Does Nintendo hate money?

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CharlieR
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Does Nintendo hate money?

Postby CharlieR » August 23rd, 2017, 11:13 am

I figured it would be a good idea to start a thread about this idea that has been going around here, and get everyone’s opinion. Are the Switch and NES classic shortages, and the SNES classic pre-order situation attributed to the fact that Nintendo hates money? I’ve seen a lot of people comment this and honestly, it seems like it is true and untrue at the same time. It seems so simple to just make enough systems to satisfy customers and not have to go back on your word with pre-orders. It just seems to me that there has to be some other behind-the-scenes reason going on. Otherwise, why wouldn’t they make systems, sell them, and make more money?

There was a business journal article posted here about Nintendo fighting Apple for the parts they need for the Switch. Maybe that is true, and maybe they do have a shortage we don’t know about. Gamestop actually posted an ad on social media saying that that they had a very limited supply of Switches in stock. Someone commented with something like “order more than three this time.” Gamestop actually replied to that comment and said the real reason, which I believe was that there were only so many available to them.

I rarely comment on social media posts, because I usually see a lot of pointless arguments, but I commented during the NES classic fiasco about Nintendo hating money, and someone did actually reply to my post. They said it was a business strategy, and that the whole thing was a marketing ploy to get people talking about their brand again, and they were banking on the fact that people who weren’t able to get an NES classic will pay for the switch instead. Hmmm…

Then there’s the whole artificial scarcity thing, which could be something. I did see a switch at Target last Wednesday. I’m not really interested in the console right now, but let’s say I was and bought it, even though I shouldn’t really be spending the money at the moment. Who knows when I’ll ever see one again?

I did see a comment that was pretty funny. Super Mario Odyssey will be out in a couple months, and people are saying the game will be everywhere but Switches will be nowhere to be found. Probably true.

Figured it would be good conversation to make a thread surrounding this idea. I’m not sure if I totally agree if Nintendo hates money or not, I just know there has to be something. I figure if they have systems, put them on store shelves, none of this artificial scarcity nonsense.

pacman000
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Re: Does Nintendo hate money?

Postby pacman000 » August 23rd, 2017, 12:47 pm

I've already answered this in other threads; mind if I copy/past it here too?

Initially producing a small number of units makes since to me. What would've happened if Nintendo decided to produce millions of Virtual Boys in anticipation of high demand? Overestimating ET's demand hurt Atari so badly they never recovered, and that game was a top 10 hit, if memory serves. That's an oversimplification, but there are other examples. Glover 2 was never released because the publisher overestimated demand for the 1st game; it sold as well as any other N64 game, but they expected to sell more. ADV overestimated demand for the anime they licensed, and had reorganize as several different companies. Underestimating is safer than overestimating.

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DaHeckIzDat
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Re: Does Nintendo hate money?

Postby DaHeckIzDat » August 23rd, 2017, 1:24 pm

I talked with my coworker about this yesterday. He can't make heads or tails of the NES and SNES Classic shortages either. He says they're treating it like a collectable, but that doesn't make sense because they're charging so little for it. If they wanted to make a rare collectable for superfans, that's understandable, but for that to be in any way beneficial to the company they should be charging $200-300 per console. $80 apiece is a good price for a silly little nostalgia toy, but then why make so few of them? If you price it so everybody can afford it, why not make enough so that everybody will buy it? This is basically a Raspberry Pi in a SNES shaped hunk of plastic, they're not difficult or even expensive to make. So how does this benefit them? Unless they're actively trying to create bad press and run themselves out of business, it doesn't. At all. The only people who benefit from this marketing strategy are the resellers who buy them all and then sell them for real collectable prices. They might be thinking along the "all press is good press" mentality, but that only works if the company that's getting bad press has enough products to sell to the curios people the bad press attracts. Otherwise you're just letting the internet and your angry customers fling mud at you for no reason.

So yeah, if there's any rhyme or reason to their actions, I can't figure it out.

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Stalvern
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Re: Does Nintendo hate money?

Postby Stalvern » August 23rd, 2017, 2:07 pm

The original Wii was plagued by shortages because of unprecedented demand. You know what previous console had shortages because of paltry supply? The friggin' Saturn. That's the level of money-hatred we're looking at here.

bluenote
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Re: Does Nintendo hate money?

Postby bluenote » August 23rd, 2017, 3:39 pm

Companies do not hold back on stock to create artificial scarcity. I'm not sure why people think this. It makes no sense for Nintendo to be holding stock in a warehouse, not shipping units out just to create buzz. No company would ever do this. (I shouldn't say no company, but no successful company). You strike when the iron is hot. Especially in this market, consumers move on to the next big thing very quickly. Nintendo would not risk sales by holding back sales.

