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Wii Shortages Costing Nintendo 'A Billion' In Sales
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.'"
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.
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!
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.
Anthropic principle: We see the universe the way it is because if it were different we would not be here to see it.
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.
-Limb
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
Even those who arrange and design shrubberies are under considerable economic stress at this period in history.
I have the solution to solving the holiday product crunch: spread the holidays out over the calendar. In the USA, divide the country up into 12 regions of about the same population and economics. Then assign each region a different month to have the gift giving holidays. Most people don't celebrate Christmas religiously, anymore, so this shouldn't be much of a problem.
The above does still leave a big crunch at stores and malls within a region. So maybe it's better to divide things up on a micro-scale instead of a macro-scale. So, how about celebrating the gift giving holiday based on (zipcode % 12), where you celebrate gift giving based on your zip code modulo 12 to choose the month.
This still means a big crunch for families and neighbors in the same zip code. So I have a better idea. Let's use the date of birth to determine when to celebrate the gift giving holiday, based on who the gift is for. And instead of having it all on one day of the month, let's spread it out further and use the actual date in the date of birth for everyone's own personalized gift giving holiday.
Ooops. I didn't take into account February 29. Never mind.
now we need to go OSS in diesel cars
New Wii units without a multi-controller/multi-game bundle are selling for a fifty to seventy-five dollar price premium over retail. Even if the 15 million units they've sold to date were sold for USD 50 more, Nintendo would only be making an additional 750,000,000 bucks, less than three-quarters of a billion. And that assumes that everyone willing to pay $250 for Wii is also willing to pay $300 for a Wii which I doubt. It seems to me that a large part of the Wii's popularity is its price.
But more importantly, the lack of a large premium on the Wii from resellers suggest that the present rate of production and price is very close to the market equilibrium. If demand were far outstripping supply, the premium from resellers on eBay would be far higher. If supply were far outstripping demand, we'd be seeing the boxes stack up on the shelves. But from first appearances, it would appear that Nintendo is very close to hitting the sweet spot with their present rate of production.
Not sure, but how much of this 'shortage' was deliberate by a subset of consumers that bought Wiis simply for speculative reasons?
I can find tons (right now I see 9000+) of Wiis on ebay at joke prices. Presumeably almost all of these will go back to the store within a week or two of Christmas.
Not Nintendo's fault, really.
-Styopa
I for one have wanted a Wii for quite some time. It just looks fun! However my impulse to buy has faded over the year+ that I've actually been looking to get one. If I have to wait wait much longer I'm plain not getting it. The PS3 and the Xbox are becoming far closer to the price of the Wii. While I won't buy M$, most people will, including grandpas and grandmas who don't know Mario from Halo. Many households won't buy two systems. Nintendo has self-limited themselves from a bigger piece of the gamesystem pie, which Sony and MS will happily lay claim to.
But more importantly, the lack of a large premium on the Wii from resellers suggest that the present rate of production and price is very close to the market equilibrium. If demand were far outstripping supply, the premium from resellers on eBay would be far higher.
Not necessarily. This could instead indicate that the demand is elastic with respect to price. That would mean the demand for $250 Wiis is extremely high, while the demand for $400+ Wiis is very low. An item being in short supply relative to the demand does not automatically mean that the people who want the item would be willing to pay more for it. That usually only applies to what are more or less necessities, like gasoline or food staples.
This especially makes sense in the context of who the Wii's primary market is -- casual non-gamers. These are people who maybe saw a friend or relative's Wii, played it and had fun, and decided they want one despite not being into any previous game consoles. For them, $250 for a fun toy may seem like it's worth it. If the toy turns out to be hard to find, are they going to decide that they will instead pay $300, $400, or $500 for it? Or are they going to decide that they don't need it that bad, and can wait until more are available?
It's only the hard-core that are going to be willing to buy their chosen console no matter the price. But even then they're also the ones who'd be willing to call every store in town and show up before they open on shipment day. The latter is the category I fell into. Even I, long-time Nintendo fan boy, wasn't willing to pay scalper mark-ups on a Wii.
What this implies is that despite some theories to the contrary, the Wii's MSRP is in fact a major selling point.
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