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July 5, 2017

In this thread I want you to prove to me how Artificial Scarcity works

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  3. In this thread I want you to prove to me how Artificial Scarcity works
JigglyPunk 9 hours ago#1
How does artificial scarcity work, and how does it financially benefit Nintendo? What are some examples of when Nintendo has used artificial scarcity to their advantage. Please provide evidence to back up your claims.
FC: 0011-7520-5552
YOSHI202 9 hours ago#2
JigglyPunk posted...
How does artificial scarcity work, and how does it financially benefit Nintendo? What are some examples of when Nintendo has used artificial scarcity to their advantage. Please provide evidence to back up your claims.

Did you get irritated, in Linetrix's thread?
"And the consensus of THIS game is that it's decent" - AhnoldDood on Sonic Boom (genuine quote)
Shah138 9 hours ago#3
Do I have to use proper citation formatting as well?
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JigglyPunk 9 hours ago#4
YOSHI202 posted...
JigglyPunk posted...
How does artificial scarcity work, and how does it financially benefit Nintendo? What are some examples of when Nintendo has used artificial scarcity to their advantage. Please provide evidence to back up your claims.

Did you get irritated, in Linetrix's thread?

Nah fam, I'm pretty amused by his antics. 

I'd just like these guys to put their money where their mouth is. If there is artificial scarcity, prove to me how it works. That's all. If they're going to use that as an explanation, then surely they can explain how it works?

If they can't, that leads me to believe they don't know what they're talking about.
FC: 0011-7520-5552
___shan 9 hours ago#5
How it works is that if the product you hate is selling decently and constantly out of stock, it is artificial scarcity. If there is plenty of stock, it means that the product was a miserable failure.
JigglyPunk 9 hours ago#6
Aw c'mon guys, no biters? 

Now is the time to help everyone understand. Step up to the plate, prove your theory is true!
FC: 0011-7520-5552
Endgame 9 hours ago#7
It doesn't financially benefit Nintendo. It just creates the illusion that there is demand for Switch when there really isn't (Seriously, Switch has no games people actually want until Odyssey comes out.) to try to get the investors off their asses.

"Oh, we have a real hot product. We just can't produce them fast enough. Yeah, that's it....."
I may not agree with what you have to say, but I will fight to the death for my right to fight you to the death. -Stephen Colbert
Poweranimals 9 hours ago#8
It doesn't work because it doesn't exist.
YellowThunder 9 hours ago#9
It doesn't work unless the price also increases and I don't mean through scalpers. Unless Nintendo increases the price directly they leave money on the table. If you want to say they are just trying to create the illusion of demand to make it seem more disirable then that fine but it's a stupid business decision and isn't good way to keep hype up since eventually people will either buy something else like a PS4 or just not spend their money.
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bburnett 9 hours ago#10
so Jiggly what console are we talking about?
SNES classic or Switch?
either way it's just piss poor planning not artificial scarcity imho.
Nintendo has the $$$ to procure enough parts they just chose not to, or somebody dropped the ball.

It's just another example of a giant company trying to maximize profits by spending the least amount possible.
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A Nintendo item sells out means artificial shortage.
If it doesn't sell out it means its not wanted.
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shlaguedweir 8 hours ago#12
With amiibo, it can be a sales booster because it lets them sell at full price to people who would not have made the purchase if the figure wasn't perceived as rare/collectible. If they were always plentiful like most Infinity figures, people would wait for sales and the stocks would collect on shelves. It favors impulse buys from people who are on the fence, because they’re afraid they’ll « miss their chance ».

With consoles like Wii and Switch, it can be great advertising to have your machine be hard to find for a while after release. Of course, they have to be careful to provide sufficient stock to be able to show convincing sales numbers to third parties and shareholders, but if they keep the consoles coming at a calculated pace, they can keep that “hot item” vibe going while still getting satisfying sales from their small bank of launch software. Again, when a buyer is on the fence or maybe waiting for a specific game to come out, they might jump in as soon as they see a console in stock in case they are nowhere to be found when the time comes. Slowing down deployment a little also helps gauge demand and see if any hardware problems pop up for them to fix.

With special items like the Classic consoles, it may be pure advertising. Waiting lines for the SNES will be on the news all aver the world
.
That said, Nintendo sometimes takes it to such extremes that I wonder if they own and operate ebay stores so they can scalp their own products.
Endgame posted...
It doesn't financially benefit Nintendo. It just creates the illusion that there is demand for Switch when there really isn't (Seriously, Switch has no games people actually want until Odyssey comes out.) to try to get the investors off their asses.

