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Forums - Sales Discussion - Wii shortages costing Nintendo $1 billion: analysts

Vizion on 14 December 2007

 

Supply shortages have been part of the Wii for most of its life in the US. It seems it may be costing the company more than many may have imagined.  
 

December 14, 2007 - It's no secret that Nintendo can't keep Wii consoles on the shelves in America, with many people trekking from store to store in hopes of finding one of the Big N's elusive white boxes. Unmade sales, obviously, hurt the company's coffers, but analysts are starting to weigh in on exactly how much that figure may be. While people search for Wiis that Nintendo can't sell them, many wily individuals have been taking advantage of the situation to help line their own pockets.

“It’s pretty amazing,” Jim Silver, editor in chief of Toy Wishes magazine and industry analyst for 24 years, said. “By a year later with hot items, inventory usually catches up.”

“It’s staggering,” said James Lin, MDB Capital Group senior analyst. He estimates that Nintendo are losing $1.3 billion in unmade sales. “They could easily sell double what they’re selling.”

Nintendo ship 1.8 million units worldwide, up from 1 million last month, a third of which go to the US. The company doesn't feel that it has done anything wrong in its planning, however. “We don’t feel like we’ve made any mistakes,” said George Harrison, senior vice president for marketing at Nintendo of America. “It’s a good problem to have,” he said, but acknowledges that there may be a downside. “We do worry about not satisfying consumers and that they will drift to a competitor’s system.”

The GameSpot chain of stores makes up for around 28% of video game sales in the United States, and believes it could double or triple its Wii sales if the shelves in all of its stores were filled. GameSpot's senior vice president for merchandising, Bob McKenzie, says the company has stopped telling stores when to expect their weekly shipments of the console. Word gets out of the delivery date, he said, and “then people start doing crazy things, like putting up pup tents.”

According to Lazard Capital Markets analyst Colin Sebastian, around 86,000 Wiis have been offered for sale on eBay since the fourth of December, with an average selling price of $320 US, 28 percent higher than the retail price.

Some believe the company is deliberately keeping supply low to help maintain a buzz around the product. If this is true, they believe that Nintendo risk losing customers permanently as those who are buying one for a gift may not buy a console in the new year.

“Nintendo is afraid that if it makes too many Wii, the boom may crest too quickly,” Masayuki Otani, an analyst at Maruwa Securities in Tokyo said. “It doesn’t want to satisfy all demand right away.”

Link http://www.aussie-nintendo.com/?v=news&p=20234

 

 

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I feel vindicated after all the vitriol I received on this thread http://www.vgchartz.com/forum/thread.php?start=50&id=12035. Analysts say the same thing. Analysts believe Nintendo could have sold double, as I implied on this thread. A huge, gigantic opportunity missed by Nintendo. There is no doubt Nintendo could have had 30+ million in people's homes today. If Nintendo established such a userbase so early on the Wii would have been clearly the winner hands down and most likely got many of the 3rd party 360's and PS3's games such as Resident Evil 5 or Grand Theft Auto 4 which would have increase demand for the Wii even more.

Nintendo knew how hot their console was when they didn't stockpile any during the summer. Right then could have been the time for Nintendo to really churn those Wiis out in time for the holidays. Also considering they are introducing the console to more Asian markets, it's really foolish not to ramp up production even higher. 1.8 million a month is definitely not going to cut it.

A huge, huge, huge opportunity missed by Nintendo.



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Mummelmann on 14 December 2007

Ouch...



tokilamockingbrd on 14 December 2007

Oh well, they will regain the sales eventually



psn- tokila

add me, the more the merrier.

lenardo on 14 December 2007

one thing wrong

its GAMESTOP

not GAMESPOT-that is a website..


but you know i agree for the most part. if they shipped 3 million units a month.. currently they'd SELL about 3 million units a month



gawalls on 14 December 2007

how does these analysts know that the interest caused by Wii shortages isn't outweighing the money lost by people who cannot get one and shop elsewhere as lets be honest if everybody was going to easily give up and it costed Nintendo money then there wouldn't be any queues for them.

Also if there was more Wii's made - how does anybody know how many have to be made before demand is met?How does these analysts know that these 86,000 isn't 1 Wii bought and sold over and over again therefore if demand was met then this number means nothing!

I'm personally sick of these Analysts have baked pathetic analysis and predictions



Those people that think they're perfect give a bad reputation to us who are... 

"With the DS, it's fair to say that Nintendo stepped out of the technical race and went for a feature differentiation with the touch screen, but I fear that it won't have a lasting impact beyond that of a gimmick - so the long-lasting appeal of the platform is at peril as a direct result of that." - Phil Harrison, Sony

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Avinash_Tyagi on 14 December 2007

Well the model of monopolistic competition does show that Nintendo is leaving a lot of profits on the table



 

Predictions:Sales of Wii Fit will surpass the combined sales of the Grand Theft Auto franchiseLifetime sales of Wii will surpass the combined sales of the entire Playstation family of consoles by 12/31/2015 Wii hardware sales will surpass the total hardware sales of the PS2 by 12/31/2010 Wii will have 50% marketshare or more by the end of 2008 (I was wrong!!  It was a little over 48% only)Wii will surpass 45 Million in lifetime sales by the end of 2008 (I was wrong!!  Nintendo Financials showed it fell slightly short of 45 million shipped by end of 2008)Wii will surpass 80 Million in lifetime sales by the end of 2009 (I was wrong!! Wii didn't even get to 70 Million)

gawalls on 14 December 2007

not denying that it's just the longer that Nintendo keep an interest in the Wii then the better the library of games is when they get it, the more publicity it gets and the less risks it takes on laying out money to vamp up production.

t's not all negatives thats all and no "analyst" can predict exactly how things would pan out if they had broke their backs to meet demand at any cost



Those people that think they're perfect give a bad reputation to us who are... 

"With the DS, it's fair to say that Nintendo stepped out of the technical race and went for a feature differentiation with the touch screen, but I fear that it won't have a lasting impact beyond that of a gimmick - so the long-lasting appeal of the platform is at peril as a direct result of that." - Phil Harrison, Sony

FishyJoe on 14 December 2007

What an awful problem to have...



tmbh on 14 December 2007

Sure they could easily be making a lot more Wiis/profit.

Generally high demand is good but here with its consistant short supply there will definitely be people going for the 360/PS3 just because its in stock.

Nintendo have played it too safe. The console makes them money straight off the bat (360/PS3 still sold at a loss). Production rates are conservative, even the increase is limited. Both Wii and the DS are huge sellers and could do with a big increase in production especially this time of year!!



mesoteto on 14 December 2007

yeah like 1.3 mil increase inproduction...ohhhh wait they have tried that---face it nintendo did tehbest they could, they just didnt see, like many people...except John, that demand would be so huge