Nintendo on supply issues: ‘Sometimes we get it wrong’

Photo by James Bareham / The Verge

Last night Nintendo made a surprise announcement: a brand-new piece of hardware is launching this summer in the form of the New Nintendo 2DS XL. That will mark the third major hardware release for the company in the span of nine months: the now-discontinued NES Classic Edition released in November, followed by the Nintendo Switch in March. The one common theme between these devices — and even the older Nintendo 3DS — is that they’ve been incredibly supply constrained of late, making it difficult for consumers to actually purchase them.

I had the chance to ask Reggie Fils-Aimé, president of Nintendo of America, about what exactly goes into the process of determining how many units to make of a particular product. “We create a plan, we build our programs against that plan,” he explains. “But based on what we see in the marketplace we make adjustments, and we go from there.”

Take the Switch as an example. Nintendo originally planned to produce enough of the tablet / console hybrid to sell 2 million of them in the first month. But that number grew significantly — yesterday the company revealed that the system moved 2.76 million units in March. “As we began the ramp up with our communication activity, starting with the video we released in October, then the hands-on events that we did in January, clearly we began to see a consumer response that was very positive, and there was a lot of excitement,” Fils-Aimé explains. “So at that point we began to improve on our production capability.”

New Nintendo 2DS XL.

One thing that doesn’t necessarily influence supply is the introduction of new platforms. A new 2DS likely won’t have a dramatic impact on Switch production, just as Switch didn’t greatly impact the NES Classic. “It’s not a direct, one-for-one effect,” says Fils-Aimé. “Certainly there are some components that are common within a particular platform; so with 3DS for example, there are some common components. A great example: the AC adaptor is the same whether you’re talking about a 2DS or a 3DS XL. It’s the same adaptor. And there are some things that are shared between a 3DS platform and a Nintendo Switch. But what we try and do, is manage the overall business to deliver as much financial results as we can, and also as much consumer satisfaction as we can.” (Of course, that doesn't necessarily preclude the idea that Nintendo is intentionally limiting stock to increase demand, as many have speculated.)

Successfully meeting day one demand is a problem for most hardware companies — just ask Google. That said, Nintendo says it’s confident that the supply issues that have plagued recent launches won’t also hinder the release of the New Nintendo 2DS XL on July 28th. “We make estimates on what consumer demand is, and if the demand dramatically exceeds what we plan, it creates some tightness in the marketplace,” says Fils-Aimé. “We think we’ve estimated for New Nintendo 2DS XL pretty well, and we’re confident that the consumer who wants to buy it on July 28th is going to be able to do that.

“We get it right more times than we get it wrong. But sometimes we get it wrong.”

Comments

Nintendo doesn’t limit stock, just by word of mouth you know people are buying their amiibos, their portables, etc, but their mentality is that they want to sell first whatever they already produced before making more, never making losses, that’s why it always sells out. Remember that Nintendo doesn’t have any more income to take red numbers like Sony and Microsoft can, they are a game company.

Nintendo has options for raising funds. The idea that they can’t produce a reasonable amount of items because of a lack of capital is a problem they should be able to solve.

they dont lack the money, I’m sure they got more money than Sony right now after the pokemon craze last year, but they like to keep it on their massive Ducktales vault. Sony has the whole company riding on the Playstation brand, that’s why they even take budget from movies and invest it in gaming, that’s why even when they announced sales have stagnatted on the PS4, it still is the king of that generation cycle.

Nintendo has enough money in the bank to lose 20b Yen per year and it’ll still last them to 2052 or something like that. Then if they liquidated some of their assets they could make it to an estimated 2075.

SONY is a failing company. One of the only parts even breaking even is SCE. Microsoft lumps gaming in with Surface Tablets because (?) so their numbers are all but hidden so who knows what theirs are.

Nintendo has money… but like the saying goes: You don’t get rich by wasting money.

…. Yen has no decimal point values, only whole numbers.

And Nintendo has been hemorrhaging money every year – which is your 20 billion yen number. Money lost. Not earned. Lost. Quarterly losses. They posted a quarterly profit to start this year, only the 2nd time since 2011 that has happened.

Nintendo doesn’t have money… it’s a myth perpetuated by fanboys on the internet.