"Oh, we have a real hot product. We just can't produce them fast enough. Yeah, that's it....."

isn't the point of this thread to back up and prove your claim? I'm not seeing any sources.
Terotrous 8 hours ago#14
The idea is that making the product hard to lay your hands on increases the demand for that product, both because the shortage gets people talking about the product, which increases brand recognition, and because the perceived rarity makes people more inclined to buy ASAP for fear that it might not be available later.

There have been examples in the past that show this is effective. Beanie Babies, for example, used a system where they would retire their toys, which created a collector's market for the ones that were no longer available and helped create their "fad" status. One could easily argue that Amiibo were a very similar situation.
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MightyBaconX 8 hours ago#15
Limited supplies of a premium items is a great way to raise that item's status among consumers. When people hear that a product is "selling out" and it's really hard to find on store shelf, it automatically create this longing to own that product due to the elusive nature.

Either way, nobody can prove that Nintendo is creating this artificial scarcity nor can they prove that it doesn't exist.
Miggi3Fr3sh 8 hours ago#16
I think you mean prove that Nintendo uses artificial scarcity AND explain what artificial scarcity is.
kamui22 7 hours ago#17
bburnett posted...
so Jiggly what console are we talking about?
SNES classic or Switch?
either way it's just piss poor planning not artificial scarcity imho.
Nintendo has the $$$ to procure enough parts they just chose not to, or somebody dropped the ball.

It's just another example of a giant company trying to maximize profits by spending the least amount possible.



100% agreed.
Except artificial scarcity creates artificial demand. A company only cares about selling all of their stock and shorts it. But on a collectible, consumer demand rises on scarcity due to the "necessity of owning a limited supply item" which can be easily factored into demand. The scalpers merely takes a cut of the consumer surplus, but companies see no substantial loss from scalpers thus have no real reason to produce more than intended and decrease the demand and open doors for unsold products or hurt their upcoming collectibles. But consumers are obviously gonna complain because they're losing their surplus, except this is really just a form of price discrimination. For the market as a whole, scalping and artificial scarcity helps the more people more, at the expense of the customers.

Except Nintendo has a high resistance to losing consumers compared to most companies. That's why they can pull this off as efficiently as they do and why every time they release a new product, they're sold out every time. 

As for the Switch, it's probably just material issues as stated many times before. Either that or they're holding back til a giant wave of supply for the holiday season. Which really doesn't sound all that incredulous considering they're planning on releasing 2 AAA first parties near the holidays
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(edited 7 hours ago)reportquote
Torgo 7 hours ago#19
Endgame posted...
It doesn't financially benefit Nintendo. It just creates the illusion that there is demand for Switch when there really isn't (Seriously, Switch has no games people actually want until Odyssey comes out.) to try to get the investors off their asses.

"Oh, we have a real hot product. We just can't produce them fast enough. Yeah, that's it....."


But people have to buy up all the product first before any stories or hype regarding "artificial scarcity" can ever begin to filter down to the public.

Even still...it's a reverse Occam's razor conspiracy. Occam's razor states that the simplest explanation is often the most likely. Artificial scarcity involves Nintendo manipulating markets on risky gambits that require far too many variables to work out exactly as they plan for it to benefit them.

So really, artificial scarcity is nothing more than Nintendo haters and Sony fanboys making excuses for the Switch exceeding demands for a non-holiday launch from smaller, and very conservative company coming cautiously after a console that sold well below projections.
Gamefaqs: The original home of 'Alternative Facts'...
(edited 7 hours ago)reportquote
INTERWEBUSER 7 hours ago#20
Exhibit A: Beanie Babies

Selling $3 plush toys made its creator a billionaire. Look it up.
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Torgo 7 hours ago#21
INTERWEBUSER posted...
Exhibit A: Beanie Babies

Selling $3 plush toys made its creator a billionaire. Look it up.


That's a reductionist conclusion reached by cherry picking a rare extreme example without the whole story.

The fact of the matter is, whether it was Cabbage Patch kids in the 80s, Furbies in the 90's, Tickle Me Elmo, or Beanie Babies, there had to be sustained demand at some point first.

If this were the case, any manufacturer could just under-produce a product, then sit back and watch the hype and frenzy and scalpers do their dirty work of driving up demand.
Gamefaqs: The original home of 'Alternative Facts'...
INTERWEBUSER 7 hours ago#22
Torgo posted...
INTERWEBUSER posted...
Exhibit A: Beanie Babies

Selling $3 plush toys made its creator a billionaire. Look it up.


That's a reductionist conclusion reached by cherry picking a rare extreme example without the whole story.

The fact of the matter is, whether it was Cabbage Patch kids in the 80s, Furbies in the 90's, Tickle Me Elmo, or Beanie Babies, there had to be sustained demand at some point first.

If this were the case, any manufacturer could just under-produce a product, then sit back and watch the hype and frenzy and scalpers do their dirty work of driving up demand.

