Pop quiz which company is trying its hardest to keep nintendo products out of your hands Microsoft
Huh good guess, but no sony. Nope try again. Give up its
Nintendo (Dramatic noise)
(some reference of laughing) You serious
Spelling Phailer Science blaster Subtitles provided by Parker yes everyone in california it's me!FNAF reference Parkiplier
Hello internet welcome to game theory where I spend more time looking at gaming industry statistics than a tinder dater
analyzing text messages, uuh, she said okay, but she actually wrote it out like O.K.A.Y
instead of just letters, O.K? Does that mean she's into me?
If only there were a youtube channel that would teach me about dating oh yeah, (Dating Sims)anyway
We're over analyzing Nintendo today
And we've got a lot to cover so let's get into it if you have read any gaming blog or media outlet over the last
Two years you've heard about the infamous Amiibo shortages
(Thunder)
If you never heard of amibo , you've probably never watched this
Channel then before so if you took a wrong turn at Tyler Oakley and can't find your way out
Let me catch you up by saying that amiibo are the biggest gaming peripheral phenomenon of the last
Decade their toys their collectibles their DLC
They're adorable and yeah some are made of yarn they sync up with all your favorite nintendo games to add special features
and there's such a huge hit because they're functional enough for serious players, but so easy to use a
(coughing)
Kindergarteners eat them up. Well, hopefully they don't that would mean that they cause choking hazard
But in addition to all that they've also been one of the most infuriating
Nintendo products in history because ever since Nintendo released Amiibo in late 2014
Weird guy: no way how am I gonna win? [oh]?
hello, everyone Matthew Cool :) a lot of them have been impossible to find we're talking speeder Bike level of battletoads impossible wow wave
[4] went on sale in April 2015 and sold out at some retailers in less than 24 hours
The demand for them was so high that it crashed not only [Gamestop's] online servers, but also their in-store computer system as well
So ok nintendo created a popular product and wasn't able to keep up with the demand
Except that they were totally [able] to keep up with the demand in Europe
Photos of stores in Germany during the shortage show gel whole that is that is a tongue Twister?
shorted showed Shelves shorted showed shell shortage showed Shelves photos of stores in Germany during the shortage showed Shelves full of
Amiibo even rare ones like Marth and Ike yeeer nailed it in fact a lot of the scalpers reselling on Amazon and ebay
are European because amiibo are just much more plentiful there
So what gives I mean it's not like Nintendo would screw over its biggest customer base by under supplying the market on purpose
Right well clearly if I'm asking you that question you know the answer is gonna be yes
Seriously, you guys know how this channel works already unless you're one of those aforementioned Tyler Oakley stragglers in which case hey
Thanks for sticking around this long appreciate the retention time in short there are two major parts to this nintendo conspiracy
Theory one Nintendo's response to the whole Amiibo shortage has been pretty fishy Nintendo's apologized a number of times for the shortages
And that's all well and good. They were really slow to resupply the [u.s.]
Creating a rampant black market for Amiibo like little Mac fox and Captain Falcon Amiibo are supposed to retail for $12.99
but some rare amiibo are selling on Amazon for four to five times that much the one that still shocks me to this day is
the Wii-fit trainer at
$60 you'd think that nintendo would want to make sure that they're the ones making the profit from the sale of Amiibo
but judging from their response to the shortages their reaction has basically been a more polite version of meeh
Some people have theorized that Nintendo is trying to [artificially] drive up demand
Now allowing them to charge more for the figurines in the future
And then there's number two when you actually look at the data Nintendo has a long history of shortages a lot of industry insiders
Think these aren't so much accidental as they are
strategic by Nintendo free publicity and increasing the value of its
Products by making them seem more scarce than they actually are but is there any validity to these claims?
Well, I did the research and today. We're gonna get to the [bottom] of this amiibo shortage
Conspiracy the truth is out there and by out there. I mean in this episode
We're gonna get to it in a minute or two here starting all the way back in
1988 Nintendo was already showing shortages of its most popular products for two of its sequel games in fact Super Mario Brothers [2] and
Zelda 2 the Adventure of link it was such a big deal that the primetime news show
2020 (Okay enough fnaf references) even did a big segment dedicated to the shortages showing how far people had to go to get the games?
This man came all the way from Indiana to get one
Became a thousand miles just for this game. Yeah, I've done seven stores a day for three weeks now
I cannot find it
If somebody had told these people just how difficult
Zelda 2 is what to save them a lot of hours waiting in Line Grainy video and Tom Selleck
Mustaches aside the 20/20 segment was a huge deal remember this is
1988 [a] [10] minutes story on primetime television, but maybe it was just a coincidence
I mean
how was Nintendo supposed to know what kind of buzz its products would have this was still the early days of video gaming and they
Didn't have the benefit of the rational calm perspective of reddit to guide them
But hopping forward into the future
Nintendo didn't seem to learn from the nes Snafu remember how hard it was to find a Nintendo Wii
when they first came out the Wii was released in november of
2006 but the supply in the [us] didn't catch up to the demand until well into
2009 three whole years later. It's not like Nintendo strapped for cash
Nintendo has the money it needs to produce enough consoles the publicity is a whole other ball game
You know saying that any publicity is good publicity?
