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Games Entertainment

GameStop Theorizes Wii Shortage Deliberate 163

Posted by Zonk
from the ruh-roh-raggy dept.
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.'
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GameStop Theorizes Wii Shortage Deliberate

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  • by bym051d (980242) on Tuesday March 27, 2007 @03:27PM (#18506971)
    By stopping supply of Wiis to Gamestop.
    • Re: (Score:2, Insightful)

      by c0mmanderb0nd (994754)
      Yes the only company actually turning a profit on a console just really doesn't like money so they would rather not make it by holding back supply. Maybe Dan needs to go back to firing managers whose employees sell games to kids and continue with his own exceptional management policies, as in how to ass whip customers into trading in more games or over pre ordering things that will never sell out in a million years. "Yes sir you really need to preorder Barbie horse adventure 2, the first one was a major b
  • by rolfwind (528248) on Tuesday March 27, 2007 @03:34PM (#18507071)
    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.
    • by DDLKermit007 (911046) on Tuesday March 27, 2007 @03:58PM (#18507469)
      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.
      • 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.

        Sorry, but I just want to point out the house of cards you're arguing about the Wii - they aren't faking the shortage because there obviously is a shortage due to the fact they can't keep up with demand. Wouldn't an artificial shortage cause it to appear there's high demand due to a shortage? If there wasn't a shortage, demand would be sated and
    • Well before the launch they were talking about how they produced so many units you should just be able to walk into your local retailer and walk out with one(sans waiting in line in cold weather for hours) on launch day. A huge nintendo fanboy friend of mine bought that line and ended up having to wait until well after Christmas to get one. He's not really bitter about it, but.....
      • Re: (Score:2, Informative)

        by Anonymous Coward
        Reposting anon with formatting
        Well before the launch they were talking about how they produced so many units you should just be able to walk into your local retailer and walk out with one(sans waiting in line in cold weather for hours) on launch day.

        That is not true.

        Here [slashdot.org] is a story where Reggie Fils-Aime says "not to get complacent."
    • by Skreems (598317) on Tuesday March 27, 2007 @04:18PM (#18507777) Homepage
      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.
  • by sqlrob (173498) on Tuesday March 27, 2007 @03:35PM (#18507085)
    This from the company that resells new reprints as used because the used sells for more.
  • by ravyne (858869) on Tuesday March 27, 2007 @03:36PM (#18507095)
    If they're artificially choking supply at ~6million units sold worldwide already, I'd hate to hear those numbers if they weren't.
    • by soft_guy (534437) on Tuesday March 27, 2007 @05:23PM (#18508621)
      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.

      It is possible that Nintendo underestimated demand when they were reserving factory time for the Wii to be built. Then again, it is possible they just can't get enough units to market as quickly as they would like due to some factor beyond their control (this is most likely).
      • by Chris Burke (6130) on Tuesday March 27, 2007 @07:37PM (#18509949) Homepage
        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.
        • by macserv (701681)
          The Wii has well over the marketshare of the Xbox 360 [vgcharts.org].

          P.S.: Don't point me to NexGenWars... they estimate based on trends. VGCharts only uses official numbers.
          • Re: (Score:3, Funny)

            by macserv (701681)
            Of course, I meant, "well over half the marketshare of the 360". I need sleep.
          • by soft_guy (534437)
            This chart shows installed base, not marketshare.

            Marketshare would be the percentage of consoles sold in some period of time. This is just raw units shipped since launch.

            Not that installed base is unimportant, but it isn't the same thing as marketshare.
        • Re: (Score:3, Insightful)

          by Tom (822)

          Nintendo is still sitting at less than half the market share of the 360.
          Half, yes. Sitting, no. The 360 has been out for what, four times the time the Wii has been around? Getting half the market share of a competitor who's been around four times as long isn't exactly "sitting", it's more an "in the process of overtaking".

          Give it another 4, maybe 5 months and the Wii will be the best-selling next-gen console.
          • by Phisbut (761268)

            Give it another 4, maybe 5 months and the Wii will be the best-selling next-gen console.

            When will we catch up with the future and stop calling the Wii, PS3 and Xbox360 "next-gen". When does a console become "current gen"?

