5 ms·

I have worked for ~4 years at Nintendo in production planning and inventory management/demand forecasting. I'd just like to clarify one thing - which is repeate

I have worked for ~4 years at Nintendo in production planning and inventory management/demand forecasting. I'd just like to clarify one thing - which is repeated so frequently but just plain wrong: There is no secret "scarcity" creates more demand masterplan from Nintendo. - Nintendo sells to retailers (for the most part) - so any type of price gouging isn't benefiting them. - Everybody at Nintendo would prefer retailers to never run out of stock. The second a retailer runs out of stock - overall customer demand drops. There is no secret evasion to other channels (which of course are also out of stock) happening. - Hype effects are only _maybe_ valid for very niche core gamer titles (Xenoblade, Fire Emblem, etc.). Yes, sometimes these titles benefit a little in the beginning pulling in demand from week 2 & 3 into week 1 if presales are closed very early due to limited availability. - Core gamer titles generate furious outrage on the internet, which sometimes even spills over to mainstream journalism, but are barely relevant to the bottom line compared to mass market titles (Mario, AC, Zelda of course but also titles like NintenDogs). - Production Planning starts anywhere from 8 weeks to 6 months in advance of a titles release. It's damn hard to predict how well a title will sell that early on. It is even worse for HW which has lead times much, much longer. - Games are shipped via air and final assembly happens in the region where they are sold. HW is shipped via boat from Asia directly. This means right about now somebody is ordering Christmas HW. How do you think the red left joy-con will sell in December? We had tricked-out time-series forecasting statistics at the end but still got it wrong ~20% of the time. - Overstock is crazy expensive, both in the channel and in Nintendo Warehouses. If you order too much of a title and it turns out the title only has a core day 1 audience you or the channel which you made believe in the title is totally screwed.

lobochrome 5y ago
Oh and on emulators: Again - old titles are not relevant but for the smallest minority of noisy internet nerds. Whenever we released something in that direction, it got nowhere near the needed reaction from the market to justify its investment. It only appeases the noisy nerd minority. Make no mistakes - many many people working at BigN belong to that minority, especially in the lower ranks. But management needs to make decisions that are profitable - otherwise, there wouldn't be enough runway to make bold bets like WiiU, Switch, Tomodachi Life, Splatoon etc.
- Andrex 5y ago
  I don't think that necessarily has to be true. When there's marketing and hype, old titles do very well. The Mario 3D collection to name one example.
  - deleted 5y ago
    [deleted]
  - LukeShu 5y ago
    I think a substantial part of that hype was that it was a limited-time thing. But hey, apparently Nintendo doesn't do scarcity to drive demand, so what do I know?
- VMtest 5y ago
  And of course sending C&D to fan games' developers is justified Not to mention taking down Steam Deck Nintendo Switch Emulation videos on Youtube Overall great investment
- selfmodruntime 5y ago
  If that's true, why doesn't Nintendo allow emulators by third party developers on their platform's version of the app store?
  - sgift 5y ago
    Because it isn't true. The GP is either intentionally misleading people or they are as out of touch as TV execs were when they proclaimed that streaming will never be more important than TV channels. Also, since Nintendo Switch Online exists, someone at Nintendo seems to disagree with them.
  - mattl 5y ago
    Pretty sure they do allow this. I have a couple of Disney titles that are pretty clearly NES/Genesis/Game Boy/Game Gear emulators.
- hoseja 5y ago
derefr 5y ago
This is all about day-1 production-run planning. But what about follow-on runs? The "weird thing" about Nintendo, to me, has always been how little "greater-than-expected demand" seems to influence the supply, even on a 6-month delay. A lot of Nintendo products sit around "sold out" on Amazon for months/years/forever, despite a thriving secondary market for those same products, often with scalpers now charging higher than MSRP for the products. For example — Amiibo. Why don't Nintendo keep pumping out Amiibo figures until the volume swamps scalpers and people can actually buy the things for $10? It's not like they're trying to create a secondary market for collectors; they want to sell these things to kids, as practical toys, in volume. So where's the volume for the popular figures? This is so clearly Nintendo's pattern, that it was a big shock to gaming journalists when Nintendo actually decided to restart production for the NES/SNES Classic. Why is something like that such an exception?
- bagels 5y ago
  It took nearly a year before the switch was something you could a actually buy
  - mattl 5y ago
    Really? At launch or during lockdown? I had mine on day one and they didn’t seem especially hard to buy at the time.
    - bagels 5y ago
      We had different experiences. https://markets.businessinsider.com/news/stocks/nintendo-stock-price-switch-is-sold-out-everywhere-and-investors-couldnt-be-happier-2017-7-1002207426 https://markets.businessinsider.com/news/stocks/nintendo-sto... I called a few local stores every few weeks for months shortly after launch, all sold out. Best Buy I think did have some scalper package you could buy for $500.
      - mattl 5y ago
        Looking back at my email, it seems I ordered mine in January 2017 and it arrived on March 6th. When did you try to order?
oneeyedpigeon 5y ago
Interesting stuff! We do know, of course, that Nintendo has partaken in very open artificial scarcity recently: Mario 3D All Stars.
mfrommil 5y ago
Have several years experience dealing with supply chain from the retailer side in the past, and your comment is spot on. Anything that is: expected to be in demand during Q4/Xmas season, manufactured in Asia, electronics, etc., demand planning and orders are in minimum 3-6 months in advance. Even if a retailer wants more supply, many manufacturers are extremely hesitant to overproduce. Here's some rough napkin math to help illustrate the cost of being overstock (caveat: I have no idea actual costs of video games, using best guess), applies to both retailers and manufacturers: $60 MSRP Switch game, cost to retailer: $48 ($12 profit/unit) Let's say a retailer orders 100k units of a game in Q2 for the upcoming holiday season, but sells only 70k units during Q4. 70k * $12 = $840k profit. Meanwhile, 30k * $48 = $1.4M of inventory is sitting there, that cash is tied up so the company can't buy inventory of new games releasing in the future, and there's some non-trivial cost for each subsequent month that merchandise sits unsold in the warehouse. That's for under-selling forecast by 30%... now imagine if you're off by 50% or more an any individual game.

