It appears the third time's the charm for Nintendo Co. Ltd.
For the third consecutive holiday shopping season, the Japanese video game maker's Wii console is among the hottest gift items on wish lists across North America.
Indeed, as many shoppers are finding out, even when a retailer receives a shipment, the Wiis won't stay in stock for long.
Despite the dark economic clouds gathering over the economy in the United States, sales of the Nintendo Wii more than doubled during the week of U.S. Thanksgiving. Sales of the company's popular handheld DS console also jumped 20 per cent over the same period, compared with last year.
Although some consumers are still going home empty-handed, Nintendo has finally found a way to get more Wii consoles into North American stores by both increasing production and diverting more stock from other international markets.
"We're still not caught up because we're selling everything we ship," said Matt Ryan, a spokesman for Nintendo Canada. "We still haven't reached this unprecedented demand. We don't know how many people want it, but that's actually a good place for us to be right now."
Wii sales topped 800,000 units during the week of Thanksgiving in the U.S., easily topping last year's 350,000 units, Nintendo president Satoru Iwata told Reuters in an interview this week.
The Wii, which first went on sale in November, 2006, has become a breakaway hit for Nintendo. Its motion-sensitive controllers and roster of family-friendly games, such as Wii Fit, that are designed for non-traditional video game players - namely women and older generations - have helped the Wii outsell both Sony Corp.'s PlayStation 3 and Microsoft Corp.'s Xbox 360.
"Clearly if you have an item that is very hot, where demand outstrips supply, and then you're able to increase supply, then you have the opportunity to sell more units," said Mike Hickey, an analyst who tracks the video game industry for Janco Partners Inc. in Colorado.
Last year during the holiday season, many shoppers ventured out into the cold in search of a Wii only to be greeted by empty store shelves. At the time, Nintendo was producing about 1.6 million Wii consoles a month, with about one-third earmarked for North America.
Earlier this year, however, Nintendo increased production by 50 per cent to 2.4 million units a month and began shipping a larger proportion of the total number of Wiis produced to the U.S. and Canada.
Nintendo traditionally sends about 40 per cent of its stock of a given product to the U.S. and Canada, with about 20 per cent slated for Japan and the remaining 40 per cent sent to Europe, according to Michael Pachter, a financial analyst for Wedbush Morgan Securities.
When the euro was trading favourably against the U.S. dollar last year, Nintendo allocated more Wiis to Europe because it could make a greater profit on each unit. But when the U.S. dollar recovered slightly this year, a larger percentage of the shipments was diverted to North America, Mr. Pachter said, leading to a 50-per-cent jump in the number of consoles reaching U.S. and Canadian retailers.
"When Nintendo was diverting shipments to Europe, we were actually getting starved," he said. "Now we're getting our fair share and that translates into a 50-per-cent sales increase."
Although it might seem counterintuitive for a video game console that retails for $280 (Canadian) to see sales rise in an economic slowdown, analysts say the Wii offers consumers family entertainment for a lower cost per hour than other pastimes, including hockey games, restaurants or the theatre.
"If you look back to the Great Depression, cinema was an area that performed well because people need to forget for a while and be immersed in some sort of content offering and forget about their problems, and clearly gaming is now an avenue for that," Mr. Hickey said.