well as long as the press isn't that the platform hurts your neck and makes you wanna vomit. it's true for months in
2014 and 2015 the Amiibo shortage
dominated the gaming conversation in the Media and it didn't cost
Nintendo a dime in fact we can measure the impact that the amiibo shortage had by using the best data mining you can get outside
Of the NSA Google trends take a look at this graph that measures the mentions of Amiibo in News results since MiD-2014
Amiibo was officially announced by Nintendo at E3 on June 10th
2014 which accounts for that little
Spike right here on the left side of the graph the first wave of amiibo were released in the USa on November 21st
2014 which results in increased search
But just weights we get our first big spike in mid December of 2014 want to guess what happened then yep?
That's when blog coverage started reporting and how the first wave of amiibo were running out and starting to get marked up by huge
Percentages on Amazon and ebay and that hype train didn't get derailed for a long time
Amiibos news relevant stayed high until October of 2015 hitting a peak at the beginning of April
2015 when wave four Amiibo orders short circuited game stop now think about that for a second
Nintendo's Amiibo shortage made a splash in the news more than five times as big as when Amiibo were first announced
And it was a splash that lasted for 10 solid months also
Google trends shows us exactly where this amiibo buzz was the loudest and it's almost all in the [united]
States and Canada if this were really a problem of Nintendo running out of amiibo. That would be one thing
But the search Data shows that almost none of it was coming from Europe or Japan
Nintendo knew where it could create a shortage and they knew from experience that this kind of problem would create publicity
For itself they played us all
Intentionally fueling the fire and making us pay higher prices on the black market
That's right theorists nintendo would rather get some free press than have happy customers
but hey, that's ju-(stopping noise), are you kidding?
Come on. Did you really think that that was the whole story here?
look at what We're talking about it's one of the most
Trusted gaming companies in the world with one of the broadest fan bases of any company on the planet
do people really think that they would be intentionally screwing over their primary consumers to get some extra blog posts on Kotaku
Is Nintendo really that heartless and anti-American
Corporation local theorists the answer is no
there's plenty of evidence that nintendo isn't out to get us and to explain that we're gonna be talking about the thrilling world of
Macroeconomics let's start with this whole advertising issue all those news stories. You've read about Nintendo creating shortages of products
Yeah, it makes for an exciting blog headline, but the numbers just don't back it up
If Nintendo were knowingly creating shortages to drive publicity you would expect to see decreases in their advertising budgets
But it just ain't happening in the fiscal year ending in 2015 Nintendo was one of only two of Japan's top 50 companies
To spend more than 10 percent of its total revenue on advertising how does that compare to the advertising budgets of other tech companies?
Actually pretty ordinary
Microsoft is a bit more aggressive with its advertising spending about 18 percent of its annual budget there
But nintendo actually spends more cash than apple which only invests
7% annually now don't get me wrong when nintendo has a shortage of a product. They'll certainly take the press and increased
Hype that goes along with it
Who Wouldn't? but this is only half of the story for Nintendo?
It's my theory that their marketing strategy is a whole lot more sophisticated than any of us have given them credit for
Now all those news articles about Nintendo trying to artificially increase demand for its products through shortages are just plain wrong
It's not how economics works that isn't even how the idea of demand works for those of you who haven't taken an economics class
Congratulations, you probably took something a lot more fun in high school, but now it's time to figure out what's actually happening here
we all know that economics is based on the laws of supply and demand
but the thing to remember is that these two concepts are independent of each other demand depends on a product's price
Generally speaking the lower the price is the higher the quantity that people are willing to purchase when people talk about a demand curve
[this] is exactly what they're talking about. I mean think about it
It makes sense when something is free most people will take it it might be the most hideous free t-shirt in the world
But damn it. I'm taking it and wearing it around the house, okay. What's in that trader
Joe's sample cup? I don't know and I don't care it's free and it's getting shoved in my mouth hole nom Nom
Nom likewise the higher the price goes the fewer people are going to buy oh, I'm sorry is that a
$500,000 car with a gold trimmed engine yeah, I'm gonna pass on that one
Thanks
though
Compare that to the supply curve which goes in the opposite Direction
and function separately when sellers can charge a higher price for a given item they're gonna choose to make more of it to increase their
profits in the ideal system the price of anything should be
determined by where the supply and demand curves cross which is called the point of
equilibrium for electronics and video games we don't have any price caps in the us
So we can consider Nintendo to be acting pretty much in a free market with that being true
Shortages of Nintendo products are a result of not meeting
equilibrium and somewhere in Pawnee Ron Swanson sheds a single manly tear
But what does that tell us about Nintendo creating shortages?
But what the media and most online discussions about nintendo are getting wrong. Is that they're not under supplying the us with products
They're under pricing the us, but here's the real twist. They're doing it on purpose in economics
there's a difference between demand and
Quantity demanded a gander at our supply and demand curves shows the difference if a nintendo game comes out
And it's terrible say it's we jeez birthday surprise. No one wants to play it
This is when demand Falls
And you can see the whole demand curve move to the left no matter. What the price [is]
Fewer people want to buy the game because it sucks [look] at the graphics on this thing Ouija is just creepy
His eyes are staring into my soul
this in short is how demand falls over all demand when nintendo makes more or less of a game?
