Nintendo’s announcement today that it’s discontinuing its wildly popular NES Classic Edition console has fans in an uproar. Why would Nintendo do this, when the device has been sold out for months and it’s clear consumers will buy it as soon as it hits store shelves? Does the company hate money? How, after so many product mishaps and sleeper successes, does Nintendo not realize when it has a genuine, certifiable hit on its hands? The company gave no concrete reason for why it made the decision.
We can make all kinds of assumptions about why Nintendo might have done this. Perhaps it was related to licensing those classic games or profit margins or how the NES Classic fits into the company’s product landscape alongside the Switch. Perhaps there’s going to be an SNES Classic coming this holiday season. But all this postulating is missing the point. The real debate is whether Nintendo’s long-term, overarching vision is to sell a lot of products. The answer to that question is probably a no.
Nintendo is not Apple. Nintendo does not want your money. The company does not care about you as a consumer or as a fan, insomuch that it’s interested in satisfying your consumer needs. Rather, it wants to be the company you spend the most time thinking about. Nintendo wants you to want its products, desperately and always. This isn’t just an artificial scarcity strategy, in which Nintendo keeps supply low so demand is always high. Though that argument seems to apply quite well to Nintendo’s strategy here with the NES Classic, its Amiibo toys, and its 3DS handhelds, it doesn’t paint the full picture.
When Nintendo whips up a frenzy around a limited run product, when it knows supply will never meet demand, it’s setting the stage for the future. Now, every time Nintendo packages nostalgia and puts a reasonable price on it, it can expect it to sell well. In fact, it knows exactly how and to what extent it will sell — the company has for months released small NES Classic batches and observed how fast they sell out. The company can continue to do this in any number of verticals and for any number of franchises. From what we can gather without seeing inside the minds of its executives, Nintendo would very much rather sell out of a half-dozen different products than sell enough of one to ever meet demand. Through these methods, it’s amassed a legion of fans ready and willing to line up, cash in hand, to buy whatever it’s selling because they know it will soon be gone.
One could argue that Nintendo’s strategy here is more manipulative than what most other game companies do. Of course, this industry is full of executives eyeing quarterly targets, revenue goals, and margin milestones. Estimated to see sales of more than $100 billion this year, the video game industry deserves no illusions about what its mightiest and most powerful players are after.
But Nintendo does not seem intent on maximizing profit like some of its competitors. Sure, it does tend to charge quite a lot of money for digital versions of classic games. Yet it doesn’t seem to partake in the same type of microtransaction and downloadable content strategies that other companies have relished in over the past few years. It’s these types of revenue tricks that have turned mobile games into multi-billion dollar properties, and the goal there is to get as much money from consumers as possible, spread out over the longest amount of time.
Nintendo doesn’t appear all that interested in that on the surface. (You could argue that it’s changing its mind when convenient, like with the in-app purchases in Fire Emblem Heroesand the DLC packs in Mario Kart.) What it is interested in is controlling how and to what extent its products sell, as a means of gauging consumer interest and keeping people hungry for the next must-have item. The best way to do that, it seems, is by drastically restricting those products’ availability and never letting a single unit go unsold.
Think of that what you will, but understand that the idea of Nintendo as an out-of-touch company who doesn’t understand its fanbase is likely an inaccurate reading. The company understands its fans better than anyone. It knows what drives them, what gets them to spend money. That’s Nintendo’s revenue: the wants and needs of its players. So long as it knows that, collects it, and keeps it flowing in, the company doesn’t need to listen to you or me or any fan. It just needs to keep doing what’s it’s been doing.
But there is a point at which consumers may grow tired, of the lines and the flash sales on Amazon and craving a way to give a corporation money for a product they want and not being able to. Nintendo has a rich fountain of goodwill, to be sure. It hasn’t run out yet. But it’s worth asking where the line is, and how many more disappointing holiday seasons or disheartening calls to GameStop it takes for consumers to take their money elsewhere. Nintendo may find out soon. It could very well result in the company’s worst nightmare: a product, on a store shelf, that nobody cares enough to buy.
Source: The Verge