Wii shortage is intentional, according to Gamestop
by Ludwig Kietzmann 
{ Mar 27th 2007 at 3:39PM }
In an investor conference call that took place after the release of Gamestop's financial results earlier today, the game retailer's COO, Dan DeMatteo, briefly discussed the crippling Wii shortage that has been prevalent in the United States ever since the system launched last year. "I don't think it's going to be an issue...and this just my opinion, but I think [Nintendo] intentionally dried up supply because they made their numbers for the year. The new year starts April 1, and I think we're going to see supply flowing." Nintendo's story, as recently echoed by Nintendo Europe's Laurent Fishcher, has always been that it's "still struggling to deliver the right numbers of hardware to cope with demand." Compared to the PS3's fluid supply and the fact that the Wii is comprised of cheap, proven and occasionally duct-taped parts, this is not a story that many have found easy to buy. In fact, it's about as easy to buy as a Wii, which to this day, still seems to be a retail phantom (much like the DS Lite). Managed scarcity is a good technique for keeping your product desirable, but it comes at the expense of leaving people with empty hands, tightly clenched in frustration.
There is some good news in the Gamasutra article, however, with DeMatteo promising the arrival of more Wii and DS stock. "We were concerned about the dryness here in March, but it looks like April is going to be good." With any luck, you won't be a fool for going to a store in search of a Wii next month.
Reader Comments (Page 1 of 2)
Jack of No Trades @ Mar 27th 2007 3:43PM
Continue the hype.
RoroCo @ Mar 27th 2007 3:43PM
I highly doubt Nintendo is sandbagging consoles until their next fiscal year. What sense does that make? The quicker they sell units the quicker they can realize revenue on them.
Gamestop...Maybe Nintentdo is final realizing that your outlet is no longer the best way to move consoles. So, they are not sending you as many units as they did in the past. Just maybe.
Colin @ Mar 27th 2007 3:47PM
Maybe the are pushing as many sales as possible to June 1 so that they can collect that $5 browser fee...
;)
Stef Geiger @ Mar 27th 2007 3:49PM
This managed scarcity concept is so stupid. WHO in the world would actually be DRIVEN to buy a console they otherwise wouldn't have because they heard that it's in short supply?
I'm far more interested in a console that's in very good supply, because it means that the manufacturer can churn them out at both decent quality and quantity, and that the install base should increase faster.
Lewis @ Mar 27th 2007 3:50PM
Fanboys, Commence.
Tufas @ Mar 27th 2007 3:56PM
As a poruguese guy living in a country where there are no Nintendo offices and where videogames are not publicized on TV or outdoor ads, I have been saying this "drought" of Wiis is intentional for ages now. I mean, on August 2006 Nintendo were saying hey were *alread* pumping out 1 million consoles per month and that figure would double before launch..
Wiis are out for sale everywhere here. One retailer is a big-chain supermarket - the place where all the casual players could buy it - and judging by the Wii shelf - which i have been following for 2 months now - the number of display hasnt dropped one - yes, ONE - since. In fact, they have printed word-document-scripted ads and glued them to the shelf, self-promoting the machine. The price started at 279 euros and is now at 259. So yes, i do believe Nintendo wants to build hype by controlling awareness and forging demand and more interest by faking a sell-out.
Next year, or as far as 2 years from now, Wiis will be gathering dust - unless of course third-party software does more than party-games. In fact, looking ahead at the next 12 months of Wii releases, I reached the sad conclusion: the machine I bought, which I havent touched since late january, is going to be resold soon (tho, not here, when I go abroad next month - seems to me I have a better chance reselling my Wii in a country where Nintendo's spin doctors actually made it look more worthy than it actually is).
To conclude: "I told you so" comes to mind.
BlessedBullet @ Mar 27th 2007 3:56PM
It's not really "according to Gamestop" if the quote is preceded by "...and this is just my opinion, but I think..."
Way to report responsibly
required @ Mar 27th 2007 3:59PM
I believe it's both intentional and flawed. It's intentional because they want people to think it's a hot item. It's flawed because I often see the system collecting dust outside of gamestop (other retailers).
Rj @ Mar 27th 2007 5:00PM
Managed Scarcity, especially for a product like this makes little sense and I don't believe its happening.
I don't believe its happening because the Wii continues to outsell the Xbox and PS3, so its not like Nintendo is only putting out PS3 launch type numbers. Its scarce because people are buying it.
