Tag Archives: nintendo wii

WiiNomics… Nintendo’s scarcity strategy keeps paying dividends

I finally, finished Co-opetition by Brandenburger and Nalebuff (some of you may have noticed it was up on the library list for quite some time). It wasn’t for lack of interest – I’ve just been reading so many great books of late.

nesOne item in the book that stuck me was the example of Nintendo and the launch of it’s Nintendo Entertains System (NES) back in the mid-80s. This wasn’t because, as a kid, I was denied an NES by my parents, but because it lent credence to the accusations that Nintendo has purposefully created scarcity in the supply of its current machine – the Nintendo Wii – as well as some of its games – like the Wii Fit.

Certainly the following paragraphs out of Brandenburger and Nalebuff suggest there is a strong precedent in Nintendo’s actions. My friend Andrew M. has long argued that Nintendo has being artificially creating scarcity, but I’ve also thought it was just that the company hadn’t anticipated its success and so production had lagged demand. Now I’m inclined to think Andrew has been correct. If Brandenburger and Nalebuff are correct, then it looks like scarcity has been a Nintendo strategy for over 30 years. Check out these tidbits:

Even as demand took off, Nintendo remained cautious about flooding the market. It strictly controlled how many copies of games were produced, and pulled its own games off the market as soon as interest declined. Over half of Nintendo’s game library was inactive. Sometimes, severe shortages resulted…

…Somewhat paradoxically, the shortages may have helped create even more consumer demand. There were at least three different effects going on. First, shortages made the game cartridges even more desirable in the eyes of consumers, actually boosting demand. Trendy restaurants play the same game. For example, the long lines outside K-Paul’s in New Orleans made it even more fashionable, further increasing the lines…

…Second, shortages made headlines; filling demand would not have. “Tonight’s top story: Nintendo sold game cartridges to all those who wanted them. Details at Eleven” We don’t think so. The shortages generated tremendous free publicity for Nintendo, a company known to be rather stingy on advertising (spending only 2 percent of sales).

Third, shortages helped retailers move slower-selling Nintendo games, because parents would buy a lower-selling title if the the kid wanted was sold out. Of course, this was only a temporary solution, what we call the “Band-Aid” effect. The substitution might tie the kid over from Christmas to New Year’s, but kids tend to remember these sorts of things. So parents would have to return for the sold out title once fresh supplies come in. Nintendo made two sales instead of one.

(Page 113-114 of the paperback edition)

This time around, rather than making the game cartridges scarce – something hard to do since Wii games or printed on CDs, which are abundant – Nintendo made the games console itself scarce. I’m not sure about the last effect, but there is ample evidence of the first and second effecit. Nintendo has earned endless free media as a result of the Wii’s scarcity. Plus the scarcity has peaked interest – especially among non-traditional gamers.

I’m not sure if Nintendo is control the flow of video games in general – but certainly it is near impossible to buy a Wii Fit in Vancouver. So it would be interesting to know if this strategy is being used on its games as well.

Also interesting is to read how other parts of Nintendo’s strategy have also remained intact. When the Wii was first released I remember Sony and Microsoft deriding it for being little more than a generic graphics card attached to a hard drive. Well – the accusation was actually pretty accurage. But then, this was true of the NES as well:

In truth, the Famicom (renamed Nintendo Entertainment System in the North America) was hardly a computer at all-everything was dedictated to a single purpose, game playing. In order to keep the costs down, Nintendo deliberately used a commodity chip, an 8-bit microprocessor dating back to the 1970s. Personal computers at that time-such as the IBM AT or the original Apple Macintosh-were selling for between $2500-$4000. Nintendo’s machine was priced at $100. The Famicom’s price radically undercut the competition, its price so low that many people believed it to be below cost.

Back then it was Nintendo’s creative games that drove demand – not cutting edge graphics. This time, it was again creativity – the motion sensitive wiimote – that has driven demand.

ParticipAction 2.0 – Get Hal and Joanne on my Wii!

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About a month ago a good friend lent me their WiiFit so that I could give it a try. I confess, I’ve become a fan.

wii-fit-01-540x540For those unfamiliar with the WiiFit it is a balance board you use with the Wii game consol to do strength building exerices, yoga, and balance games to develop flexibility, strengthen core muscles and burn calories. You can read more about the Wii Fit, its benefits and drawbacks here, and here.

The Wii Fit continues a trend of video games that find ways to get people to be active. Anyone whose tried Dance Dance Revolution, or even boxing and tennis on the Wii knows what I’m talking about. Still more amazing is how many households can now access this technology. 986,200 Wii’s have been sold in Canada as of July 1st, 2008. That is essentially one Wii for every 32 Canadians, one for every 12 households. Imagine if 1 in every 12 houses had a tread mill, or even a simple yoga video. Well, in a sense they do!

What is most interesting is that the Canadian government could help take this type of activity to the next level. Despite its success the WiiFit sufferes from a few shortcomings:

  1. there could be more exercises – ideally downloadable over the internet
  2. it would be nice if you could string together a customized series of exercises, that way you could create different workouts,
  3. the pace of the “trainers” is pretty slow, it be nice if you could eliminate their introductions and wrap ups to each exercise, by doing so you could increase the pace and a “workout” much more vigorous
  4. there could be cooler trainers guiding you during your work out
  5. it would be nice if more than one balance board could be connected to a given Wii – that way you could work out with friend(s)

180px-Participaction

In short, what we have is an increadible technology, one that touches millions of Canadians, and yet it is short on its potential. Thought of differently, every Wii Fit board, Nintendo Wii and television has the potential of becoming an instant gym.

hal_jo_06

Ideally, the community could create a game with several trainers or even “skins” – such a variety of themes could increase the appeal to different niches. I can already imagine someone grabbing and digitally editing a bunch of the old Hal and Joanne videos so that they appear to be doing exercises on the Wii balance board – one can imagine it being the must have retro cool game.What if the newly revived ParticipACTION partnered with Nintendo to create a new WiiFit game. ParticipACTION would agree to pay a discounted license fee to nintendo, and in exchange it would sponsor an open source community to create a ParticipACTION WiiFit game – one that could be cheaply distributed and customized to appeal to anyone, but especially the very kids who are most at risk of not exercising…

(the fact that, in researching this post, I discovered the participation archive project again reveals the mysteries and wonders of the internet. I mean, if there are transit geeks, why not participaction geeks?)

The Creative Econom(ii)

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As many of you know I’ve recently become an owner of a Nintendo Wii – that fun games console you control, not by pressing buttons, but my using a motion controlled wand (e.g. when you play video game golf, you actually swing the wand like a golf club). Needless to say it’s hilarious and fun.

One interesting feature of the Wii is that it allows you to download channels that bring content to you via your console. One of these is the Everybody Votes channel. This channel offers up a constantly updated set of questions – such as “Graffiti is…: Urban Art or Defacing Property?” – on which you vote. What makes it particularly interesting is that you get to see the result broken down by gender, province, country, etc…

Obviously, the survey data gathered by the Everybody Votes channel is deeply skewed and not representative of the population as a whole. But I think this is also what makes it so interesting.

For example, recently, the program asked the question “Which is worse to have stolen from you: Things or Ideas?”

Interestingly 50.6% of participating Canadian Wii users selected “Ideas.” So just over half of Canadian Wii users believe it’s worse to have recognition for an idea stolen than it is a tangible, likely fungible, asset.

Young people valuing ideas over things? Video-gamers valuing ideas over things? Could be a sign of the creative economy – where one’s ability dream or mash up new ideas is what’s valued most. I’m willing to bet that most Wii users are young professionals acculturated to this new reality.