'm far more inclined to put the substantial cost of the latest gen console toward a new HD TV.
Some mornings it's hardly worth chewing through the restraints to get out of bed.
how exactly is this going to be enforced, how do they intend to check up on retailers? Surely they could report back to microsoft that they'd sold two games as promised, but just hold the ones people didn't want in the stock room then order a few less over the next few weeks as the excess is sold off 'naturally'
Yeah, I'd want to get a good look at this agreement as well. It doesn't sound as if Microsoft is "forcing" consumers to do anything -- they've just decided (for whatever reason) that they want their hot new console to sell out on launch day, and they want to ensure that this happens. So they ask retailers not to take on more than they can sell through in 24 hours and impose a maximum allowance and minimum requirement. BFD.
Be they tiny Mom'n'Pop stores or huge chains, retailers know their customers. They know what will sell through and what won't. They know how many games walk out with how many consoles whenever a new one launches. It smells like some of them know they could make a hell of a lot more money off of this console on launch day and they're pissed off that the supplier isn't meeting their demand for more product. They're worried that Microsoft is going to cost them money by limiting their capacity to sell at launch.
I work for an international toy distributer. As someone who deals with Mom'n'Pop type joints all day, I can say this: I pity the fool who'll tell the owner of a small retail store what s/he can and can't sell.
When they were writing this, did a paperclip pop-up and say "It looks like you're writing an intimidating press release..."
I'm not scared of anonymous cowards.
They're going to be building capacity to sustain sales *after* the launch. They will have built up an inventory to sustain the initial rush of the launch - but three months after launch they want to be making Xbox 360s at the same rate that they're able to sell them.
And so we come to first-day sales allocations. There are already stories that many outlet's entire allocations have been pre-sold. So it makes absolutely no sense whatsoever to send inventory to stores that are going to have them sitting around for a couple of weeks before they well. Hence the orders. They sound almost exactly like the following:This makes perfect sense if you ask me. They're trying to make sure that the initial shipments get sold to gamers rather than lingering on a shelf at an unpopular store. This exact scenario happened with previous launches (including the Playstation 2 launch) - game stores sell out but the department store has stock that it can't shift (and is wasted) because gamers don't shop there.
As for the "2-game minimum", you forget that "bundle-only" deals have been commonplace for several console launches from major retailers. The Playstation 2 and PSP launches included. If you don't want to buy 2 games in order to get an Xbox 360 at launch, I'm sure someone else will gladly take your place in line, and you'll be able to get an unbundled console in a few weeks.
Google now. use making it so on launch your system MUST be packaged with 2 games? Good work.
Seriously now, am I an idiot or does this type of totalitarian tactic not jib with any one else's morals? This "sell out or you'll not get anything from us" sounds a lot like their other dealings. Personally I'd be suprised if in the future it's "sell Halo 3 with a bigger sign then the ps3 or don't get the game"
What Microsoft needs to realize is that Pre-order isn't NECESSARY to force. These companies would kill themselves to get pre-orders because they guarentee business. But even more so, they don't make that much on sales of consoles or games, doing package deals helps the company, the system, and the retailers as more units are moved. If it was only one or the other there'd be little point to do so in the past, and the last console was done with this repeatidly.
But even more than this let's say store A gets NO consoles, would they cry? Maybe the employees would for they don't have their systems themselves but then the manager would shrug. The retail stores make more money from traded in games than they ever would make on consoles. I'm willing to bet that they'd be happier if you bought an Xbox 360 and 3 used Xbox Games than an Xbox 360 and a single 360 game... Hell even better if they sell an Xbox and 3 used games plus some extra used periphes.
But overall I gotta say Microsoft who has constantly been trying to say "we're the nice guys now" has just fallen back into it's old hated work with just a little nudge.
Speaking of 'Sell Out', who is actually going to by this microsoft product? :)
The government which is strong enough to protect you from everything is strong enough to take everything from you.
As a logistician, I can tell you that stock-outs can be very costly, and are usually something to be avoided, even in a very lean system.
It seems they're willing to take that risk in order to generate viral marketing buzz. I just hope they know what they're doing, because it sounds like a strategy that could easily backfire.
I work for a video game retailer, and we were told that we were being allocated roughly 30 units per store across the chain. The majority of the units sold remain the premium pack, with some regular bundles being included in the mix.
To help move units, we're giving an instant discount on the purchase of a game with the system, to help in fulfilling our contract with Microsoft to sell-through the majority of the units and games.
Microsoft wants hype.
I don't wish ill on the XBox, I think it's generally been a positive influence on the gaming industry. Here's what I think might happen though:
1. XBox 360 is released, and immediately falls into the hands of the "hardcore gamers." Invariably, most people buy a copy of Perfect Dark Zero as one of their two bundled games.
2. Those who didn't buy PDZ will tend to be disappointed, as the rest of the XBox 360 game line-up will fall somewhere between "pathetic" and "not bad but I feel like an idiot for spending $700 to play this. Where are the "OMG THAT'S AMAZING!" games???
3. These gamers, having already spent $700, will be very hesitant to spend money buying any additional games. They MIGHT be convinced to buy PDZ via word-of-mouth, hoping it's the magic game to help them justify the new system the bought.