The Switch was getting great reviews, and good feedback. Lack of stock is not making the product look any better to the consumer. There is no reason to believe that this isn't what Nintendo is saying: Lack of components. Simple as that.

Regarding the NES/SNES classic, I don't really know why they didn't make more. That is baffling to me. Especially the NES classic at xmas time. They could have made a killing! If every Walmart, Target, etc had those by the checkout lane, it would have been the biggest seller.

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DaHeckIzDat
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Re: Does Nintendo hate money?

Postby DaHeckIzDat » August 23rd, 2017, 4:07 pm

bluenote wrote:Companies do not hold back on stock to create artificial scarcity. I'm not sure why people think this. It makes no sense for Nintendo to be holding stock in a warehouse, not shipping units out just to create buzz. No company would ever do this. (I shouldn't say no company, but no successful company). You strike when the iron is hot. Especially in this market, consumers move on to the next big thing very quickly. Nintendo would not risk sales by holding back sales.

The Switch was getting great reviews, and good feedback. Lack of stock is not making the product look any better to the consumer. There is no reason to believe that this isn't what Nintendo is saying: Lack of components. Simple as that.

Regarding the NES/SNES classic, I don't really know why they didn't make more. That is baffling to me. Especially the NES classic at xmas time. They could have made a killing! If every Walmart, Target, etc had those by the checkout lane, it would have been the biggest seller.


Your third paragraph is why we don't believe your first and second paragraph.

ActRaiser
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Re: Does Nintendo hate money?

Postby ActRaiser » August 23rd, 2017, 4:55 pm

I had a thought

It's a dumb one, because it's based on Nintendo logic.

Memory is/was a hot commodity. The world market was fighting Apple and Samsung for the same thing for memory for phones.

Nintendo has memory needs for five devices.

$300 Switch
$200 New 3DS
$150 New 2DS
$80 SNES Classic
$60 NES Classic

Between all five items which stand to generate additional revenue after the initial sell, generating more revenue?
$300 Switch
$200 New 3DS XL
$150 New 2DS XL

Why? Games, of course, either digital or physical.

How about revenue?

When one looks at the revenue, clearly $300 > $200 > $150 > $80 > $60

So, between all five items the only three worth distributing more memory (if that continues to be a limiting factor) is to devices that are A) higher in revenue and B) can generate additional revenue.

Now, having said all that, the people buying the NES Classic most likely isn't the same audience that would throw down $300 for a Switch or even $150 for a 2DS.

So...if Nintendo is truly limited by hardware supply it would behoove them to find additional supplies or not release product that cannot be fulfilled as it only creates a negative perception. IMHO I can't believe there's an upside to limiting supplies.

Steve
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Re: Does Nintendo hate money?

Postby Steve » August 23rd, 2017, 5:43 pm

I don't think Nintendo hates money but clearly the decision making at the executive level isn't always ultimately the best move......something many companies are guilty of. I'd love to be a fly on the wall at some of these company meetings.

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Retro STrife
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Re: Does Nintendo hate money?

Postby Retro STrife » August 23rd, 2017, 7:17 pm

Let me present a different perspective. I'm not sure if I fully believe the perspective I'm about to throw out, but it may have some truth. Plus, the "Nintendo is dumb" perspective has been well represented here, so let me play the "Nintendo is smart" side for a moment:

Many of you are thinking short-term. "Oww Nintendo missed the chance to selling an extra couple million NES Classics at $60 a pop. Are they crazy?" Nintendo doesn't care about your $60; they're thinking long-term. They want to sell 100 million Switches at $200-$300, and then 100 million Switch 2's after that. Problem is, the Nintendo brand is in the toilet. The Wii U sucked. The 3DS was ok, but it was not as big as the DS and it's lost most of its steam now.

So, Nintendo is like a sports team in rebuilding mode. First step to rebuilding? Remind people of why they fell in love with Nintendo in the first place.. Roll out Nintendo's flagship system - the one all of America knows and loves from their youth - the Nintendo NES. Put lots of good games on it, and throw it out there at a $60 price point, which even the most casual grandma gamer will think is a good deal. The concept is genius.. it says, "Hey guys, stop hating us please... remember the good old days? Here, play your NES again..."

But that's not enough -- now we need to market the thing to generate interest. The Atari Flashback and Sega Genesis Classic sell modestly, but we need to do waaaay better than that to rebuild a whole brand. But how?? Well, let's flash back to Nintendo's most financially successful console ever - the Wii. You could not find the things anywhere for the first 2 years. And guess what? It was still one of the best selling systems of all time. A large part of that was the simple concept that scarcity develops interest. If you saw a Wii in a store, you had to buy it - because it was something everybody else wanted, and who knew when you'd see it again.