It doesn't make business sense because the people that Nintendo is selling to, and the market they've been trying to sell to is the casual gamer. Not the hardcore gamer that is willing to scour every store every day. The price is so low as to be an impulse purchase. Every time there is no unit on the shelf Nintendo loses a sale.
Suggesting Nintendo is restricting supply to increase demand is illogical. This game system isn't a Gamecube with better graphics, its a different type of game play (whether its a gimick is certainly debatable) the best sales technique for the device is to have it in peoples homes, and have their friends play it and want to buy their own. Managed scarcity doesn't drive the casual shopper to buy it even more.
Dolla Dolla @ Mar 27th 2007 4:01PM
Nintendo is over-delivering in the Wii production department, if vgcharts.org is correct in its console sold count. Nintendo estimated 6 million by March 31st, and they are past that. I could understand if they under-delivered, saying 6 million and only getting 5 out the door, but that's not the case.
Will they be able to deliver enough in April? That's a good question. I guess we'll see.
hegemonyhog @ Mar 27th 2007 4:01PM
"It's flawed because I often see the system collecting dust outside of gamestop (other retailers)."
Please, where are these systems? I could use the extra $100 they'll bring on eBay.
C. Grant @ Mar 27th 2007 4:01PM
Stef Geiger: look at every report, on blogs, in the newspaper, about PS3s sitting on store shelves. There is definitely a problem with appearance. On the other hand, if you can get *more* coverage for being sold out, and everyone wants to know why, that's another strategy that's proven to be effective.
WamBam @ Mar 27th 2007 10:51PM
Dear Nintendo,
Whether or not you are creating a shortage, I'd just like to say thank you. Though I've had to wait in some long lines, I've been able to make a healthy profit on ebay because of the Wii. For whatever reason, people will pay anything for your system and I been able to my hands on them at retail. So, keep up the good (lack of) work!
Love,
WamBam
JodyAnthony @ Mar 27th 2007 4:05PM
I don't buy it, but thats just me. Why would a company thats been struggling for years want to hold their big moneymaker back? Why would they want to hold on to things until AFTER the fiscal year ends? It seems to me they would be pumping these things out as quick as possible, given that demand is still crazy high. Get as many sold before the fiscal year ends so after year end they can tell 3rd parties/investors "look how much money we made and how many systems we sold! Don't you want to invest in us/develop for us?"
Jerk Face @ Mar 27th 2007 4:07PM
@ Tufas
This isn't really relevant to the topic, but I agree with you with regards to the bleak outlook of the system.
I am a Nintendo fanboy - straight out. Have been since the NES days. But I have this sinking feeling that the Wii just might be another Game Cube or N64. Every third party game I have played so far has been average at best. I hate it but I sometimes just don't want to swing my damned arms around to play a snowboarding game. Or even golf! And I don't care if there are alternate control schemes for some games that let them play like a more traditional system. The Wiimote was supposed to be the Coolest Thing Ever, remember? That's what the Nintendo execs said.
But I am afraid that they are wrong. I am afraid that the Wii is just a damned novelty like all the PS3 fanboys said.
Big N better kick out some good games and get their crap together with online play or else I will be a very, very sad panda.
PhrawzT @ Mar 27th 2007 4:59PM
Where are people having trouble finding a DS? Since the DS Lite came out, I have never seen any shortage of them. I was at Best Buy two days ago to see that they had at least six of every color in stock.
The Wii however is still next to impossible to find. Since its release, I have never walked into a store to see one in stock. I got mine off Ebay.
required @ Mar 27th 2007 4:07PM
bay area. btw, I believe the wii ebay is part of their smoke and mirrors, heck it's far cheaper than most advertising.
IslandLife @ Mar 27th 2007 4:09PM
Seriously though, how could anyone, outside of a jaded fanboy, believe that production of a console with so many old and outdated parts could ever be so difficult to produce in large quantities. I would believe that story about as much as the PS2 running into supply shortages.
I call this myth... BUSTED!!
Crono @ Mar 27th 2007 4:11PM
Because they're not old and outdated parts. They might be weak (comparitively speaking), but they are definitely not old, and new manufacturing lines had to be created to make them.
Travis @ Mar 27th 2007 4:14PM
If this is true, i don't think its a good plan. I saved $260 to buy a Wii and after a couple of weeks of not being able to find one, i spent it on something else.
Cutriss @ Mar 27th 2007 4:16PM
"Wiis are out for sale everywhere here. One retailer is a big-chain supermarket - the place where all the casual players could buy it - and judging by the Wii shelf - which i have been following for 2 months now - the number of display hasnt dropped one - yes, ONE - since. In fact, they have printed word-document-scripted ads and glued them to the shelf, self-promoting the machine. The price started at 279 euros and is now at 259."