4. Many will try to return or sell the 360, looking to back out of their $700 commitment. Anyone who *can* jump ship will try their damndest to do so.
5. Those who bought PDZ will either be happy with their system purchase, or majorly disappointed, depending on whether the game turns out to be good or not. If they're disappointed, Microsoft's word-of-mouth strategy will backfire. A consumer who is on the fence, thinking "hmmm it's $700 should I go for it," it's only gonna take a tiny little bit of negative buzz to turn them away.
6. Instead of "it must be awesome it's sold out everywhere," the mindset will be "I'm glad *I* wasn't so crazy as to spend $700 on an XBox 360. That would've been CRAZY." This means they'll need even MORE motivation to buy the system than they did at launch date. The "sold out" strategy, too, has now backfired.
7. By now it's time for the holidays. At $600-700, the 360 systems won't appear under that many Christmas trees. The ones they do appear under, the people who REALLY wanted them and pushed the limits of holiday funds to get them, will also be the first to return them, when the pendulum swings back the other direction. This is especially the case when these people consider that the PS3 launch is only 4 months away and that $700 of holiday money is the only way they'll be able to afford the PS3. It's a chance at redemption from a bad holiday shopping move.
8. At this point it's around January. By now, some more "killer apps" or pseudo-killer apps have hopefully hit the market, bolstering the 360. MS will now have 1 or 2 months to build momentum before the PS3 launch starts to loom near. They now have to fight the initial negative buzz AND the additional negative buzz from the holiday season (which will be a disappointment both in sales and marketing effect).
9. Now it's ~February. Hype is building around the PS3. Pre-orders are piling up. The next-generation graphics the XBox 360 failed to deliver are now the promise of the powerful Playstation 3. Most importantly, XBox 360 sales will grind to a halt for the simple fact that nobody is going to buy the 360 when they can take a wait-and-see approach by waiting 2 months to see what the reaction is to the PS3. And of course the 360 will probably have a price drop to try to better compete with Sony's debut.
10. The PS3 is released. Sony will no doubt make sure they've got some killer apps on launch, most notably Metal Gear Solid 4. The PS3 will likely live up to most of its hype, or at least definitively deliver to gamers what they thought they were getting with the 360 last year. If Blu-Ray high-definition movies have seiged the market by April, this will be another feather in Sony's hat, even amongst those that don't have HD sets. It's a tipping point, a useless tech spec that makes you nervous about buying the "other" system that only plays mere DVDs.
11. The console war "proper" begins. Microsoft, battle-worn, will have its cushy lead, but that lead advantage could easily be wiped out if initial PS3 sales are strong, making all of Microsoft's marketing efforts over the past 6 months all for naught. Also of note, targeting the "hardcore" gamers may prove less lucrativ
Need I say more than the subject?
Wait, I do need to say more. The Dreamcast had Sonic Adventure, Soul Calibur, Powerstone, Tokyo Xtreme Racer, House of the Dead 2, and Hydro Thunder at launch. Compared to... uh... what launch titles does the Xbox 360 have? A licensed game and some military FPS?
(Uh... the captcha for this post is... "crotch." Slashdot, what are you trying to say?)
Early revs typically have better support for user made hardware.
PCs at similar price points to the Xbox 360 complete version have even better support for user made hardware. You can probably build a $400 PC that's overkill for surfing the web, playing videos, and emulating classic video game systems.
I think this strategy will get them more sales in the long run. People are stupid. Sold out = I need it because it's a hot seller!
Thank you for saying this.
The Xbox 360 seems like the first Japan-style worldwide launch: Out of the gate early with few supporting games. Japanese consumers are notoriously technophilic, and in the past have bought systems on the promise of future titles and little else. US consumers have appeared the opposite: punishing the N64 for releasing with just 3 titles (even if one was one of the greatest games ever), and the Saturn for a similarly non-stellar launch.
Both were going up against competition, though, and that is where the key lies. If Microsoft knows the battle is ahead, as they are waiting for the PS3 to launch Halo 3. For now, they seem contented to launch with what appear to be underwhelming but nice games, and get a few buys before digging in their heels for the PS3 and Revolution launches. Once great games start being sold, we'll have a real battle on our hands. Expect to see blood in Christmas 2006 and 2007. This? This is just the pre-show.
The ______ Agenda
I dont know if this has been sugessted before, but, why didnt they just have a way for a current Xbox act as a hard drive for the new one? I know 20 gigs is more than 8 gigs, but, Im just sayin. Would have saved a lot of money, and, made people keep both systems.
Ok, its a dumb Idea.
Shady business tactics - in other words, business as usual for M$.
;)
What part of this constitues news?
Assorted stuff I do sometimes: Lemuria.org
Of course this is a simple but pretty nice strategy from Microsoft to sell their X-Boxes. They want to produce the impression that the whole world wants one and for this everyone has to hurry up to get one. What can we do to get one? Choose a casino strategy (like e.g. http://www.quarks-robots.com/) and win enough money in the next days to be able to pay the seller more than the normal selling price to be sure to get one? One strategy! Or: we confederate with each other at the selling day and nobody buys it to build up a complot against Microsoft's business strategy. Someone should create such a complot website ...