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Nintendo Supply Chain Facing Big Challenges This Coming Holiday Season

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An interesting twist to the upcoming 2012 holiday buying surge are reports that Nintendo Company’s new Wii U gaming device, which was introduced to the market this weekend, is already expected to be in short supply.  Both a Bloomberg published article and a CNET news article indicate that Nintendo’s executives expect supply shortages due to late start in production ramp-up. Bloomberg reports that more than 500,000 worldwide customers are currently on a GameStop waiting list awaiting the device. The Wii U features a tablet controller allowing for more game interaction as well as adding more online interaction in the playing of games. However, this first new video-game console for U.S. homes since 2006, won’t offer the Nintendo TVii service that the Kyoto, Japan-based company has touted as a centerpiece of its capabilities. The feature will be available sometime in December, the company said on Nov. 16, without being specific. According to Bloomberg, Nintendo also delayed the availability of some online services including Amazon.com Inc.’s Instant Video, and Google’s YouTube on the Wii U.

The delays could make it more difficult during the crucial holiday shopping season for Nintendo to position the Wii U as a whole-home entertainment center for parents and kids alike.

As much as a few weeks ago, these same executives had made indications that the new Wii U gaming device may not be ready for this year’s holiday buying period. The supply chain has obviously been pushed to make units available sooner.  In addition to the U.S., reports indicate that the new console is expected to be available in Europe and Australia on November 30 and in Japan on December 8. In late October, Nintendo indicated it expected to sell 5.5 million units by March 31, an indication that the supply chain must anticipate customer interest and order fulfillment efforts that extend into next year. IHS expects Nintendo to sell upwards of 3.5 million units during the upcoming holiday period. The Wii U will be introduced with 23 available game titles, with 29 expected by the end of march.  Similar to shades of 2008, a competitive race among game console providers Microsoft, Sony and Nintendo is underway to capture consumer interest this holiday period. Available game titles will obviously been a determinant. However, tablets and smartphones have gained even more interest for share of consumer wallets, and more and more gamers are turning to online options.

There is a lot at stake for Nintendo, including delivery of some level of respectable profitability for its fiscal year.  No doubt, gaming devices will be one of the supply chain related headlines for all of us to watch unfold in 2012 and early 2013.

Bob Ferrari

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  1. Bob Ferrari says:

    Hello Everyone,

    We have a November 27 update to our Supply Chain Matters commentary regarding the challenge of Nintendo’s supply chain in supporting the late holiday season launch of the new Wii U game console.

    In its first week in the U.S. market, this new console sold out at all retail outlets. Nintendo indicated it sold more than 400,000 consoles during its first week after market release. Demand is now outstripping the supply chain’s capability to re-stock retail outlets.

    Bob Ferrari