The MSRP of the Wii is 249 Euro. Perhaps the buyers in your area would just prefer not to get fleeced?
hegemonyhog @ Mar 27th 2007 4:14PM
"bay area. btw, I believe the wii ebay is part of their smoke and mirrors, heck it's far cheaper than most advertising."
From my perspective, I haven't seen a single one on the shelves in any store I've been in in Ohio or Kentucky since it launched. There's still lines outside of stores every Sunday.
What is the point of manufacturing shortages if you aren't making any money off of them? Even if Nintendo's going to release a bunch more systems, at some point the real demand will dry up if it's simply being driven by the appearance of a shortage.
And if systems are plentiful on store shelves in the Bay Area, why are they selling for $120 over retail on Craigslist?
http://sfbay.craigslist.org/search/ele?query=wii&minAsk=min&maxAsk=max
hvnlysoldr @ Mar 27th 2007 4:14PM
If this really is intentional shortage, it's got to be one of the worst and best. It's the worst since to drive demand by scarcity would mean to have as few units available to purchase as possible. Which doesn't make sense compared to the Japanese sales charts and NPD numbers. When you're selling several HUNDRED Thousands of DS Lites and Wiis in Japan a WEEK and hundreds thousands in US a month as well, is that really a scarcity? You're selling millions of products and building new plants and it's still selling out? They're selling millions, how could they still be holding out? So it's the best launch orchestration ever that with withheld product they sell millions of units and it's still sold out for four and a half months.
required @ Mar 27th 2007 4:14PM
funny thing is a lot of the press bought the campaign hook line and sinker, they really think it's hot.
slacker164 @ Mar 27th 2007 4:14PM
The problem with the intentional theory is that according the NPD and other sources, Nintendo is actually selling shitloads of the things. If the February NPD said 100,000 Wiis were sold or something, that would indicate something very strange. However they are apparently shipping and selling to consumers large quantities. Nintendo clearly needs to do better and produce more, but having sold through 335,000 Wiis in North America alone during February, I’m inclined to believe the demand argument over the withholding stock argument. Not to mention they are on track or ahead with their shipping goals which originally stated 6 million worldwide by the end of March.
required @ Mar 27th 2007 4:16PM
hegemonyhog, are they really selling for $120 over retail on Craigslist? I think not.
oh and why? as I said, it's far cheaper than most advertising these days.
Ludwig Kietzmann @ Mar 27th 2007 4:16PM
Yeah, BlessedBullet, the Gamestop Chief Operating Officer's opinion on the supply of a product Gamestop sells clearly cannot be attributed to Gamestop. We should have waited for physical Gamestop stores to creak and shudder out a message in brick dust.
Matt B @ Mar 27th 2007 4:18PM
I also said this weeks ago and was scoffed at.
Looks like I'm not the only one.
burnt_secondary @ Mar 27th 2007 4:21PM
Well, to tell you the truth Nintendo saved me money. I was all hyped to get a Wii but now that I see it is mainly a party mini-game machine (Wii Sports, Wii Play, Wario, Rayman, etc.) I can do with out it.
Got Zelda($39.99) and a used Gamecube($34.99) so I think I've already got the Wii's best title for the next few years.
yurinka @ Mar 27th 2007 4:28PM
It's bullshit. Nintendo must sell more now to reach their own current fiscal year predictions.
Finn @ Mar 27th 2007 4:22PM
@ required
loser
Velops @ Mar 27th 2007 4:23PM
Can we draw any parallels with the DS Lite? The DS Lite was also supply constrained for a long time. So why didn't anyone accuse Nintendo of artificially creating a shortage of DS Lites?
Nintendo considers the launch window to be 6 months. The Wii is approaching the 6 month mark so that will the be moment of truth. Whether or not the shortage continues at that point while be a clear indicator of what is happening.
RoroCo @ Mar 27th 2007 4:24PM
required... You seriously need to stop. Your delusions are not healthy dude. Nor does anyone believe your Nintendo "perceived shortage" conspiracy theories.
Rubang B @ Mar 27th 2007 4:27PM
One time I bought 2 Wii games at GameStop, and then when I walked outside, the building started to shake. As I turned around, I noticed a face had formed in the bricks, and it began to moan and told me "Trade in 2 Wii games and get 1 freeeeeeeee....."
navsimpson @ Mar 27th 2007 4:30PM
The Wii is basically an urban legend here in Toronto. I managed to snag one due to a connection at a video store where most people wouldn't think to look, but if I hadn't, man would I frustrated by now since they are sold out everywhere. If they appear online, the 50 or so they put up or gone in under a minute. It's ridiculous.