            • A console generation becomes 'current gen' once:
              1. It makes up the majority of the install base or
              2. People are talking about the 'next gen', turning the former 'next gen' into the 'current gen'.
      • by miro f (944325)
        you have to remember as well that ramping up production is not cheap and quick. It takes time, it costs a lot of money, and if in two months the demand drops back, then you've essentially got a factory that's all kitted out and is essentially a huge waste of money.

        Nintendo is a very conservative company, and as such, they would be more likely to just try to ride out the wave rather than spending huge amounts of money ramping up production only to be overproducing and having wasted all that money
    • by tknd (979052) on Tuesday March 27, 2007 @08:04PM (#18510191)
      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.
      • by Phisbut (761268)

        In addition to this, Nintendo must also produce additional remotes, nun-chucks, and classic controllers at roughly the same rate.

        At a slightly higher pace actually. Many Wii owners will eventually want 4 Wiimotes, so that's 3 extra Wiimotes per Wii sold. And they're currently as hard to find in stores as Wii consoles. I got a Wii at launch, but only managed to get a 4th Wiimote two weeks ago, and that's only because I managed to get my hands on Wii-Play with the Wiimote bundled.

      • 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.

        Not quite. You would have to factor in how quickly the initial supply sold out; after that it would come out differently - and likely still quiet close to the original 46.5k per day. So... suppose an initial supply of 400k units with a sell out of 7 days (close, I think):

        Initial Supply = 400k
        Initial Supply Sell Out = 7 days

        400k / 7 = 57142.857.. Wiis/day

        Sold Since =

    • by Kanasta (70274)
      Maybe Sony called them and begged them not to make the PS3 look any worse than it already is?
  • ya think? (Score:3, Insightful)

    by mstahl (701501) <marrrrrk@gm[ ].com ['ail' in gap]> on Tuesday March 27, 2007 @03:36PM (#18507103) Homepage Journal
    I'm shocked....

    I'm not so sure that's the case though. There definitely does seem to be more demand than can be quickly supplied. Remember kids, the PS3 was the intentionally shorted console, and now they're on shelves everywhere. The Wii on the other hand is actually selling still and there's tremendous demand for them.
  • At least they weren't impossible.
    I bought one for my house and one for my nephews. I'd rather be complaining about a company providing a limited release when there is a lack of software than have the poor implementation of the competitors.
  • by 7Prime (871679) on Tuesday March 27, 2007 @03:39PM (#18507145) Homepage Journal
    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.
    • Re: (Score:3, Insightful)

      by Chris Burke (6130)
      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.

      It doesn't make any sense at all. The claim is that Nintendo, having easily met their fiscal goals, deliberately clamped production/shipments. First, so long as you don't appear to be sacrificing long term stability, investors would love for you to exceed your goal. Nobody complains about making more money, and I can
      • Then again, from what I've read about the PS3 launch in Europe, the availability of consoles at retail is considered failure. If Sony had only released 10,000 of them, it would have been a huge success!

      • by Maxwell (13985)
        It doesn't make any sense at all. The claim is that Nintendo, having easily met their fiscal goals, deliberately clamped production/shipments. First, so long as you don't appear to be sacrificing long term stability, investors would love for you to exceed your goal. Nobody complains about making more money, and I can't see why Nintendo would.

        It makes perfect sense. Investors would much rather see a company make their goals for two years in a row, then to have one high year, followed by a dissapointing year

        • by Chris Burke (6130)
          It makes perfect sense. Investors would much rather see a company make their goals for two years in a row, then to have one high year, followed by a dissapointing year. Consistency is rewarded. Nintendo would rather stall for a few weeks then sell everything they can *after* April 1st so fiscal 2007 looks as good as 2006.

          Like I said, that only appiles if the next year is going to be dissapointing, otherwise having an exceptional year is a good thing as far as investors are concerned. There is little reason
  • by elrous0 (869638) * on Tuesday March 27, 2007 @03:40PM (#18507147)
    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.