You’re not right because in terms of annual reports, they were profitable for the last 3 years in a row. Quarterly profits are a fairly artificial construct anyway, so even if just one very good quarter in a given year had to balance out three bad quarters they were still profitable overall for that year. Nintendo had to do some massive downsizing after the end of the Wii and DS era. They’ve lost 70 % of revenues since 2009, yet they were very successful in both returning to profitability and coming out with creative new products like Splatoon and Switch. They also got lucky with Pokémon Go. People don’t appreciate how volatile the gaming industry is.

They were not. They turned a profit in 2011 and have not turned one since. And 2011 was the first since 2005.

Nintendo has a LOT of income, their handhelds have always brought in big bucks. And Nintendo is sitting on a war chest of like $11 billion in liquid cash.

Maybe after the Wii they did. But they’re losing their ass lately. Down to 4.

You also need to factor in costs next to that asset too… some of those costs are constant to remain in business.

He sounds very concerned for his customers.

"We get it right more times than we get it wrong. But sometimes we get it wrong."

Wii
Amiibo
New 3DSXL
Switch
NES Classic

I think wrong more times than right should be the answer.

Frankly, they even struggled to have the Wii U in stock for much of its life cycle.

I never noticed that. The Wii U didn’t even manage to stock out during Black Friday the year it launched. It’s hard to find now because they stopped making it months ago, but unlike the Wii, Amiibo’s, certain models of the 3DS, the Switch and the NES Classic, the Wii U never carried a premium on eBay for the very reason they weren’t hard to find.

For the past three years or so I never saw new units at Gamestop, Walmart or Target, nor do I remember seeing them on Amazon. You could often find "refurbished" units at Gamestop and I would often see them going for much more than MSRP on Amazon from 3rd party sellers, but I would never see them available at the normal price. That’s just my experience, obviously, and it’s not like I was trying furiously to hunt one down, but there were a couple times I considered buying one for the kids and they just weren’t available. And I’m in Houston, not some small town.

I think they misspelled "All times"

"Repeatedly, consistently, and frankly as basically our modus operandi, we get it wrong."

Actually, the Switch isn’t much of a failure. It is possible to get one with just a little effort. (Certainly less effort than people put into complaining about it.)

And the Amiibos, let’s be honest. EVERYONE is surprised they’re doing as well as they are. NOBODY expected people to pay $15 for a tiny figurine that gave them a Mario Kart costume. But… here we are.

Physical DLC… I’ll take it.

Switches were impossible to find in my home town or online until just this week. I’ve had better luck finding AirPods than a Switch, and the fact they’re still selling for a healthy premium on eBay supports this. If they were easy to find, people wouldn’t still be paying 80-130 dollars over retail for them.

Not where we are. Have been checking Amazon, Walmart, Target, BestBuy, Gamestop. Nothing. None to be had and no dates available for any incoming. Only ones available are gray market pirates on Amazon selling them for like 2X the MSRP or outright scammers. Screw that.

Amazon had them at regular price for a couple of hours on Friday. Use a site like camelcamelcamel to track the price.

was wii that hard to get? I just walked into a toysRus when I bought mine, maybe it was a couple months after the initial craze or holiday season, but I thought it was easy enough. Never really thought too much about it.

During launch? Absolutely. I remember standing outside my local best buy for 8 hours in a snow storm just to get one for my kid at launch. The Wii is what started the conspiracy that Nintendo purposefully limits stock in order to create a buying frenzy by giving off the impression they are highly sought after.

It was impossible. I remember getting extremely lucky when I got mine. I had been trying for awhile to score one without any luck. I happened to walk into my local Gamestop for something else. While I was checking out I asked if they happened to have any in stock. He said they had exactly one and sold it to me. I didn’t live in the best part of town at that moment in time so he was being very careful with keeping the whole purchase discreet. He rang it up and then lowered it under the counter while he bagged it. He even warned me to be careful getting to my car. All kind of comical for a game system.

I wouldn’t actually mention the Wii, Amiibo or Switch. A company is never going to be able to fulfill 100% of its production for a hardware launch when it comes to something in the millions. Even Apple, a company that produces in the 10s of millions for a launch still doesn’t fulfill demand. You would have to only take preorders and then be able to start productions a year in advance to truly meet demand with some of these things. Nintendo made Wiis as fast as they could and it still sold out. There’s a different issue there and in most cases everyone who wanted one got one.

As for Amiibo, you can’t over produce those things. If they are off, they’re off maybe 1000. Walk into a store and you can see exactly why certain amiibo are "limited."

View All Comments
Back to top ↑