The Great Holiday Wii Rush, Supply and Demand

During the holiday season of 2007, a year after the release of Nintendo’s best video gaming console to date, the Wii, Nintendo faced massive shortages and could not keep up with the demand of the public. Nintendo forecasted a much more passive welcoming of its fifth generation console and was not prepared to brave the waves of customers that were ready to spend $249.99 of their hard earned cash on this gaming innovation. To make matters even worse, as the holiday season neared in 2007, many households were doing quite well financially and had money to spend on other items.

Nintendo's Wii has been selling like hot cakes for the past three years

Nintendo originally planned to ship 14 million consoles during the holiday season but analysts predicted that this would not be enough, they calculated that around 18 million units would be needed to quell the hordes of frustrated gamers. With the console selling out virtually everywhere in the world, the stores that did have a few units cashed in on the event and raised their prices to an upwards of $400 for each console, around $150 more than the MSRP.

Nintendo simply did not have enough Wiis supplied to meet the demand of the public. The producer in this instance, Nintendo, set an appropriate price for the console which in turn decided how much they would supply to the public. Unfortunately, since so many people wanted Wiis, their demand overcame the supply and created a shortage.

That christmas, Nintendo lost a huge opportunity to increase profits for the fourth quarter of 2007. Nintendo could have sold an extra four million units that christmas if they had properly prepared for the demand of the public.

Link to BBC News article here.