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Mbolibombo on 04 January 2019
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RolStoppable said:
Mbolibombo said:

I'll just quote this to highlight it further. This is correct.

Nintendo did not lower their forecast after Q2. Thus they will and can ship what they feel they need to ship for Q3 to hit their forecast.

Why is Jumpin's post correct?

The issue are indeed retail sales, i.e. demand in the marketplace. Retailers won't buy the necessary units if the consumer demand isn't there. Nintendo defines 'shipped' as 'sold to retailers', so while it is clear that there is no problem to manufacture 20m units during this fiscal year, it's also obvious that those 20m won't be shipped if retailers aren't ordering them.

The commonly brought up idea of channel stuffing only works for holiday quarters, because outside of that retailers can't be convinced that there will be more demand than expected. The consequence of a stuffed channel is that Q4 of the fiscal year will be soft, because retailers have to work through their excess stock before they buy more units from the console manufacturer. If Nintendo for example shipped 11.5m in Q3 of this fiscal year while units are piling up at retailers, then Q4 would have a hard time to be above 2.5m.

zorg1000's example supports this despite him thinking otherwise. Sell-through of the PS4 from January to March 2017 was comfortably above 3m, but shipments were under 3m.

Which is the quarter in question -  Q3 - holiday season, manufacturing is the only thing stoping Nintendo from not shipping intended consoles in Q3. And as I said Nintendo didnt lower their forecast before Q3 since they believed in their forecast, they have talks with retailers all year about their expectations, they're not going in blind with their own forecast. Clearly both Nintendo and retailers, had faith in what could be sold during the holidays and after which we see now is indeed happening.

As for the second bolded part, clearly you want to be prepared.  Dont want to be left hanging in the most important shopping period all year, if it piles you calibrate next quarter however it fits, there were 2 big games in January and February that year for Sony that they clearly were expecting to sell hardware and late shipments in Q3 clearly were intended for. Nintendo has a big game releasing early January that will likely push some hardware which will also need to be shipped in Q3.