AfterDawn: News

GameStop accuses Nintendo of limiting Wii stock

GameStop CEO Dan DeMatteo has recently accused Nintendo of withholding Wii consoles from retail outlets around the US.

DeMatteo has stated that he believes that Nintendo hit its wanted target for the 2006 fiscal year and is withholding stock to boost performance in the first quarter of 2007.



"This is just my opinion – I think they intentionally dried up supply because they made their numbers for the year. Their new year starts April 1 and I think we're going to see supply flowing," he said.
He expalined that they were getting shipments for April, and hopes to not have crippling shortages in the future.

"Next week we get our first allocations of Wii and DS and we are quite pleased with those numbers. We are concerned about the dryness here in March, but it looks like April is going to be good," commented DeMatteo.

Source:
Gamesindustry.biz

Written by: Andre Yoskowitz @ 28 Mar 2007 21:04

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• 21 comments

• azndrake

  Thats very interesting, i knew it had something to do with marketing.

  28.3.2007 22:06 #1

• munx

  The beauty of economics. I would not be surprised at all if this was nintendo's strategy. It just makes sense, limit supply and you will inevitably drive demand and profit will follow with that. Futures Market...

  28.3.2007 22:06 #2

• ZippyDSM

  Perhaps the WII is a phemonenom witch and simply you cant see because your to busy burning used PC games instead of selling them like any sane retailer should....god forbid a old game should take up shelf space and sale more than crappy new titles.

  28.3.2007 22:08 #3

• kyo28

  Originally posted by munx:The beauty of economics. I would not be surprised at all if this was nintendo's strategy. It just makes sense, limit supply and you will inevitably drive demand and profit will follow with that. Futures Market...
  I don't think that's the drive behind this: to boost demand. The real drive is to get good figures to present to the shareholders. If Nintendo sells huge amounts of Wii's in the fiscal year 2006-2007, that means less sales in the fiscal year 2007-2008 ... meaning a drop in the stats they present to the shareholders. They want to keep some of the sales for the next fiscal year to be able to show increasingly good figures to the shareholders.
  ... yeah, company politics....

  28.3.2007 22:22 #4

• OzMick

  Maybe they are just selling a %$#& ton of consoles and supply doesn't yet meet demand? It doesn't make much business sense to be able to manufacture at a rate that exceeds initial demand, you are permanently scaling back production from day 1 that way. This seems to be the mentality that Sony has adopted with the PS3, demand will thus never reach supply, and any economist will tell you stock on shelves COSTS money. One could also say that Sony is basing their distribution on a push-distribution strategy, Nintendo is working on more of a pull-distribution strategy. Check out http://en.wikipedia.org/wiki/Push-Pull_strategy Nintendo's problem is that they didn't stockpile sufficiently before release, so initial demand wasn't met.
  
  Anyhow, how does witholding stock in the first quarter actually IMPROVE first quarter performance? I get the feeling this article is maybe 3 months old...

  28.3.2007 22:30 #5

• oofRome

  Response from george harrison:
  
  http://palgn.com.au/article.php?id=7138&...ck+Wii+hardware
  
  On top of that, Nintendo is looking for another manufacturing partner. Why would they need to if they havea secret stock-pile of withheld consoles?
  http://www.digitimes.com/systems/a20070328PD220.html

  28.3.2007 22:45 #6

• ZippyDSM

  Its been argued that keeping a console in a hard to find manner after launch keeps the interest of it up and makes it sale more than heavily stocking(within reason) retailers and having ti easily gotten but the interest of it wanes,it also looks better on the books if you only put out X amount of stock and sale most if not all of it out then you can start the next wave in a slightly "better" manner.
  
  Anyone want to debunk that?

  28.3.2007 23:02 #7

• kyo28

  Originally posted by OzMick:Anyhow, how does witholding stock in the first quarter actually IMPROVE first quarter performance? I get the feeling this article is maybe 3 months old...
  Actually, IF Nintendo is witholding stock, they are doing it in the fourth quarter of the current fiscal year, in order to have strong sales in the first quarter of the next fiscal year.
  You have to keep in mind that Japanese fiscal years, just like the academic years, run from April to April.
  By artificially limiting sales in the last month of the currect fiscal year (March), they would assure very strong sales in the beginning of the next fiscal year (April).
  However, all this only holds true if they are indeed witholding consoles.

  29.3.2007 00:14 #8

• dazila

  As people said its because of the shares im on that aswell it would work out perfectly for them Wii is flying in sales and is catching the 360 and will have caught it in i'd say the next 2 months but iam dissapointed that no good games are comming any time soon.
  The only being Mario Party 8.
  

  
  
  
  
  
  
  
  
  
  
  
  
  
  
  

  29.3.2007 02:44 #9

• BobbyBlu

  I wonder how much of them trying to fight pircy with that new modchip being out have to do with this?Because i think they are don't something to there system to make it hard to add the Wii Chip.Nintendo has been pretty much a St8 forward company in there past.

