GameStop Theorizes Wii Shortage Deliberate

In GameStop's quarterly public conference call, company COO Dan DeMatteo called out Nintendo on what he sees as intentional supply shortages. Along with the news that the company hit $5.3 Billion in 2006, Next Gen reports that the call contained several remarks on the next gen systems. The Wii, Dematteo thinks, has been short supplied because 'they made their numbers for the year ... [Nintendo's] new year starts April 1st, and I think we're going to see supply flowing.' They also commented on the Euro launch of the PS3, with CEO R. Richard Fontaine saying, 'I think the summary of that was that it was a very good launch falling somewhat short of what [GameStop's Euro managing directors] would call a great launch.'

Comments

That is a double edged sword

[rolfwind]

You run the risk of having consumers turn to the Xbox360 instead because 3 months after Christmas is a long time to wait for a console.

I don't know if that is what Nintendo did... but it would seem short sighted to lose a customer over the life of this product and reaping in game sales just to have better numbers in one quarter.

Re:That is a double edged sword

[DDLKermit007]

Gamestop is talking out of their ass. Nintendo still can't keep with with the DS Lite in Japan, and the Lite revision has been out for over a year, and thats the last place they want to have shortages.

Re:That is a double edged sword

[Skreems]

The 360 has been out for nearly two years. They've sold somewhere under 11 million units. The Wii has been out for all of 4-5 months and they've sold over 5 million. And they still can't keep them on the shelves. Since they make a profit on their hardware, unlike MS and Sony, this is basically like printing money to them. I think demand has just exceeded everyone's expectations.

artificially choking supply?

[ravyne]

If they're artificially choking supply at ~6million units sold worldwide already, I'd hate to hear those numbers if they weren't.

Re:artificially choking supply?

[Chris Burke]

If Nintendo was really intentionally choking the supply, it would make them the biggest idiots of all time. There is a short window after launch where you are everybody's baby - if you don't make it then, then your platform will fail. Cutting off supply during this period would be beyond idiocy.

How many times have we discussed on /. the importance of momentum and marketshare? Despite a very healthy start and the apparent success of getting non-gamers to buy the Wii, Nintendo is still sitting at less than half the market share of the 360. You are absolutely right; deliberately stunting their marketshare would be utterly retarded as it would hurt them in 3 ways: 1) Lower marketshare means less appealing to 3rd parties 2) People unable to buy a Wii would perhaps buy another console 3) Word-of-mouth advertising that gets the non-gamer interested in the Wii would be cut short.

I think they simply underestimated demand, and now it's both difficult and expensive to try to meet it.

Re:artificially choking supply?

[tknd]

Release date: November 19, 2006.
Today: March 27, 2007.

Days between the two dates: 129 days (including today)

Wii's produced till today: 6,000,000+

6,000,000 Wiis / 129 days = 46,511.628 Wiis / day.

Each Wii sold includes 1 remote, 1 nun-chuck, 1 sensor bar, 1 a/v cable, and 1 power brick. In addition to this, Nintendo must also produce additional remotes, nun-chucks, and classic controllers at roughly the same rate.

I don't know about you, but you find me a manufacturer that can produce electronic hardware at a rate of 46.5k units a day without running out of any supplied part in the process. Even if you give them an additional 30 days to buffer the launch dates with units to sell you'd still get roughly 37.7k Wiis per a day. In order to pull this off Nintendo has to have good engineering (low defect rate), good manufacturing process (low manufacturing defects, fast/efficient production lines), and good supply chain management (can be compensated by better engineering to accept multiple part alternatives in the event a supplier cannot keep up with demand--I've seen this with their battery manufacturer changes that ship with the remotes). That doesn't even begin to include what you're going to do when people send back defective units during the warranty period.

For a global/multilingual launch and a company that only deals with gaming hardware/software, I'd say they're doing a damn good job.

I don't think anyone expected this kind of demand; it's not everyday that your mom, aunt, and grandma (literally) say "I want a Nintendo (Wii)." If there was a new product that was the next big thing compared to sliced bread, this is pretty close.

