Nintendo Purposefully Held Back Wii Units

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GameStop exec: Nintendo held back Wiis
Retailer's COO believes gamemaker has intentionally limited supplies of its newest system after meeting sales goals; CEO assesses PS3 Euro launch.
By Brendan Sinclair, GameSpot
Posted Mar 27, 2007 4:54 pm PT

One of the biggest frustrations a gamer can experience is demand outstripping supply on new games and systems. Would-be Wii buyers have been dismayed by the Nintendo console's scarcity at retail since its November launch, and today an executive with the leading US specialty game retailer speculated that the gamemaker orchestrated the system's supply woes itself.

During a post-earnings release conference call today, GameStop vice chairman and COO Dan DeMatteo was asked by an analyst if he thinks Wii supply issues will be a recurring problem in the future.

"I don't think it's going to be an issue going forward," DeMatteo said. "This is just my opinion. I think they intentionally dried up supply because they made their numbers for the year. Their new year starts April 1 and I think we're going to see supply flowing."

DeMatteo also said GameStop has received its first shipment of Wii systems for April, and that the retailer is "quite pleased" with its allocation.

When asked for comment on the speculation, a Nintendo representative said, "We are doing everything we can to ship product to retail as quickly as possible. We knew we had a potential hit on our hands, but we had no way of predicting demand for Wii would be this intense."

Elsewhere in the investor Q&A session, GameStop chairman and CEO Dick Fontaine answered analysts' questions about the retailer's assessment of last week's European PlayStation 3 launch.

"I think the summary of that was a very good launch falling somewhat short of what they would determine to be a great launch," Fontaine said. We are probably more happy with how well we did, selling through as a percentage of our reservations then perhaps some of the mass merchants. But I think we'd tab it exactly that way, a very good launch falling just short of a great one."

Fontaine later added that the software-to-console tie ratios were "OK," that the number of accessories the company received to support the launch was "very, very light," and that the PS3 launched "with not the greatest lineup of software."

As for the retailer's own plans for the future, DeMatteo said that it was going to make significant investments in its Web site, giving consumers the ability to order or reserve a game online and pick it up in-store.

There you have it. No sooner do I hear people talking about this very situation on another forum, than the next day we discover it's most likely true. The situation goes like this, from my understanding: Nintendo has it's profit line and number of units that they forecast to sell. If they sell far too little, it's bad for stocks. If they sell too much over their forecast, it looks like the company has no idea what they're doing to investors. The solution? Allow sales to be better than they originally forecasted, but not so out of bounds that it looks bad for the investors.

But from the sound of it, this April the Wii shortage should finally start to wane.

Oh yeah, well they better bring them Wiis out here so we can get 'em!

Whatever. Sony would have done the same thing if they had made more than 5 consoles.

I really don't believe this.

Why would they hold them back? The casual gamer does not want to wait or they will just give up.