I don't know if it's entirely fair to compare Nintendo to Sony - Sony are after all a much larger consumer electronics company and have more experience manufacturing - but Nintendo really need to figure out something quickly, because this has now gone beyond merely building hype. Everyone from diehards to people who are just curious about the hype are getting annoyed, as they well should be.
I do think all the hype is worth it - anything that both has me hooked (still not sick of Tennis and Golf) *and* can get my 60+ year old parents having fun playing video games must be doing something right. I just wish more people could find it...
hegemonyhog @ Mar 27th 2007 4:30PM
"hegemonyhog, are they really selling for $120 over retail on Craigslist? I think not."
Well, there are the dozens of Craigslist postings in the Bay Area today...alone. And the fact that it's replicated on eBay, Craigslists across the country, and other such selling boards.
If there was no shortage, why wouldn't there be at least one complaint that people were drastically overcharging for something that was on shelves in apparent ready supply?
You're asking me to believe that Nintendo has a staff of likely dozens, perhaps hundreds, pumping out auction and sales notices on sites across the country asking for $120 more than the MSRP of a system that's allegedly in ready supply and is already outselling every single one of its competitors...and it's working, despite thousands of real-life resellers also attempting to work the same system.
The backlash to this strategy, if there were systems on the shelves, would come so fast and be so obviously true that it would sink Nintendo.
Suppose that this was all a massive conspiracy on Nintendo's part to build hype for the Wii, and that there was supply on the shelves. Well, we all know that there's a great little secondary market for hoarders out there who will take advantage of any scarcity for a desired product in the market. If Nintendo had been promoting massive scarcity for over five months, real-life resellers would have hopped on this bus to try to take advantage of it, crashing any hopes of the plan with a glut of supply, and exposing Nintendo in their own AllIWantForXMasIsAWii.
If you seriously believe this, you're either an idiot, or I hope Sony's paying you for the privilege of public embarrassment. Which is it?
Yoshi Likes Boys @ Mar 27th 2007 4:29PM
Any response to the NPD argument? Anyone?
LaughingMan @ Mar 27th 2007 4:32PM
Have you ever seen a console go this long with a supply shortage? I mean we are going into APRIL!!! and I have never seen a Wii anywhere. You can't tell me it's that popular, cmon no way. I can't say for sure that this is delibrate by Nintendo, but it is really weird.
Ben @ Mar 28th 2007 12:10PM
Why do so many of you ignore the fact that the Wii is selling tons of units every month? How can you ignore it? It's been reported over and over by the NPD group.
Anticrawl @ Mar 27th 2007 5:32PM
Fellow fanboys, apparently you do not understand why nintendo would do this. They are a company who turns a profit, and has had a steady net profit increase for over 50 years, only having it drop on one or two occasions. If they had such a spike in profits last fiscal year then it would make sense for them to leave room for improvement the following year. That's what they've done all along and it keeps them extremely profitable and in the game.
32_Footsteps @ Mar 27th 2007 4:42PM
I've had a few sources (anonymous for their sakes) tell me much the same thing. It's to the point that unless you get extremely lucky with the retail drops, even industry folks can't use the usual B2B channels to get the Wii.
For those that think it's stupid, it's really not. Companies thrive on the hype that builds around "the hot, impossible-to-get" thing. Selling out your stock drives hype. That hype can turn to anger and backlash if the product void persists too long, but in this case said void is lasting no more than a month, which should be ample time to build anticipation without frustrating too many folks.
I honestly doubt that this technique actually results in more sales (particularly here, where I think they'd sell out their stock regardless), but it certainly results in more hype.
As for the DS Lite... Funny, I just was in Atlanta's airport, and they had a half-dozen of the things for sale there in the middle of Terminal C - and without the airport markup, no less. Though that'd be even better if a) there was a way to get to the kiosk without taking a flight through Atlanta and b) if there was some way to charge them at the airport.
RoroCo @ Mar 27th 2007 4:53PM
Laughingman... The 360 was in the same boat. No stock until mid April.
Susi @ Mar 27th 2007 4:56PM
Wiis are all but impossible to find in the Twin Cities area. I am hoping for a big drop in April since I will finally have the funds to buy one, so I hope that there's truth in DeMatteo's speculation.
