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Nintendo, the gaming giant, has been forced to pull ads for its Wii console in the run up to Christmas as demand is already too high.
The campaign for Wii, created by Karmarama, will be replaced by ads for its handheld console, Nintendo DS.
The company says that it has been forced to pull the ads because retailers have been running out of consoles and it would be irresponsible to continue with the campaign.
A Nintendo spokesman says: "We have been running the campaign all year round, but we want to take a responsible stance this Christmas and not fuel demand."
Nintendo adds that, as the campaign is not seasonally themed, it can be put back to the New Year when the Christmas rush is over. The media planning and buying is handled by Mediaedge:cia.
MarketingWeek wrote:
One ad industry insider says: "You can tell what has been happening. They have a lot of spots on TV, but I am seeing more ads for the DS than I am for the Wii, so you can draw your own conclusions."
Although production has been stepped up to 1.8 million units a month, Nintendo says that it has not been able to meet the demand.
The game company has increased its forecast of the number of units it expects to sell in the year to March 2008 from 14 million to 17.5 million.
Why is there a shortage?
Via digg a news source wrote:
Obviously Nintendo is making money on every Wii sold now, but the company has now bumped against an economic break point, where the marginal cost for each Wii beyond what it is making now increases significantly. Nintendo already has several contracted production facilities working at full capacity manufacturing Wiis. To increase supply, it can't simply pay the workers to stay longer or leave the machines on for more hours of the day, because frankly the facilities are already pushed to their absolute limits. Indeed, to increase supply Nintendo would need to invest in a whole new facility, something it is unwilling to do.
Nintendo will not expand into another production facility until the company is confident that the current level of demand can be carried forward for several years. The initial start-up costs of building a new facility, with all of the necessary equipment, would be enormous. This would hurt the company's profitability in the short term. That is acceptable to most investors if they can be assured that the investment will pay off in time. However, Nintendo has no such assurance regarding the Wii. It's entirely possible that demand tapers off following this holiday season. By the time Nintendo brought a new facility on line, it could no longer be in need of the increased supply and find themselves with a number of facilities operating at 70-80% capacity instead of 100% like now.
It is the safer route for Nintendo to simply make as many Wiis as it can with what it already has. This obviously frustrates some Nintendo executives, including American President Reggie Fils-Aime, who sees this excess holiday demand as a "missed opportunity". Perhaps so, but the more calculating minds in Tokyo have this one right: success today is no guarantee of future returns. Just as swiftly as Nintendo was swept back into power, it may again lose its seat to Sony or Microsoft. Nintendo is simply protecting its business from unnecessary risk by not getting overly excited by the Wii's success, and that is something Nintendo fans should be thankful for: the best thing to ensure Nintendo's continued importance in the gaming industry is to make sure that the company remains financially healthy for decades to come. Of course, if that's too hard for the kids to understand this Christmas, there's always eBay.
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