If you’ve set foot in an electronics store this past year, there’s a 99% chance that you’ve seen empty holes where Wii consoles were supposed to be. The amount of demand for the Wii has been phenomenal: in our constantly evolving digital age, it’s almost unfathomable for a piece of electronic equipment to stay in such high demand for over a year. While the demand has been wonderful for Nintendo, it’s a sad reality that there have been far too few Wii to go around.
It’s undeniable that the lack of available Wii has created a certain mystique around the system that its competitors don’t have. A handful of people have speculated throughout the year that the shortages were purposeful in order to keep the system in the media and fresh in the consumer’s mind. This obviously has some truth, as the Wii has been the hot-ticket item for two holiday seasons, but it’s important to remember how much Nintendo lost as well. It’s clear that the 1.8 million consoles that Nintendo is currently churning out for the entire world is simply not enough, but what can be done about it? Obviously ramping up production would be a plus, but there’s also the fact that only so many consoles can be produced within Nintendo’s factories a month. Nintendo’s holiday rain check program was a great idea to combat eBay scalpers, but what about the future?
People have debated both sides of the shortage problem, with some positing that it might be an intentional ploy to keep the Wii’s bubble from bursting while others pointed out how much revenue has been lost from the majority of Wii-less consumers. Nintendo of America president Reggie Fils-Aime seems to be in the latter camp, and went on record with Reuters saying that the shortage has been negative due to the way that it “complicates all of [Nintendo’s] future business planning,” further noting that figuring out how to market new titles like Wii Fit will continue to be extremely difficult until they have “supply and demand curves that intersect.” Analysts have estimated that the shortage cost Nintendo over $1 billion for just this holiday season, which obviously doesn’t take into account the additional revenue that was lost to the small percentage of people who picked up another console instead.
While it’s extremely difficult to see this problem facing the Wii three holidays in a row, last year’s performance shows that anything can happen. What should Nintendo do this year to make sure that the supply for their slippery console finally meets its demand? A few things come to mind.
1. Setting up a more straightforward rain check program
Firstly, coordinating a more straightforward rain check program with more Wii retailers would be a great start for Nintendo, as it would keep finicky shoppers from buying another console by providing a physical “golden ticket” for their elusive console. Working with other retailers aside from GameStop/EBGames would be a plus as well, as not everyone has a local store around their city. Slight modifications to the voucher system would help ease customer’s worries as well, especially if Nintendo could provide an exact date of shipment for the consoles, rather than letting it be the usual haphazard “first come, first serve, whenever we get it in” kind of practice that have disappointed perorderers in the past.
Nintendo would most certainly benefit through this continued program by assuaging the Wii-less public’s hunger with an exact date/time period of their Wii’s arrival, while simultaneously not having to increase production and gamble with whether or not the Wii bubble will burst. Since a voucher program has already been implemented, it seems like a logical step for Nintendo if the demand doesn’t cease anytime soon.
2. Direct-Sale of Wii consoles from Nintendo
If the voucher system is too tricky for Nintendo to implement full time, how about offering it up for sale in the Nintendo store? Having an option for people to purchase a Wii at any time as long as they can wait the few weeks for shipment would certainly help a lot of people, especially those who are unable go out every weekend at 8am to head to their local Big Box store. While this could feasibly work at any online retailer, the Nintendo store would be the most direct option to the Wii, and would hopefully be able to gauge shipment the most accurately. Currently, the Nintendo Store only offers links to places to find the Wii out of stock, or in high-priced bundles; both of which are pretty useless to your average customer. Offering a place where people can preorder their hot-ticket item, much like the Apple store does, will ease a lot of frustrated customer’s nerves.
Obviously Nintendo already has the online store to sell these items, and with a little extra manpower and system routing, this could be a completely viable way for people to get their system. With exact shipping dates that would obviously grow with increased preorders, impatient buyers would skip the wait and try their luck in stores, while those who can wait will have a way to get their Wii. Win-Win.
3. Use other components temporarily for a huge burst
So now it’s worst-case scenario time. It’s holiday 2008 and the Wii is even more popular than it has been in the past few years, possibly due to some sort of Tickle-Me-Elmo RPG that starts coming bundled in with the system to ensure complete chaos. What is Nintendo to do? While they can seemingly only assemble so many consoles a month, getting their hands on more of the components and increasing the work hours would obviously help speed up console production. After all, they were able to increase production from 1 million to 1.8 million in late 2007, who’s to say they can’t pump it up a little more?
One way that Nintendo could feasibly do this would be to start using other suppliers of Wii components. EE Times had a rather interesting article back in December about the various parts that go into the Wii and mentioned how, if Nintendo chose to, they could use parts from different sources in order to assemble more systems than they are currently doing at the moment. The biggest problem that could arise from the use of other suppliers would be possible “quality control” problems, while other minor problems like system color variations might arise.
However, if Nintendo did a little bit of planning on their part and stress tested the other components to make sure that they worked as well as the original, as well as using different colors for the Wii (which would also give them a sales boost and alleviate any problems coming from an “off-white” Wii), this method could be a viable option for the future. Let’s hope that this mess is sorted out by next November, but if not, Nintendo might want to look into outsourcing it’s components to different vendors to ensure a more successful holiday in 2008.
With the Wii shortages (hopefully) working themselves out in the next few months, many of these measures will hopefully not be necessary. If the demand stays as high as it has been in 2008, however, Nintendo sill has a few different ways of staying afloat. Making sure that everyone who wants a Wii will be able to get one should be Nintendo’s priority this year, but we’ll see how high the demand for the Wii is after the initial post-holiday hysteria dies off.