Back at the beginning of March, I was in Best Buy with my friend. As we were browsing for a webcam in the electronics section, I took a minute to look at the selection of video games and consoles. In a display case, in all its glory, was a Nintendo Switch. I was going to get it, but decided I’d better wait. I had a high credit card bill that month and I figured I’d pay it off, wait to get paid, and then come back to the store at a later date to grab my Switch.
Boy was I wrong.
As COVID-19 continues to ravage the United States, people are craving for something other than a zoom meeting, leading to a massive need for entertainment. An easy answer to home entertainment is video games, and with the Nintendo Switch launching title after title, everyone wants to get their hands on them. Yet, if you try to buy one at Target, Best Buy, or any other major retailer, you’ll be greeted with “Out of stock” or “No in-store pickup for 250 miles.” The pandemic has led to a massive Switch need and a massive Switch shortage.
This lack of availability is a direct result of pandemic supply and demand. We saw this earlier with toilet paper. Some people bought massive amounts of it thinking they’d never be allowed to leave their house, the general public noticed supply was dropping so they started buying more too, there was reporting on toilet paper shortages, and suddenly stores had to pass restrictions on how much toilet paper a consumer could buy. It was slightly more complicated than that, as toilet paper companies create both home and commercial toilet paper, but the point is that in the end, TP lucked out. When public places such as restaurants and movie theaters shut down due to COVID, they had to change their manufacturing output, something that couldn’t be overhauled in time to deal with the initial skyrocket in demand. Forbes explains it in more detail, making the same connection between the need for toilet paper and the demand for Switches.
The lessons we saw from the toilet paper fiasco apply directly to Nintendo, albeit in different markets. When companies create a product, unless the product is manufactured only based on orders (such as custom cakes or specific styles of decor,) they also create sales projections, predicting how much of a product they believe will sell during the current fiscal year and beyond. These are based on market research, comparisons to past products, and many other factors. When Nintendo creates consoles and games, they have to do the same thing as everybody else for their predictions and projections.
Nobody predicted COVID-19.
Regardless of politics and effectiveness of leadership, the disease has ravaged the world, some places more than others. This greatly affected the global economy, and each industry. Some negatively, such as live sports or theater, and some positively, such as delivery services and, of course, gaming. After the total number of Switches sold reached 52 million, Nintendo updated their fiscal forecast to 19 million units for the year. They sold 21 million.
Not only did the pandemic exceed its expectations by 2 million, requiring more units to be manufactured and sold, but it also gave insight to Nintendo that global production was not able to keep up with demand due to COVID, as many of the products are manufactured in China. However, as the ability to create the consoles is hindered by the virus, eventually so will the consumption, leaving Nintendo’s next fiscal year projection at 19 million.
With all of these factors, and with the words “New Normal” being used more than “Hello” right now, there is a disconnect between production, consumption, and availability. Will you be able to get a Switch? Probably, they’re selling out so someone has to get them. Will it be hard for a while? Absolutely.