And the threshold of all available inventory sold to legitimate demand is more easily reached in an artificial shortage.
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Console of the Year 2013, 2014, 2015, 2016, 2017
Rizeroth 7 hours ago#23
Endgame posted...
(Seriously, Switch has no games people actually want until Odyssey comes out.)

Just like every other console few months into launch. Guess every company makes use of artificial scarcity now huh.
Zelda is a freaking NINJA!!
Rizeroth 7 hours ago#24
YOSHI202 posted...
JigglyPunk posted...
How does artificial scarcity work, and how does it financially benefit Nintendo? What are some examples of when Nintendo has used artificial scarcity to their advantage. Please provide evidence to back up your claims.

Did you get irritated, in Linetrix's thread?

That guy is a loaded gun on this board.
Zelda is a freaking NINJA!!
Torgo 7 hours ago#25
INTERWEBUSER posted...
Torgo posted...
INTERWEBUSER posted...
Exhibit A: Beanie Babies

Selling $3 plush toys made its creator a billionaire. Look it up.


That's a reductionist conclusion reached by cherry picking a rare extreme example without the whole story.

The fact of the matter is, whether it was Cabbage Patch kids in the 80s, Furbies in the 90's, Tickle Me Elmo, or Beanie Babies, there had to be sustained demand at some point first.

If this were the case, any manufacturer could just under-produce a product, then sit back and watch the hype and frenzy and scalpers do their dirty work of driving up demand.

And the threshold of all available inventory sold to legitimate demand is more easily reached in an artificial shortage.


Assuming Nintendo was so sure they would sell through inventory on a big risky new-concept console and then the sustained demand would be great enough to generate these stories...and that the consumer public would be swayed enough to rush out to the store and not have product to buy?

Wow, now that's quite a Xanatos Gambit:

http://tvtropes.org/pmwiki/pmwiki.php/Main/XanatosGambit

A Xanatos Gambit is a plan for which all foreseeable outcomes benefit the creator including ones that superficially appear to be failure.


I think you're giving Nintendo's marketing people more credit than they deserve considering how much negativity and heat their marketing department has been taking for the last few years.
Gamefaqs: The original home of 'Alternative Facts'...
(edited 7 hours ago)reportquote
Wow, ITT collectible noobs. I mean, I wrote a big thing about why scarcity works for collectibles, but... I guess this wasn't exactly a topic for discussion actually, huh?

If you know anything about economics, the moment you say collectibles, the conversation should've been over. Otherwise, we gotta explain from the freaking ground up like I attempted to. But if that gets ignored, there's no actual conversation going on here
"Iwata was awesome" - Mr. Nintendo
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Torgo 7 hours ago#27
legendarylemur posted...
Wow, ITT collectible noobs. I mean, I wrote a big thing about why scarcity works for collectibles, but... I guess this wasn't exactly a topic for discussion actually, huh?

If you know anything about economics, the moment you say collectibles, the conversation should've been over. Otherwise, we gotta explain from the freaking ground up like I attempted to. But if that gets ignored, there's no actual conversation going on here


Yeah, basically:
Amiibo can be considered collectibles, baseball cards are collectibles, consoles are not collectibles.
Gamefaqs: The original home of 'Alternative Facts'...
atomicx 7 hours ago#28
How many PS4s sold it's first month of release?
How many Switches sold in it's first month of release?

I don't know the answers to this, but both consoles were in heavy demand that first month so I would say if Nintendo were able to keep up with Sony's numbers then there was no shortage.
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Torgo posted...
legendarylemur posted...
Wow, ITT collectible noobs. I mean, I wrote a big thing about why scarcity works for collectibles, but... I guess this wasn't exactly a topic for discussion actually, huh?

If you know anything about economics, the moment you say collectibles, the conversation should've been over. Otherwise, we gotta explain from the freaking ground up like I attempted to. But if that gets ignored, there's no actual conversation going on here


Yeah, basically:
Amiibo can be considered collectibles, baseball cards are collectibles, consoles are not collectibles.

Except NES mini and SNES mini are collectibles. The Switch as said like a billion f***ing times before has shortages for a wide variety of other reasons
"Iwata was awesome" - Mr. Nintendo
dinglebutt
NeoMonk 7 hours ago#30
atomicx posted...
How many PS4s sold it's first month of release?
How many Switches sold in it's first month of release?

I don't know the answers to this, but both consoles were in heavy demand that first month so I would say if Nintendo were able to keep up with Sony's numbers then there was no shortage.

I don't know the exact figures, what I do know is that the PS4 was not available everywhere for awhile.
It released on Nov 15th and you couldn't find one in stores up until early january. 
Where as the Switch as we all know has been widely unavailable for 4 months now.
Only now do I see weekly stock showing up more and more commonly in the US, can't speak for other areas.
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