The Nintendo Switch has only been on the market for roughly two months, but following its progress has been a wild ride from the get-go. The console blew past Nintendo’s sales expectations and ended up causing the company to scramble to assemble thousands of more units than planned in order to meet the incredibly high demand of consumers. Despite Nintendo’s best efforts, Switch systems are still hard to come by in retailers all over the world. This has led to some folks accusing the company of deliberately constraining supply in order to make it seem like the system is selling better than it actually is. Not only is this accusation false, it’s just plain crazy talk.
The aforementioned accusation isn’t anything new for Nintendo. When amiibos were selling out like nobody’s business, and the recently-discontinued NES Classic also became a rarity overnight, these exact same claims were being brought against the company. The people who have been calling out Nintendo for holding back supply are most likely the ones upset that they can’t get what they’re looking for. The controversy really blew up when Nintendo announced a few weeks back that the NES Classic is no more, after the system was hardly ever available in retailers. But, the question is: would doing something like this be beneficial to Nintendo?
Like any company, Nintendo’s primary goal is to make as much money as possible. If it’s not selling enough products, then they are losing profit, which is of course never a good thing. Less profit translates to losses. These losses, in turn, can then damage the company and threaten the livelihood of its employees, which Nintendo happens to have thousands of across the globe. So, for obvious reasons, making money is as big of a deal to Nintendo as it is to all other for-profit companies in existence. And that’s why deliberately limiting stock would not be a good idea at all for their company.
If Nintendo were to intentionally limit the stock of any of its products when they’re in high demand, that could result in a potential loss of profit. Those who accuse the company of doing this try and back-up their claim by stating why Nintendo would be doing this in the first place. Limiting stock would create ‘artificial demand’, which simply means that it would make it seem like the product is incredibly popular. This would, in turn, make more people want it because everyone else seems to be buying it. This is true to an extent, but you also need to look at the negative side of an action like this. By having a product that’s deliberately always ‘sold out’, some people’s excitement and desire for it will drop because they can’t get it. Instead, they would just look for something similar to fill that hole and forget about the product they were chasing after originally. On top of that, inventory purposefully being held back also decreases the number of actual units sold, resulting in low figures and no profit. That’s why this accusation just doesn’t make sense: it doesn’t benefit Nintendo, or any other company.
Holding back stock would mean less profits, which is not something any for-profit-company would actually want.
The fact of the matter is that the Switch is simply selling more than Nintendo anticipated. Like everyone else, the company was unsure as to how the market would react to the new system after the Wii U was completely unable to generate its projected sales figures. Combine that with the seemingly unending popularity of the PlayStation 4 and (to a much lesser but still relevant extent) the Xbox One, and you have yourself a true wild card. That’s why Nintendo set its expectations on the modest side, initially promising to produce and ship two-million units within the month of March. When it turned out that substantially more people wanted the system than anticipated, Nintendo quickly responded by upping production to 2.72 million units. In fact, the company was so invested in fulfilling consumer demands as quickly as possible, it even had some units shipped via airfreight — the most expensive form of transportation. Does that sound like a company that’s trying to purposefully constrain supply?
Like the Switch, the unexpected popularity of the Wii in its early days also caught Nintendo off guard. At the time, the company was just coming off the Gamecube (which is now the second lowest-selling Nintendo home console of all time). Nintendo did not know what to expect from the Wii, so when it became a hot-seller, production rates had to be adjusted accordingly as the months went on. It took almost a year for production to match demand — it was just that popular. Likewise, the Switch will have to go through a similar spiel over the course of this year. The thing is, the system is selling at an unexpectedly fast rate despite launching at such an awkward time: Most consoles actually launch right before the holiday shopping rush at the end of the year, but the Switch launched in the Spring during one of the quieter seasons for the gaming industry. Presumably, this will position Nintendo with a better chance to adjust production rates so things can normalize by the shopping rush at the end of the year.
So, if you really believed Nintendo executives were sitting on stockpiles of Switch units while they laughed at all the upset consumers unable to find a Switch on store-shelves, hopefully this will change your perspective and help you to realize that the system is simply more popular than anticipated. You’re not being left out on purpose,you just have to wait for the situation to improve. Nintendo’s main goal is to make money and report big numbers to investors, so it’s definitely trying its best to produce and ship as many consoles as possible to fill the demand. Nevertheless, this is all good news at the end of the day. Nintendo has almost completely turned the ship around despite the potential anchor the Wii U’s lackluster sales could have been for them. In fact, if things continue this way for the Switch, it just may end up being Nintendo’s biggest hit.