  29.3.2007 03:29 #10

• SProdigy

  It has to do with the Fiscal calendar, as pointed out. The Japanese fiscal calendar means zip when they are Nintendo of America, and are an American Corporation. Here in the USA, you can set your fiscal calendar to end whenever you want to. I'm sure it's easier for them to end it in April if that is what happens in Japan. They met their goal, and don't have to rush to put anything out for a week or so. Smart move for their investors. It's a numbers game.
  
  I'm not so sold on the demand part. They've sold over 5 million consoles and people are still camping out overnight to get one, even in my small town. I'm so glad I camped out on launch day, otherwise, I still might not have one!

  29.3.2007 04:46 #11

• oofRome

  Quote:
  However, all this only holds true if they are indeed witholding consoles.Which, as I said earlier, seems unlikely considering Nintendo is looking for another manufacturing partner as we speak.
  
  Still, an interesting theory at it's core. Artificial Demand for the sake of longevity. Doesn't seem to make sense for consoles, though, because developers would rather develop for one that has a large user base rather than for one that has a large expected user base.

  29.3.2007 09:12 #12

• handsom

  It's ironic, Nintendo has had several large shipments as of late, and the demand is high for their system. Considering the demand for these things, they've set an unprecendented record for keeping stock as much as possible with this system. Sony has been pegged for this several times to a ridiculous point, and until information came out about problems with M$' factories people had thought they did with 360; turned out it was just horrible timing for manufacturing plants to go down, some for regular maintenence, others for emergency conditions(Think fire and boom).
  
  The claim that Nintendo is doing this seems really out of place; they've been supplying above and beyond what their competition has been capable of, and GameStop criticizes them? That's typical of a company like GameStop. I worked for them, and as such I have no respect whatsoever for their business strategy, their upper management 'techniques' or their policies. I sincerely hope that Nintendo responds with a friendly statement along the lines of "Oh, we're sorry Gamestop, we're not supplying you anything for another six months, don't be a prick next time." And the funny thing is, they can afford to, because while Gamestop is 'the bigges games specialist in the world', they're still a fraction of the business companies like Nintendo and Sony get from Wal-Mart, etc. It'd be nice to see a manufacturer shove gamestop's foot into it's own mouth. lol.

  29.3.2007 09:22 #13

• tsumiro

  kinda screwed up, but... they have to make a living too, ya know?

  29.3.2007 11:02 #14

• pollution

  I am glad they are limiting stock. I realized that I do not want a Wii after waiting. Nintendo lost a sale!

  29.3.2007 13:12 #15

• fgamer

  Originally posted by pollution:I am glad they are limiting stock. I realized that I do not want a Wii after waiting. Nintendo lost a sale! I kinda agree too the more I've waited for a Wii I've completely lost interest in it, especially after some of the games like Red Steal not being that fun.

  30.3.2007 00:32 #16

• ZippyDSM

  handsom
  and thos factories put their issues into the product the 360 has fcked hardware MS should have pulled systems and niped in the bud ASAP.....hopefully by next year all the new systems sold wont have "issues" >>

  30.3.2007 03:10 #17

• handsom

  As a victim of these hardware issues, I whole-heartedly agree. I'm just angry that the manufacturers (Outsourced by M$) did such a crap job making the physical units, bad solder, etc; these aren't design flaws, they're manufacturing flaws. On one hand, M$ paid for quality, and even paid a little extra for some of the manufacturers; on the other hand, I still wish M$ had done a complete recall on 'Day One' systems, I wouldn't be sitting here with a towel around my system, wondering how long before it's a total brick.
  
  I'm half interested in the elite, but I can't help being concerned... If it's not using the new 65nm chipset, I don't know if it's a wise choice to re-invest yet. In the meantime, my system technically works, and I've got plenty of other systems as backup entertainment, such as the Wii, for when it fails. :D

  30.3.2007 04:55 #18

• ZippyDSM

  handsom
  if you upgrade give me your old system :P
  
  Anyway it boggles the mind at how much money MS has lost over fixing bad units,A recall would have really made them a compentant brand in my eyes but with that and this new but not so new 360 god M$ has screwed up,of coarse the tween sheeple they view as their main consumers will think nothing of it.....

  30.3.2007 05:01 #19

• mcsol

  Remember, the console is sold at a loss - money comes in through games. Nintendo would not at all benefit from a self-limited stock. Tha Gamestop guy is probably just pissed that the big stores like target or walmart got higher allocations...
  
  my 2c

  1.4.2007 07:22 #20

• handsom

  @mcsol
  
  Welcome to the forums, it's nice to see intelligent new users around here!
  
  There's an interesting sidenote though, regarding your comment.
  
  For the first time in over a decade, a major system launched where the producer DOESN'T lose money on the system, they actually PROFIT... That would be the Wii. Nintendo actually starts profiting just from you picking up the system. They received lots of accolades and praise for being able to do this from major firms, etc. Unlike the competition, Nintendo can be happy even if you just buy the console, not that they wouldn't prefer you to buy games as well, lol.

  1.4.2007 09:06 #21