I would just like to add that while the lot of you might be hating on the system for your various reasons, predicting it's downfall in the near future, I'll think of you fondly in a year or two when my friends and I are still rolling around on the floor, giggling and throwing wiimotes at eachother as we play the console's simplistic, yet stupidly fun games and I'll hope that you're just as bitter and crotchety as ever.
paralipsis @ Mar 27th 2007 4:58PM
I think a big factor in this is the (almost) simultaneous worldwide release of the Wii. All previous Nintendo home consoles had a significant gap between Japan, US, and European launches.
I think that the different approach this time would to some degree constrain their ability to maintain early supplies. While delays in release to all the large markets has considerably shrunken over the years, there was still over six months between the initial Japanese release of the Gamecube and its release in Europe. Considering that less time than that has passed since the Wii was released, it is unfair to directly compare the situation now to that of past Nintendo home console releases.
And while manufacturing ability has increased, so too has the number of people able/likely to buy a console.
Anonymous @ Mar 27th 2007 5:00PM
I've been thinking they were holding consoles back as well. The console is supposed to be insanely easy to create from inexpensive parts, and yet I can't find one in a store anywhere? Personally even if I saw one in a store, I'm not ready to buy yet. The Hype is strong, but the games are weak (I've already played Zelda on Gamecube, who cares about the control scheme) and I've got nothing but time to wait and see if third party devs actually put out something worthwhile for the Wii.
And I agree that these headlines are getting a little over the top. "Wii shortage intentional, according to gamestop" it's more like "Wii shortage may be intentional according to opinion of gamestop COO" Don't worry though, the other day on another blog (I forget the name of) I saw the headline "AT&T Dropping Lawsuit on Nascar" obviously I thought that a previously filed lawsuit was being dropped...but I was wrong, and by "Dropped" they meant "Filed"
Gavin @ Mar 27th 2007 5:05PM
For what it's worth, they haven't had any Wii consoles at my local Wal-Mart, which is on the outskirts of Baton Rouge. I know the guy who runs the department and asked him if they have really been selling out and he said that they just haven't gotten any in. So it isn't that they have been flying off the shelves, it is just a lack of units. They have had Wii-motes and Nunchucks though. Smells like an artificial shortage to me.
ttr @ Mar 27th 2007 5:09PM
I really don't think the DS Lite is hard to find. Every time I check BestBuy and Futureshop, there are several DS Lites in the glass cabinet. I usually see at least 6 Lites of various colors and about 2-3 open-box discounted Lites. The black DS Lite seems a lot harder to find, though. Maybe Japan players looking for some DS Lites should import from here if they are still lining up every week.
Mr. Clownn @ Mar 27th 2007 5:09PM
Ok let's take a look at the math (mind you, this is WikiMath, so take it with a WikiGrain of WikiSalt)
- In the first six months of its release, XBOX 360 sold 4.5 million consoles worldwide
- In four months of its release, the Wii has sold around 5 million to 5.94 million consoles
Now, I was working in retail at the time of the 360's launch and subsequent drought. Did Gamestop also accuse Microsoft of these sales tactics? Can it just be ... gasp ... that they Nintendo actually did sell out of their initial run and Gamestop is trying it's damndest to account for loss revenues? Or are they bitter that big-box retailers like Best Buy and Target got larger quantities of the system than they did? No proof of either, just theories.
Look, I'm no fanboy. I don't own any of the next gen systems yet, but c'mon...gamers of all kinds are always ready to jump on Gamestop for terrible tactics and policies, but here he's gotta be right on. Do I have all the answers? Not even close, but I'd like to think Nintendo is smart enough to realize that any buzz they receive now will be for naught if a flood of systems come in and sales drop 50% + .
Oh and there are plenty of plugs in Atlanta, at least the kind that liked my laptop. Had a 2 hour layover in that hellacious airport 2 weeks ago and had no problem finding a place to plug in. Unless Nintendo uses some kind of proprietary charging socket...
john @ Mar 27th 2007 5:24PM
"WHO in the world would actually be DRIVEN to buy a console they otherwise wouldn't have because they heard that it's in short supply?"
Isn't that like the main rule of economics? Supply and demand are inversely related.
Zelos @ Mar 27th 2007 5:29PM
So Nintendo is intentionally keeping down supply of a console, when they make a profit on the hardware, have three major competitors (one with a year head start) and desperately need to attract third party devs (which requires a large installed base).
Where's the logic in that? The value of selling a Wii near launch is much greater than one later in the console's life.