  • by L. VeGas (580015) on Tuesday March 27, 2007 @03:41PM (#18507163) Homepage Journal
    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? (Score:4, Insightful)

    by orclevegam (940336) on Tuesday March 27, 2007 @03:51PM (#18507345) Journal
    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).
    • by Grave (8234)
      I would like to say it's not a case of "holding out" on shipments. But it's not just the Wii. The DS and GBA SP are nearly as scarce (taking hours to a day or two to sell out at most stores vs. minutes to an hour or two for the Wii).

      A person like Dan DeMatteo doesn't make those kind of statements unless he has legitimate reason to believe them. GameStop is a pretty large corporation, and CEO's of Fortune 400 companies don't blindly make that sort of accusation without there being some truth to it.
      • The DS and GBA SP are nearly as scarce

        Are you sure you don't mean DS Lite and Gameboy Micro?

      • by fotbr (855184)
        DS Lites are NOT hard to find. Unless you want the colored ones. But the white ones are all over. 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
        • by rhombic (140326) on Tuesday March 27, 2007 @05:57PM (#18509023)

          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.

          • Re: (Score:3, Funny)

            by fotbr (855184)
            Job travel...I just stop in to see if any place happens to have a Wii.

            Its either that or sit in the hotel room drinking beer and posting to slashdot. And we all know how well drinking and posting works.
        • by Grave (8234)
          The GBA SP and DS Lite (all colors) are sold out at pretty much all retailers in the greater DC area, and I believe this is the case in many of the larger metropolitan areas.

          In regards to the person who mentioned the GameBoy Micro, this is a dead system in the US. The GameBoy Advance SP, however, is still a good seller, though it has little further growth potential with the DS/Lite getting so many new titles.
          • by Scoth (879800)
            I still think it's a shame the Micro didn't do very well in the US. I love mine. With it and my flash card, I have several GBA games and a couple or three dozen NES games in a very nicely portable package. I have good eyesight, so the smaller screen isn't too much of an issue. Combined with the standard headphone jack and replaceable faceplate (== new screen, if you avoid scratching the inner screen itself), I find it to be a pretty perfect system for me. I never found the GBA SP to be very pocketable. I do
            • Have the GBA NES emulators solved the scanline/resolution problem yet? I ask because most of my favorite NES games are text-heavy (Dragon Quest 3, Final Fantasy, and Ultima 4 being the top) and impossible to read the last time I tried it which admittedly was over a year ago.
              • by Scoth (879800)
                It varies by game. The current version(s) of PocketNES allow you to fiddle the lines that are dropped so you can usually find one that's readable (L-Select). I've played a lot of FF1-3 and Exodus Ultima without a problem at all, as well as some gameshow-type games, though the text is indeed noticeably squished. I've always found at least one setting that was a good compromise. I recently found several other obscure Japanese-style RPGs for NES that I've been trying out with decent success too. But then, part
  • Shortage? (Score:3, Interesting)

    by Applekid (993327) on Tuesday March 27, 2007 @04:01PM (#18507507)
    Is it at all possible that Nintendo didn't expect the system to do so well in the US? DS-Lite is still the #1 seller in Japan while here its sales are more down to earth. By looking at that performance and equating DS = Wii, I'd call it reasonable to assume that they didn't expect demand to be so high.
    • by dead sun (104217)
      Except we got the Wii here in the US before Japan got the Wii. Talk about a weird approach if they expected lesser sales here, especially given that Japan is home to Nintendo.

      I suppose it is entirely possible they expected high demand here, but they received higher demand than planned. I don't, however, think Nintendo shorted the US any more than it had to due to production constraints and launches elsewhere. I certainly doubt they'd do so over something as trivial as just making quarterly numbers.
      • by Dorceon (928997)
        The winter shopping season starts earlier in the US (Black Friday) than in Japan (where Xmas isn't a holiday per se, you tend to get a big chunk of New Year's off, and the kids get gifts/money on New Year's Day.) That's why you'd launch the Wii in the US before Japan.
  • by Anonymous Coward on Tuesday March 27, 2007 @04:04PM (#18507553)
    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*
  • Long suspected (Score:2, Interesting)

    by Aggrav8d (683620)

    For quite some time now I've thought the shortage was deliberate to help them liquidate their stock of GameCube titles. I was never interested in the GC but there's such a shortage of good Wii games (that I have not already played through) I am forced to look in other directions. The online retro titles don't interest me so I'm forced to choose between lego star wars and mario sunshine.