Case in point... I had no interest in an NES Classic, because I own multiple NESes and have plenty of carts. Yet, once it was sold out, I wanted one. My collector instinct tells me I need this thing now, even if my gamer instinct told me before that I have no use for it.

So, at the end of the day, the goal is not necessarily to make tons of money on the NES Classic or SNES Classic.. I imagine that the profit margin isn't that great anyway. Instead, the goal is to rebuild interest in the Nintendo brand in the hopes of making real profit in the area of Switch games and consoles. And guess what... even if you say "screw Nintendo, after this preorder fiasco I don't even want their stupid SNES Classic".. you know deep down you want it even more, and you'll buy one if you ever see it in a store.

So, that's my devil's advocate argument.

Now let's hope that, this time, the preorder hype and scarcity is good enough for Nintendo and they actually make enough SNES Classic systems for the real release.

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DaHeckIzDat
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Re: Does Nintendo hate money?

Postby DaHeckIzDat » August 23rd, 2017, 8:40 pm

Retro STrife wrote:Let me present a different perspective. I'm not sure if I fully believe the perspective I'm about to throw out, but it may have some truth. Plus, the "Nintendo is dumb" perspective has been well represented here, so let me play the "Nintendo is smart" side for a moment:

Many of you are thinking short-term. "Oww Nintendo missed the chance to selling an extra couple million NES Classics at $60 a pop. Are they crazy?" Nintendo doesn't care about your $60; they're thinking long-term. They want to sell 100 million Switches at $200-$300, and then 100 million Switch 2's after that. Problem is, the Nintendo brand is in the toilet. The Wii U sucked. The 3DS was ok, but it was not as big as the DS and it's lost most of its steam now.

So, Nintendo is like a sports team in rebuilding mode. First step to rebuilding? Remind people of why they fell in love with Nintendo in the first place.. Roll out Nintendo's flagship system - the one all of America knows and loves from their youth - the Nintendo NES. Put lots of good games on it, and throw it out there at a $60 price point, which even the most casual grandma gamer will think is a good deal. The concept is genius.. it says, "Hey guys, stop hating us please... remember the good old days? Here, play your NES again..."

But that's not enough -- now we need to market the thing to generate interest. The Atari Flashback and Sega Genesis Classic sell modestly, but we need to do waaaay better than that to rebuild a whole brand. But how?? Well, let's flash back to Nintendo's most financially successful console ever - the Wii. You could not find the things anywhere for the first 2 years. And guess what? It was still one of the best selling systems of all time. A large part of that was the simple concept that scarcity develops interest. If you saw a Wii in a store, you had to buy it - because it was something everybody else wanted, and who knew when you'd see it again.

Case in point... I had no interest in an NES Classic, because I own multiple NESes and have plenty of carts. Yet, once it was sold out, I wanted one. My collector instinct tells me I need this thing now, even if my gamer instinct told me before that I have no use for it.

So, at the end of the day, the goal is not necessarily to make tons of money on the NES Classic or SNES Classic.. I imagine that the profit margin isn't that great anyway. Instead, the goal is to rebuild interest in the Nintendo brand in the hopes of making real profit in the area of Switch games and consoles. And guess what... even if you say "screw Nintendo, after this preorder fiasco I don't even want their stupid SNES Classic".. you know deep down you want it even more, and you'll buy one if you ever see it in a store.

So, that's my devil's advocate argument.

Now let's hope that, this time, the preorder hype and scarcity is good enough for Nintendo and they actually make enough SNES Classic systems for the real release.



Those are two somewhat sound business strategies, but put together they counteract each other. They want people to remember them in a fond way, so they put out a fun nostalgic toy. But then they make a false scarcity of the toy, hype everyone up until their frothing at the mouth, and then, SURPRISE! You don't get one! That makes people remember them in a NON-fond way. Sure it brings a ton of attention to them, but then what? This isn't the Switch, it's not the big new thing they're throwing all their resources at. It's just a toy. Their company will neither rise nor fall based on the sales of a NES or SNES Mini. Plus, they've already said they'll only produce them until December, so people aren't going to be checking their local Walmarts every day to see if they've got an item back in stock they know has been discontinued. If you don't get one, tough luck. Hundreds or thousands of people are now going to be pissed off at Nintendo. If anything, it will make people want to buy a Switch LESS, because why support a company that's trying so hard to unapologetically screw them over? Whether they're looking for money or good press, how does this benefit Nintendo in any way?


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