Game Theory: The TRUTH Behind Nintendo's Amiibo Shortages

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 It's actually a new type of annotation We're one of the first people to get to test it out And it works on mobile, and desktop give it a click test it. It's really cool 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

Channel: The Game Theorists

Views: 6,572,950

Rating: 4.8931551 out of 5

Keywords: Nintendo, Amiibo, Super Mario, Mario, Super Mario Maker, Mario Maker, Wii U, Zelda, Legend of Zelda, zelda wii u, amiibo hunting, Super Smash Bros, Luigi, Peach, Toad, Link, Star Fox, Super Mario World, jacksepticeye, markiplier, shortage, economics, supply and demand, Game Theory, Game Theorists, MatPat, MatPat13

Id: _yp5BpT96yo

Length: 17min 32sec (1052 seconds)

Published: Sun Apr 17 2016

Reddit Comments

[u/Benevolay]

I'm sure I'm just an idiot, but I can't wrap my head around what he's saying. He's saying that because people are willing to pay more than the $12.99 they're priced at, Nintendo is actually under-pricing them to help the consumers. But that makes no sense. They're priced there because of a number of reasons, not least of which are its competitors such as Skylanders and Disney Infinity.

And even if Nintendo were doing us such a tremendous service by keeping the price low - which they're not - he completely glosses over their supply problems and their refusal to learn from their mistakes.

People are only paying more because they can't find the items in store. It has nothing to do with the items really being worth $60. They're not. If Nintendo simply made more of the product available, those people would happily buy them at their standard price and nobody would get gouged.

He also talked about how Europe and Japan have plenty of amiibo in stock in the first half of the video, but when he devotes the entire second half to defending Nintendo, he never raises that point again. Why not move some of that product to the states to alleviate the supply shortages?

This whole theory makes no sense.

[u/Geminiregalia]

What's the name of the music at 6:30? Cookie for the finder!

[u/Samthefab]

Please tell me I wasn't the only one who expected this when he said "they played us all" about 8 minutes in.

[u/Eddiejo6]

Welp! No more Nintendo interviews

[u/lambda26]

I'm surprised he didn't talk about the California dock workers strike of 2014-2015 which was suspiciously happening at the same time.

[u/selfproclaimed]

Life is Strange episode next week?

I've been waiting for MatPatt to cover that for a while.

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