Freakonomists dissect Wii shortage

April 21st, 2007, 22:58 Posted By: wraggster

via gamespot

When it was first published in 2005, the book Freakanomics caused quite a stir. Among other things, authors Steven Levitt and Stephen J. Dubner used statistics and economic theory to axamine such hot-button topics as the crack epidemic, abortion, and cheating amongst professional Sumo wrestlers.



Now, Freakanomics' authors have turned their attention to something of particular interest to gamers--or their blog has, anyway. This week, guest columnist Paul Kimmelman wrote a detailed breakdown of the causes, effects, and implications of the shortage of Wii consoles, which has been going on since the system was released last year.

"Nintendo clearly made a colossal blunder in setting up their manufacturing," concludes Kimmelman. "Even if they assumed it would not do very well, their inability to ramp up production in four months is pretty unusual in this industry."

Kimmelman sees several groups benefiting from the shortage. First are other console-makers, since frustrated Wii-seekers with excess cash might be inclined to impulse-buy another machine when faced with empty shelves.

Other, equally obvious beneficiaries are Wii resellers. Kimmelman's research finds scalpers are making 150 percent and 180 percent of the console's $249 sticker price on such sites as eBay--with none of the increased profit going to Nintendo or retailers.

However, Kimmelman does believe stores are benefiting from "increased foot traffic" by customers returning repeatedly in search of a Wii and buying other items while on the hunt. He even theorizes that Nintendo might actually be causing the shortage deliberately at the behest of retailers to artificially create return customers.

When contacted by GameSpot, Nintendo reps said they were "reading over" the article. No official response had been sent as of press time.

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