It doesn't change the demand, but when nintendo underpriced is a game
It does change the quantity that's demanded
Of that game see this demand curve the lower the price the more people are willing to buy [the] game. There's a higher quantity
Demanded of that game
And if you look the curve didn't move lowering the price just increase the quantity demanded
Where there are a lot of people who want to buy a crappy ripoff?
Luigi game at this new lower price point and when you do that some interesting things happen
So Nintendo under prices Amiibo. They own the market. They're not making any mistakes about where they price things
They're intentionally making them less expensive than they can but why what happens is that in the short run?
There's more demand than supply these two curves aren't at equilibrium
So yes there are shortages for a couple months in Nintendo's biggest market and Nintendo does in fact get a ton of free?
Advertisement but before you go chucking your wii modes at them for being shameless
Marketing horrors take a look at almost every other tech company that you know you'll see that all the cool kids on the block use
the exact same tactic as an example the iPhone
6s used the exact same ploy so did the Samsung curved S6 its direct competitor
We don't think of these products as [being] the same because the iphone looks really expensive next to the amiibo
But remember it's all about the supply and demand curves for each product for gaming companies sometimes they admit that it was a miscalculation
In demand or there was an actual supply issue like with the PS4
But early temporary shortages are often a calculated move and free press isn't the only thing that happens
They also make the product more accessible in the long run look at it
This way if Nintendo releases amiibo for the actual equilibrium price
Yeah, sure
They'll sell a bunch of mart's and Wii fit trainers for $60 for the first week or so
But what happens then the kids who don't get so much allowance or the people who are just more casual fans still aren't going to?
Pay that much at that price the quantity demanded is just a lot lower so by underpricing them early Nintendo
Actually makes them way more
Accessible to people
Later on as long as you're willing to wait out that initial shortage those kids who can save up for a few weeks
Or the people who can wait a couple months to catch 'em all sorry wrong franchise
They can afford amibo for $12.99 where they might not have gone for ones at
$60 Nintendo ends up with a much more inclusive product in the long run and most importantly one. That's very appealing to its Target
Demographic the Younger audience and their parents are you following all this well either way you've made it this far
So as a reward for sitting through all this economics talk. Here's a cute clip of a pig frolicking through some grass
Alright enough cute. Let's finish this up the last thing that makes Nintendo's position complicated
Is that they're dealing with one of the broadest demographics in the world?
I mean think about it Nintendo's whole brand image revolves around
Anyone being able to play their games even though an amiibo is technically a toy it also appeals to adults as a piece of gaming
Technology and to Nintendo Collector enthusiasts who don't even take them out of the box?
I mean really what is that thing doing on your shelf have beanie babies taught you nothing my friend
The point is Nintendo is selling to literally everyone regardless of age Gender location
And income under pricing a little bit on the front end make sure that they're not
Alienating any of these groups in the long run without having to do any crazy price
changes all while getting a ton of free publicity for their games and peripherals
It's actually an incredibly
Smart strategy and frankly they deserve some credit [for] finding an elegant solution for a pretty complicated issue
There's cap to you Nintendo. Not just because your marketing plan works for you
but ultimately because it makes Nintendo stuff more accessible to
Gamers in the long run is it frustrating to not be able to get Amiibo right away sometimes yeah, absolutely
but knowing a little bit more about the reason why the
Shortage is happening and what it's doing for the benefit of gamers of all ages
Hopefully gives you a little bit better perspective on the decisions
Nintendo is actually making but hey that up wait before I go if you ever wanted to be a part of game theory
I'm sorry GAME THEORY well, then you should follow me on Twitter at Matpat GT MatPat GT
Never actually talked about my Twitter account on YouTube
So now seems like a good time
Not only do I attempt to say funny stuff that you can repeat to your friends and look really cool and take cute pictures
But I also ask you things that will appear in future episodes of the show in fact the next episode incorporates data
I got from Twitter followers and Gt. Live viewers, so it's pretty cool stuff
If you've ever been interested in being a part of the show so yeah Matpat gt
Hopefully, I'll see you there, but hey that's just a theory a game theory! Subtitles by Parker Unze
thanks for watching and
Now some quick and slate stuff if you're eager for more Nintendo theories click the channel icon right here to subscribe
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We have a really cool episode coming out on a secret stage and Super Smash brothers
I am so excited about it or if you want to binge on some Nintendo
Theories check out this playlist by clicking right(more like left) here and the special thanks to Roy Cortado
Stephanie's Dad who's been teaching economics for 30 years now for his deep insights into the world of amiibo talking about the differences between
demand and quantity demanded I have never seen this man get more excited about talking about anything ever with the exception of
Italian stuff he's really excited to talk about Italian things with the last name like Cortado. It's kinda to be expected
I guess anyway Roy thank you so much for your help in doing this now if you'll excuse me
I need to go crunch some data on the personality types of 10,000 of you loyal theorists