lobochrome 5y ago

Oh and on emulators: Again - old titles are not relevant but for the smallest minority of noisy internet nerds. Whenever we released something in that direction, it got nowhere near the needed reaction from the market to justify its investment. It only appeases the noisy nerd minority. Make no mistakes - many many people working at BigN belong to that minority, especially in the lower ranks. But management needs to make decisions that are profitable - otherwise, there wouldn't be enough runway to make bold bets like WiiU, Switch, Tomodachi Life, Splatoon etc.

Andrex 5y ago
I don't think that necessarily has to be true. When there's marketing and hype, old titles do very well. The Mario 3D collection to name one example.
- deleted 5y ago
  [deleted]
- LukeShu 5y ago
  I think a substantial part of that hype was that it was a limited-time thing. But hey, apparently Nintendo doesn't do scarcity to drive demand, so what do I know?
VMtest 5y ago
And of course sending C&D to fan games' developers is justified Not to mention taking down Steam Deck Nintendo Switch Emulation videos on Youtube Overall great investment
selfmodruntime 5y ago
If that's true, why doesn't Nintendo allow emulators by third party developers on their platform's version of the app store?
- sgift 5y ago
  Because it isn't true. The GP is either intentionally misleading people or they are as out of touch as TV execs were when they proclaimed that streaming will never be more important than TV channels. Also, since Nintendo Switch Online exists, someone at Nintendo seems to disagree with them.
- mattl 5y ago
  Pretty sure they do allow this. I have a couple of Disney titles that are pretty clearly NES/Genesis/Game Boy/Game Gear emulators.
hoseja 5y ago

derefr 5y ago

This is all about day-1 production-run planning. But what about follow-on runs? The "weird thing" about Nintendo, to me, has always been how little "greater-than-expected demand" seems to influence the supply, even on a 6-month delay. A lot of Nintendo products sit around "sold out" on Amazon for months/years/forever, despite a thriving secondary market for those same products, often with scalpers now charging higher than MSRP for the products. For example — Amiibo. Why don't Nintendo keep pumping out Amiibo figures until the volume swamps scalpers and people can actually buy the things for $10? It's not like they're trying to create a secondary market for collectors; they want to sell these things to kids, as practical toys, in volume. So where's the volume for the popular figures? This is so clearly Nintendo's pattern, that it was a big shock to gaming journalists when Nintendo actually decided to restart production for the NES/SNES Classic. Why is something like that such an exception?

bagels 5y ago
It took nearly a year before the switch was something you could a actually buy
- mattl 5y ago
  Really? At launch or during lockdown? I had mine on day one and they didn’t seem especially hard to buy at the time.
  - bagels 5y ago
    We had different experiences. https://markets.businessinsider.com/news/stocks/nintendo-stock-price-switch-is-sold-out-everywhere-and-investors-couldnt-be-happier-2017-7-1002207426 https://markets.businessinsider.com/news/stocks/nintendo-sto... I called a few local stores every few weeks for months shortly after launch, all sold out. Best Buy I think did have some scalper package you could buy for $500.
    - mattl 5y ago
      Looking back at my email, it seems I ordered mine in January 2017 and it arrived on March 6th. When did you try to order?

oneeyedpigeon 5y ago

Interesting stuff! We do know, of course, that Nintendo has partaken in very open artificial scarcity recently: Mario 3D All Stars.

mfrommil 5y ago

Have several years experience dealing with supply chain from the retailer side in the past, and your comment is spot on. Anything that is: expected to be in demand during Q4/Xmas season, manufactured in Asia, electronics, etc., demand planning and orders are in minimum 3-6 months in advance. Even if a retailer wants more supply, many manufacturers are extremely hesitant to overproduce. Here's some rough napkin math to help illustrate the cost of being overstock (caveat: I have no idea actual costs of video games, using best guess), applies to both retailers and manufacturers: $60 MSRP Switch game, cost to retailer: $48 ($12 profit/unit) Let's say a retailer orders 100k units of a game in Q2 for the upcoming holiday season, but sells only 70k units during Q4. 70k * $12 = $840k profit. Meanwhile, 30k * $48 = $1.4M of inventory is sitting there, that cash is tied up so the company can't buy inventory of new games releasing in the future, and there's some non-trivial cost for each subsequent month that merchandise sits unsold in the warehouse. That's for under-selling forecast by 30%... now imagine if you're off by 50% or more an any individual game.