Gaming History 101

This sign was in several store windows on Black Friday in the KC metro.

Nintendo is on somewhat of a rebound this year.  After putting the Wii U to bed both with a lack of releases and acting as if the console didn’t exist after the fall, Nintendo came out with the announcement of the Switch – its newest console slated for a March 2017 release – and a long Direct that detailed several other projects to release until then.  Of those products one of the bigger announcements was a Black Friday only limited edition 3DS in both black and white colors that would be available at all major retailers for the low price of only $100.  For those who haven’t pulled the trigger on the New 3DS but still want one and all those parents still glaring at the then $200 price point of the portable, this was a godsend.  $100 is that sweet spot for many families in the gaming world where an item becomes a potential Christmas present.  The fact that it would be so widely available and that the smiling faces of Nintendo as a whole indicated anyone who wanted one could have it this holiday season was great news.  For most, however, it’s become a freaking nightmare.  Why?  Nintendo issued so little stock of these items that they sold out in minutes across the country on Black Friday and for most retailers I asked in the Kansas City metro, has become the bane of both customers and retail employees this holiday season.

Note the “while supplies last” portion, it’s the most important.

Does that mean you can’t have one?  Hardly.  Looking at a few quick searches there are nearly 1,500 units available to purchase, over 200 available from 3rd party storefronts on Amazon, nearly half that many on Wal-Mart’s 3rd party retailers, and even just around 25 on the local Craigslist.  Prices range a bit, but most seem secure just around the $170-$180 mark.  That means that just in this quick assessment alone, there are nearly 2,000 units unsold due to scalpers picking up these items and re-selling them.  What we have here is a basic issue with supply and demand.  The supply is extremely low and the demand is extremely high, which in turn brings the scalpers out of the woodwork and we see what we have here.  That tells me, although I did not need this little experiment to deduce, that Nintendo sorely underestimated how many people would want this item or doesn’t care about offering it at this point.  It also tells me that Nintendo has no idea how the retail market works nowadays.

Permit me to combine business and history in a brief paragraph as it points to Nintendo.  The company has traditionally kept demand high by limiting supply as early as the mid 80s.  In 1986 the Nintendo Entertainment System was in wide demand and by 1987 there were already issues getting certain games in stock (I personally remember hunting far and wide for Castlevania).  In 1988 there was the so-called “chip shortage” when Nintendo claimed it had issues getting its hands on the chips to make cartridges and since all US manufacturing was required to go through Nintendo, the company was able to literally hand pick what games came out and what games remained off store shelves.  it worked back then, however, because as the demand remained high Nintendo kept selling consoles.  There was no eBay, there was no second hand selling, and in fact Nintendo went after mall kiosks that would sell games and consoles at a markup.  If you wanted an NES in the US in the 80s you would be buying it directly from Nintendo via big box retailer and it all but shut down other options.  That’s a far cry from today where if you want something, you can find it.

Let’s circle back to the two hottest items from Nintendo this holiday season: the NES Classic Edition and the New 3DS at $100.  Both items have ridiculous demand and you will not find them on store shelves.  Nintendo claimed to be refilling retailers with NES Classic Edition consoles on the week of Black Friday but a quick Twitter poll and slew of phone calls has revealed that no one got any as far as I could tell.  The difference between the Classic Edition is that you really can’t get anything like it anywhere else – and yes, I’ve touted that the AVS is a great alternative but frankly the typical consumer wants the official Nintendo product that looks like their childhood.  For the New 3DS at $100, that’s just a good price, but you can get New 3DS consoles for between $180-$200 at all these retailers, they remain locked on store shelves and no demand in the world is driving those prices up.  This is also true of any scalper that tries to get more than $180 for that New 3DS, customers walk away because the price is too similar, which tells me that people don’t want it because it’s a limited edition, but rather because it’s cheap.  The NES Classic Edition is unique enough that the sky is the limit and consoles sell for between $200-$300, which may go even higher as we approach the holidays.

Only $59.99, yeah right.

This tells me that Nintendo is either clueless about the markets it sells to or too stubborn to change.  After Christmas if that New 3DS starts at a retail price of $150, how much you want to bet it sits on store shelves?  If the NES Classic Edition comes in stock in regular droves after Christmas, it won’t sell consistently, and it will be forgotten once it’s fully in stock.  This holiday season was the time for Nintendo to flood the market with the Classic Edition at $60 and drown in the profits it gets in total.  There can’t be a high profit margin on the thing, maybe $10, so in theory you would want to sell millions, tens of millions if you could, and squeeze as much profit as possible.  Instead hundreds of scalpers across the world are reaping the benefits that Nintendo should and the real victims here are the customers that want one.  Nintendo, your prices are too high (other than the Classic Edition, which is clearly too low) and your stock of hardware too low to make any serious money and that’s a problem.  If I was an investor in the company I would be furious every time I see an eBay NES Classic Edition sell for $250 after having 50 different bidders.  That’s more than 50 customers (and probably sales) that could have walked out the door if only stores had stock.  Once the holidays are over the stock will flood the market and no one will buy or care.  It’s the same thing that happened with the Wii U, the 3DS, the New 3DS, and so on.  Something needs to change or Nintendo is going to drown itself on these items.

As for me, I just sit back and shake my head.  I gave a passing thought to the NES Classic Edition at $60 if readily available, but at this point I could care less.  I bought an AVS that supports all my carts for $185 and people laughed at me for the ridiculous price point, meanwhile they buy the NES CE for $200 on eBay.  To each their own I suppose (the AVS is still readily available).  I like most others frantically tried to get the New 3DS during online restocking on Black Friday, even getting the console into my cart twice on Amazon and once on Target before having it stripped in the process of checking out.  I gave up on that one as well.  As an impulse buy, I’m in, but if I have to spend more than $60 and $100 respectively then I’m out.  Given the effort I’ve already put in, there’s a bad taste in my mouth and I don’t even care anymore.  I’m probably not alone.  Nintendo may be best to note it because last I checked, I haven’t needed anything Nintendo has made in years.

Cross Talk is a blog written on both Gaming History 101 and The B-Team Podcast that deals with issues that converge with both retro and contemporary gaming issues.