    As for april 1, I don't think we'll see anything new unless Nintendo issues with their shares has ended. Miyamoto couldn

    • Re: (Score:3, Informative)

      by metamatic (202216)

      For quite some time now I've thought the shortage was deliberate to help them liquidate their stock of GameCube titles.

      I don't buy it, for the simple reason that the Wii can run all those GameCube titles too. With the relatively small number of upcoming Wii releases, I'm expecting to work my way through the GameCube back catalog to fill in the gaps.

      No, as a GameCube owner I can tell you that Nintendo has always had distribution problems. They just can't keep stuff in stores for whatever reason. Even hig

      • I think the Wii is actually spurring an interest in Cube games. I know two people that never purchased a Cube, but have started buying all the bargain hits now that they have Wiis.
    • I shortage of software might point to that, but a shortage of systems? More Wiis implies more consoles to run Gamecube titles. Selling fewer Wiis is unlikely to move additional Gamecube software.
    • Since the first thing I did after (finally) getting my Wii and a couple major titles was to go out and buy (cheap!) a bunch of the old Gamecube games I missed out on since I haven't owned a console in more than 10 years, I'm skeptical of the notion that withholding Wii stock will increase sales of GC titles. Also, that would be the most radically shortsighted, stupid move they could make even if it worked, since a few extra dollars from old, mostly out-of-print GC games will not compensate for the potential

      • by miro f (944325)
        or it could e that they announced a ramp up in April to cover the fact that they've been withholding stock.

        I still think it would be stupid of them, but, it appears everyone seems to think purposely withholding stock is the norm in the console wars.
  • Mmmmm... (Score:4, Funny)

    by MWoody (222806) on Tuesday March 27, 2007 @04:51PM (#18508195)
    Would you like a little ketchup to go with that hand that feeds you?
  • Nintendo has been using "supply shortages" as a business tactic dating all the way back to the NES. It keeps retailers and licensees in line, keeps anticipation high, and helps them leverage their software rollout strategy to the highest level.

    And I'll apologize for using the "leverage" buzzword by providing documentation to back up my facts.

    http://www.amazon.com/Game-Over-Press-Start-Contin ue/dp/0966961706/ref=pd_bbs_sr_2/104-2040246-58511 46?ie=UTF8&s=books&qid=1175043506&sr=1-2 [amazon.com]
  • Japan? (Score:2, Insightful)

    by Chimera512 (910750)
    Here's a question that i haven't heard asked:
    Are there Wii shortages in Japan? clearly /. is largely english speaking US/UK/Ireland and there's no japanese /.er's coming on and saying that they've got no idea what the US consumers are talking about and that there isn't a shortage in Nintendo's home market. I'd be interested to see if the Wii is selling out in Japan too.
    • I'd be interested to see if the Wii is selling out in Japan too.

      Yes, yes it is. They're very keen [kotaku.com] on the Wii in Japan.

  • Nintendo has a long history with being extremely careful to not oversupply the SOFTWARE side of the business. It looks far better to have just enough, or slightly too few, copies of a game at the retail level than to have old games piling up on the shelves. Old games sold at a discount compete directly with new releases, and it just makes a console feel unwanted.

    But that logic does NOT work with the consoles themselves.

    Let me see, six months ago, exactly how many people figured the Wii would be the #1 con
  • reminding Gamestop how many other retailers would love to have some extra inventory.
  • I guess they learnt their lessons from Cartmanland [wikipedia.org]

  • As a long-time Mac fan, the first thing that occurred to me when the Wii was so hard to find this winter was... is this a Nintendo problem? or an IBM problem?

    IBM is notorious for production volume issues with PowerPC chips. Several times, Apple had to delay planned product refreshes because IBM simply couldn't churn out enough new-model chips to meet the projected demand. (Motorola was even worse.) It was IBM's supply issues, combined with an inability to break certain performance-per-watt barriers in t

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