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."

Comments

Bundles.

[Guspaz]

"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.

Re:Bundles.

[Otter]

Well, the "choice" is to wait 24 hours instead of jumping into the mosh pit to be one of the first 20 Norwegians in the door on December 2.

I certainly regard these schemes to use consumer frenzies for PR as degrading to human dignity, but it's not like you have to be one of the idiots trampling each other at 5 am on "Black Friday".

Re:Bundles.

[PhoenixOne]

Am I the only one that got excited reading this? Microsoft expects to have at least two games ready by launch!!!

Ah, those crazy retailers

[Keeper]

Sounds very much like the retail chains' requirements, not Microsoft's.

Possible reason

[theantipop]

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.

Re:Possible reason

[Bastian]

That seems a bit far-fetched and conspiracy like

No, it seems to me like exactly what you would want to do if you were a huge corporation pushing a huge product but wanted to create a huge viral marketing campaign without *too* much effort on your part.

If it really is what MS is trying to do, I think it's a master stroke on their part. The 360 is launching way ahead of any console in its generation, so Microsoft has plenty of time to sacrifice initial launch sales in favor of higher sales in the long run.

Re:Possible reason

[Gulthek]

So far I've been labelled as a Sony fanboy, a Nintendo fanboy and an XBox fanboy. Go figure.

That's crazy. You are obviously a videogame fanboy.

Then lower the prices

[EnronHaliburton2004]

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.

Re:Then lower the prices

[Red Flayer]

"This sounds silly, but the traditional way to "sell out" of an item is to lower it's price.

That's the traditional way to sell out an overstock. The 360 won't be overstocked, it will be intentionally understocked.

"Keeping the price high by artificial fixed prices means that it's hard to 'sell out'."

They aren't keeping the price high by artificially fixed prices. They are keeping the ideal pricing point high by limiting supply.

MS needs to justify the high MSRP for the 360... and the high wholesale price. MS doesn't want to reduce the price until late next year. The best way to do that is by showing that there is enough demand that you still sell out at the current price.

Producers of a unique commodity often limit supply to keep demand and price (by extension) high. My understanding is that MS will be taking a loss on each unit anyway... so if they have to drop the price in the short-term, they'll be hemorrhaging instead of slowly leaking.

This isn't artificial price-fixing. This is manipulation of the market by restricting supply. It's done all the time with unique goods, and preserves the profit incentive to continue producing innovative goods.

It Isn't Really Such a Challenge

[Alamoth]

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.

Illegal

[El_Muerte_TDS]

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)

Re:That's so frustrating!

[BRock97]

It's funny, as a guy who has owned and played nearly everything from the Atari 2600 through the Gamecube, I can't help but comment on how underwhelmed I am with this launch. To be honest, there isn't one title that is compelling me to go out and get the 360, which is somewhat surprising. PS2 had Tekken 4, Gamecube had Star Wars, and the XBox had Halo (all fantastic games and worth the price of admission), but nothing is trippin' the old game thumbs this time around.
 
To be honest, I wish Microsoft would have gulped down a ittle pride and pushed the release back six months. All the press is pointing to the PS3 not being a threat until later in 2006 so Microsoft would still have had that window to establish a strong first response. I would get excited about some of the other features such as the online stuff for FPS and the integrated Media Center functionality, but my mouse and keyboard are too cherished (hear that Microsoft! Let us use our mouse and keyboards and you would have me at "hello") and from what I have read, the Media Center functionality is limited to 720P playback for HDTV content from the media center PC. (Note: I said HDTV playback, not games. I am aware that the 360 can do games up to 1080i, but I would want my video there, too. Plus, they aren't even going to upscale DVDs!)
 
So, I too will probably wait from something really high-profile like Halo3 to come out. As much as I wanted to get to my local Best Buy at 5 A.M., I think I will pass this round.....

I'd like to read the agreement

[max born]

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?

Comment removed

[account_deleted]

Comment removed based on user account deletion

Lack of choices always bad for consumer

[Jtheletter]

This is the kind of thing that has always pissed me off about consoles, they bundle the console and force a certain package on you. This means that you end up spending more than you want and getting things you're not interested in. When I got my first xbox it was bundled with Clone Wars/Tetris (no interest) and before that the family xbox was bundled with Jetset Radio (again zero interest). If these games were free with the system, or if there were a choice of games it would be ok, but as it was you were basically forced to pay and extra $55 for games you probably didn't care about. And because of the (IMHO) crappy play value of these games coupled with the huge number of them out there, you could get maybe $5 reselling them to the store.

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.

At least two games?

[KDR_11k]

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!"

Japan-style launch

[cgenman]

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.