This year’s hottest Christmas present wasn’t entirely new; it was a collection of video games from 30 years ago. The NES Classic, released by Nintendo on November 11, can play thirty NES games from a selection of their all-time greatest hits and it’s an extremely affordable price of $ 60. Hearing about something and then being able to get it are entirely different things, however. Nintendo has once again left children disappointed and scalpers extremely satisfied by failing to meet demand for any of its products. Those familiar with the Nintendo brand will certainly remember that this is not the first Christmas that they are underestimating demand. The Nintendo Wii and Amiibo figure launches have also faced massive shortages and disappointments. Nintendo uses shortages to secure a sale for their product and for that reason they’re great.
The cultural phenomenon known as Nintendo Wii arrived in 2006 with a huge splash and rare availability. It wasn’t just Christmas either, the product was in such high demand that the shortage continued for over a year. The Wii was not readily available in stores until May 2008. Nintendo insisted that they were ramping up production of the hot product, but obviously not to the capacity that would meet the incredible demand. The system became a flagship product on eBay, where resellers typically sold the console at double its MSRP price of $ 250.
Nintendo is said to have another successful product, but it was very different from what they normally sell. They decided to enter the genre of toys to live with the Amiibo. These toys could connect to video games and add additional functionality to titles. The Amiibos would tap into Nintendo’s large character library, offer functionality across many different games and systems, and alongside one of Nintendo’s most popular titlesâSuper Smash Bros. Perhaps more than their limited focus, fans and collectors alike were interested in the product as it would be the first time many of these characters had received a toy of any sort. They made more than enough Mario figures since Nintendo knew it would sell, but less popular characters like the Wii Fit Trainer quickly became hard to find. Supply issues were further influenced by exclusive retailer numbers that would only be available in specific stores. The $ 13 toys were selling for $ 70 or more on eBay, and consumers who wanted to collect all of the characters certainly struggled. They did something right because Amiibo still exist where Disney infinity was interrupted.
Consumers don’t need to look beyond a basic supply and demand graph to understand Nintendo’s philosophy. When the supply of a product increases, the demand for that product decreases. They’ve applied this to their previous product launches for the Wii and Amiibo and there’s probably every reason to think they’ll continue for the next Nintendo Switch. Nintendo understands that right now the NES Classic is a hit product. It’s inexpensive, has a great deal of quality games, and is cute to boot. It’s the perfect Christmas present to give to that 30-something who has everything or wants an easy way to relieve the heyday of gaming. Nintendo has production factories working on making these consoles, but they also know that ‘after Christmas these units will be much less desired, so why should they increase production only to end up with additional units. A product sale is good for Nintendo – it looks good to their investors and the free publicity they get from their product being scarce, it’s phenomenal. They are looking to make money and there is no doubt that they are making a lot of it with the NES Classic.
Nintendo is in fact able to cover some of the inherent flaws of the NES Classic by creating demand for scarcity. This is by no means a perfect product, as there have been complaints about the length of the controller cord, the difficult way users have to reset the console to change games, and compatibility with some TVs. While no console is perfect, these negatives are overshadowed by the sheer demand for the unit. The Wii and Amiibo lines also had their many flaws, including a lack of compelling software, limited use, and poor longevity. All three of these products promised significant new ways to play video games, but offered little more than their original premise. A successful product is dictated by the outcome of the initial launch. With this brand, Nintendo generally takes anticipation out of the park, regardless of the quality.
Limited supply comes with limited damage. Nintendo expected the successor to the Wii, the Wii U, to be a big hit. They were able to hit all of their sales targets at launch and although the console never sells as many units as the Wii, Nintendo has never really seen so much damage due to the significantly lower sales. According to USA Today, âNintendo announced that it sold more than 425,000 units in November  – and over 1.75 million systems (Wii U, Wii, 3DS, DS) in the United States [NPD analyst Liam] Callahan noted that Wii U sales generated 21% more revenue than the Wii launch in November 2006. Nintendo was well on its Wii U sales target, and although demand was lower, they were never made enough units to damage their results.
While Nintendo might be happy with the way the NES Classic sells, consumers are once again frustrated with the company. When Nintendo announced the NES Classic over the summer, many gaming websites reported great interest in the console. Polygon and The Verge said the console dominated their traffic charts in July. The only problem was that Nintendo hadn’t really planned to deliver a very large number of units regardless of the anticipation. Three months ago, the product was up for pre-order on Target’s website out of the blue and only for a brief period. Since then, there has been no other way to pre-order the system. Launch partners such as Amazon, Wal-Mart, and Best Buy all listed the product, but said it wasn’t available until launch day. A quick tour of the city on November 11 showed that there would be many disappointed customers. The local Best Buy had around 40 units for the 80+ people queuing before opening. Target had received around 10 units for its crowd of over 60 people. Demand has consistently exceeded supply, leaving a lot of people out in the cold without getting an NES Classic.
Since launching last month, there have been countless stories and guides on how to get the Small Console. People have resorted to frequenting Reddit groups, checking inventory at retailers, and using bots to buy excess amounts to resell. Much like the Wii and Amiibo, retailers are buying the NES Classic in bulk in order to make some extra cash this holiday season. At one point, the average for the $ 60 console was $ 250 on eBay, making a considerable profit four times the original price. Nintendo is leaving money on the table by perhaps not charging $ 100 for the system, although demand would certainly suffer if it weren’t for such an affordable giveaway. Nintendo decided to live in the margin which they saw as a success and although they could apparently make more money, they would rather not take that chance.
In fact, getting an NES Classic this holiday season was unlikely given the fervor for the product. The scarcity created by Nintendo has increased the value in the eyes of many people. Remember, the NES Classic offers little more than the accessibility of playing thirty-year-old games on today’s TVs. The Wii offered a whole new way to experience video games, and the Amiibo allowed Nintendo fans to collect figures of their favorite characters. They had new and exciting features. That being said, Nintendo had given something old back a new and exciting look with the NES Classic. While their methods of gaining this incredible press and excitement may suggest that they are not acting in the best interests of the consumer, Nintendo is using their business acumen to maximize profits. They are pursuing the same strategy that they have used on all of their product lines. Whether or not this product is a huge success, Nintendo will not have saturated the market with consoles that will be back. When their competition produced far too many consoles and offered big discounts, Nintendo was able to play by its own rules. This is where the genius of their supply control plan lies. Families might be disappointed this Christmas, but Nintendo won’t. They have been doing this for a long time and know exactly what they are doing when dealing with scarcity. The NES Classic will probably be available in large numbers in early 2017. Then supply will far exceed demand, but Nintendo will be sufficiently satisfied.
Max Covill is a freelance journalist and columnist for Film school rejections. He is the co-host of the ItsthePictures podcast. His signatures include Playboy, Mezzanine movie and more. He tweets @mhcoville.