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Forums - Nintendo Discussion - Why do you think supply for Switch was far lower than demand this holiday season?

 

Why was Switch supply so low this Holiday?

Nintendo underestimated demand 7 17.07%
 
Pandemic slowed down factory output 10 24.39%
 
Nintendo was unable to pr... 18 43.90%
 
Artificial Scarcity for increased demand 0 0%
 
Extend and Spread Out Dem... 2 4.88%
 
Other 4 9.76%
 
Total:41

Going into the holiday season, many people including me predicted that one of the reason Switch supply was so limited throughout 2020 was not only cause of the crazy demand, but Nintendo saving stock for the Holiday Season to maximize their holiday season sales and potentially have the greatest holiday quarter ever.

However, based off of sales data, sales of the Switch were pretty much exactly the same as the 2019 Holiday Season and in some cases slightly lower than 2019 despite the Switch has soaring to astronomical demand for most of 2020, with sales all year long nearly twice the amount as 2019. As Nintendo didn't at all have enough stock to meet demand.

Some people believe that the lack of a big Holiday Title like Pokemon or the lack of a new hardware release like the Switch Lite is the reason for lower Holiday Switch sales in 2020, but that is an objectively wrong assumption. The last thing to blame for slightly lower holiday sales is the demand. If Nintendo was able to meet demand I think Switch could've shipped 14M in Q3. All throughout the 2020 Holiday Quarter it was extremely hard to find a Switch for retail price as it was sold out everywhere and all the stock would sell out as soon as it came into stores. It wasn't like 2019 where you could just walk into any store and buy a Switch without needing to search store after store to find one. I work at walmart and asked the electronic section associate how fast Switch's get sold out, he states as soon as Walmart gets them they're sold out.

But what do you guys think is the primary reason why Nintendo didn't have enough stock for this holiday season? Was Nintendo limited in terms of factory output and was unwilling to use more factories to make more Switch's? Is covid-19 affecting the factories? Or is it a strategy by Nintendo to extend the demand of the Switch for longer to look better for investors who might be worried of the long-term future of the Switch. Maybe its to get more hype around the Switch since something sold out gets more demand, which isn't something atypical for Nintendo to d since they did it with Amiibos,NES and SNES Classis, and more.



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I think there was a lot of pent up demand for Switch going into the holidays. This pent up demand was because there were shortages for much of the year. These shortages were caused by both high demand and by low supply from factories that had to shut down for a while due to COVID. So in that sense COVID prevented Nintendo from supplying enough. Near the end of the year, I think they were producing a lot, but they didn't have the time to stock up enough.

Last edited by The_Liquid_Laser - on 10 January 2021

I've followed many public companies throughout my life, in lots of industries. I've never seen any organization that is even close to as bad as Nintendo at forecasting sales. They've always been very bad at it. So, when it comes to supply issues with Nintendo, my first inclination is to blame their general inability to know how many units they'll need.



VAMatt said:

I've followed many public companies throughout my life, in lots of industries. I've never seen any organization that is even close to as bad as Nintendo at forecasting sales. They've always been very bad at it. So, when it comes to supply issues with Nintendo, my first inclination is to blame their general inability to know how many units they'll need.

Is this including toy companies? Because I am not unaware of the downs (which come up a lot more) and ups of Nintendo's tendency to act more like a toy company than a electronics company. That tends to come up in talks of supply.



The Democratic Nintendo fan....is that a paradox? I'm fond of one of the more conservative companies in the industry, but I vote Liberally and view myself that way 90% of the time?

VAMatt said:

I've followed many public companies throughout my life, in lots of industries. I've never seen any organization that is even close to as bad as Nintendo at forecasting sales. They've always been very bad at it. So, when it comes to supply issues with Nintendo, my first inclination is to blame their general inability to know how many units they'll need.

I mean they oversupplied the wii U by far, probably the reason they initially underproduced the switch.

and increasing the pipeline in early 2020 would only have made finantial sense if they were expecting more sales then 2019 for 2020, 2021 AND 2022. which wasn't clear last year around now, especially with nintendo's lack of first party titles this year.

TLDR, increasing production capacity only makes sense of you are planning on making more for more then a year or two...



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Most sources I've heard think what happened was people bought more during lockdown, so that there just weren't warehouses stockpiling Switches throughout the year.

Manufacturers simply run 24/7 at 100% capacity these days, so it's pretty difficult to alter production rates.



Mainly to do with servicing more markets, as China is ramping up, rest of East Asia growth accelerating, officially launching in Brazil - there is actually a lot more markets to service.



A Mongol Shaman's curse.



I describe myself as a little dose of toxic masculinity.

Because of demand.

I withhold judgment of the holiday sales until we've seen NPD numbers and Nintendo's official shipment figures. Holiday sales are where VGC has the biggest margin of error, so it's not wise to jump the gun.



Legend11 correctly predicted that GTA IV (360+PS3) would outsell SSBB. I was wrong.

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