One can only guess...

[7Prime]

But I'm not sure this makes a lot of sense. "Making goal" for the quarter isn't exactly the most important issue in the world, in comparison to the livelyhood of an entire console generation. I'm not saying that they didn't intentionally short the supply, but I doubt that it was for this reason alone, it's just too risky. I doubt it was to make the launch look incredible either, because they still did incredibly well, and would have sold out even if they had put twice the number of units into circulation.

Probably a more practical reason is to short the supply of units during the innitial games draught, a game release slump which is simply unavoidable for any console. If 5 million people get their Wii off the bat, and then have to wait 6 months for good games to start coming out, you're going to have a lot of angry people. Currently, most people are still focused on getting the damn system itself, and don't have time to bitch about the lack of games. Now that some big titles, such as Super Paper Mario, and possibly MP3 are on the horizon, they can satisfy more customers, with less public backlash.

Gamestop is just frustrated

[elrous0]

I think Gamestop is just angry that they are stuck with shelves of the other consoles and they have no Wii's to actually bring in customers. They're probably also tired of answering the "Is the Wii in yet?" phone calls.

Trying to strong-arm Nintendo won't help, Gamestop.

Pure speculation but possible

[L. VeGas]

It's very, very common for businesses to proceed slowly after sales / profit goals have been met in a fiscal year. Short term planning proceeds on a year-to-year basis. Te vastly ramp up production without fully analyzing consequences is a good way to shoot yourself in the foot, even if every console produced was sold.

Fools rush in where angels fear to tread.

Say what?

[orclevegam]

That dosn't seem to make any sense at all. Now, if you were going to accuse them of holding out on shipments of Wimotes in order to be able to get them in the WiiPlay combo boxes, I'd say yeah, I can see that, but it dosn't make any sense at all for Nintendo to be holding back on the Wii itself. From what I've seen they have been making regular shipments to various retailers, just not very large shipments. If you're patient and willing to make an effort, you can get a Wii, you just need to check in on a regular basis (which can be even easyer if you can find out the shipping schedule for one of the retailers). I pre-ordered my Wii and had it on release night, so I didn't need to worry, but I also know of at least 12 other people who didn't and have since purchased them. Of course, I don't know anybody that's purchased a PS3, but that's not due to a shortage there.

Ok, yeah, that last one was un-called for. And I do like the PS3, but only enough to pay about $350, so till then, I'll stick with the Wii (and maybe a 360 if they release the new hardware and it comes down to $300).

Re:Say what?

[rhombic]

In the midwest, Walmart, Target, Best Buy, Circuit City, EBGames/Gamestop ALL have plenty of the white DS Lites in stock. Target had a few black ones, and I haven't seen any of the pink ones.

Now, thats a variety of stores from KC MO, KC KS, St. Louis MO, Columbia MO, Springfield IL, Peoria IL, Urbana/Champaign IL, and Little Rock AR that I've personally been in in the last two weeks, at various times of day, and various days of the week.

Dude, you gotta find a better hobby than browsing the electronics section of discount stores over a four state area. I mean, dude. Wow.

Oh of course

[Anonymous Coward]

I know when I want to drive demand from my customers, I always intentionally ship less and less product. Just seeing their little faces tighten up with anger as the realization they have ONCE AGAIN failed to buy my product warms my heart.

I think before too long I'll just stop shipping product all together, why the sheer panic as people riot in the streets for my items is sure to make me millions and millions of dollars

*point at lip with pinky*

Re:Online Multiplayer

[Skreems]

I'd second the sentiment that online play pisses me off. If it's done well, as an added mode on top of a great game, then fine. But a lot of developers these days are using it as an excuse to deliver extremely half-assed single player content. I don't know how many times I've heard, "The story mode for Gears of War is kinda short and not that interesting, but the multiplayer is a lot of fun." Somehow, playing against a trash-talking pre-teen with nothing better to do than practice 8 hours a day just doesn't interest me in the same way as a well written story mode.