SBox Analysis: The Amiibo Dilemma

With Skylanders and Disney Infinity proving incredibly profitable with their combination of toys, collectables, and video games, it was up to Nintendo to try and 1-up them (pun not intended). So Iwata said, let there be Amiibos, and so it was.

Amiibos are little statues of various Nintendo characters, generally three or four inches tall. With NFC technology (the same used to scan cards and coupons on your smartphone) they have to ability to interact with select Nintendo games, namely Super Smash Bros. for 3DS and Wii U. They serve various purposes depending on which game you use. In Smash Bros. they are trainable representations of you, but in Mario Kart 8 they create character costumes. Not to mention, they look fantastic on a shelf or desk. These run you $13 a pop.

In recent weeks, these have started to cause a stir. Nintendo is now orchestrating a serious supply and demand problem with certain figures. Out of the first of several waves of these figures, three of the bunch are already becoming collector’s items: Marth (Fire Emblem), Villager (Animal Crossing), and Wii Fit Trainer (Wii Fit). Because these three are becoming hard to come by, they’re now commanding high prices online of $80 and up (a dramatic rise from $13.

This issue of rarity is not helped by Nintendo’s cryptic explanation of the situation. Some comments suggest that these three figures are being discontinued for their initial unpopularity. Other statements suggest this is a manufacturing issue that may be corrected. The result is a million confused consumers not sure whether to stock up on every last Amiibo or to wait for stock to replenish.This brings about several questions.

Why are these figures becoming rare?

In order to address this problem let’s discuss what we already know. We know so far that approximately five of the already released Amiibos are hard to come by, that three are confirmed to be discontinued, that two of the remaining Amiibos from Wave 2 will most likely be rare as well, and Wave 3 will have store exclusives.

When addressing the methodology of limited supply, there’s a couple of things to keep in mind.

Flat out, you must consider how rarity benefits a company. Every action a smart business makes is primarily for the purpose of profit. So you must consider that if something is in fact rare, there are two main reasons as to why. Either the company no longer finds the product profitable or there’s a pre-planned tactic.

I believe the second option to be the most likely. From deductive reasoning alone, there’s no way that any Amiibo- even the least popular- aren’t profitable. These things are selling like hotcakes, no doubt about it. They know it and the analysts, who are predicting $1 billion in revenue thanks to these toys alone, know it, too. There has to be a strategy to these discontinuations. So what’s the strategy? I think it’s hype.

Will they be restocked?

When something is rare, demand skyrockets for the product; not just the initial ones, but the surrounding ones, too. Now the consumer wants to collect them all while hunting down the rare ones. Once they can’t find them through traditional means, they discuss it everywhere in an attempt to find them. Now a domino effect starts and suddenly you have buzz which translates into sales. You now see future Amiibos selling out in fear of that figure also becoming rare. That also explains why Nintendo doesn’t outright say which ones are rare and which are not.

Now you have successfully multiplied your demand. But how does Nintendo profit? After all, if you make limited product, you also limit sale potential.

If they are smart about it, the rare Amiibos will be restocked in due time. At a time where hype is still present and demand is still high, they will announce the select Amiibos will be placed on sale again. Of course it will be for a limited time in order to ensure consumer drive. Now everyone has the opportunity to complete their now established Amiibo collections, satisfying demand and giving Nintendo unadulterated bank where it would otherwise be lacking.

Consider how Nintendo usually treats limited edition items; in that they tell you beforehand. Every limited edition item is warned to be that way when advertised. Again, that gives people the drive to buy it sooner. With the discontinued three, they just pulled the rug from beneath us. The only other explanation other than a it being a marketing ploy is if there is a stock problem.

Other reasons for rarity

Speaking of which, there is another very likely excuse for rarity: a simple supply problem that they won’t make public. Perhaps they’re having difficulty producing Amiibos as they currently are, and the only practical way of getting around it is to cut corners. They spend less time producing less popular figures and more time perfecting the guaranteed hits. Additionally, in an attempt to look good for investors and keep consumer confidence, they just aren’t acknowledging it.

Production problems are easy to see. I’m sure many recall the stories of the two-cannoned Samus and the one-legged Peach among other factory defects. If they are having trouble, it’s not as far-fetched as you may think. Nintendo is no longer a toy company like they were before the NES. Toy-production may not be Nintendo’s strong suit anymore.

There is one other option which I refuse to believe as willingly. It’s the more straightforward option, but Nintendo could just be cutting certain ones permanently for lack of initial interest. Despite increasing demand already occurring, they simply don’t wish to continue forth with these. In its stead will be cards that serve the same purpose, because they are cheaper to produce and satisfy demand.

I don’t believe this to be true, but Nintendo can be peculiar that way. I really hope that’s not the case because that’s not as business smart as they may think. The statues are much more marketable than cards. Even if you were to just cut them without warning, why would you do it so soon. Smash Bros just came out a month ago. That’s not enough time for every single Amiibo to sell at its full potential.

Which ones will be rare?

No matter what the reason, now we all have to deal with these figures being rare. But how does one attempt to master the art of Amiibo collecting without knowing which ones to look for?

So far, the rarest ones are Marth, Wii Fit Trainer, Villager, Little Mac, and Diddy Kong. Some reports of Fox, Donkey Kong (got it!), and Samus being rare are also coming up. In terms of Wave 1 alone, Nintendo has kept their word with the least popular ones being the rarest in some cases. However one thing I’m noticing is that Nintendo bases availability on each character’s potential in appearing in future games.

In the case of Marth, Little Mac, Wii Fit Trainer, and even Diddy Kong to an extent, this makes sense because they’re less likely to have another game for a while. With Fox, Samus, Villager, and Donkey Kong, this is strange, but the fact that they’re still in production in a limited state speaks to the possibility and even guarantee of future appearances.

Therefore, I believe that characters in the following franchises will be rare:

  • Kid Icarus
  • Earthbound
  • Fire Emblem (remaining)
  • F-Zero
  • Game & Watch
  • Duck Hunt
  • Pokemon (Greninja, Jigglypuff, Mewtwo)
  • Mario (Bowser Jr., Dr. Mario, Rosalina)
  • Legend of Zelda (Toon Link, Ganondorf)
  • Xenoblade (maybe)
  • R.O.B.
  • Pikmin
  • Wario

At the end of the day, I hope Nintendo will improve this whole Amiibo dillemma going on here. What they need to do from here is improve communication with the consumer. If the Amiibos are to be discontinued or rare, they need to make that clear to consumers so they can go about this in a way that makes them happy. They also need to improve the quantity of stock so that they can make a profit and won’t have to draw untrue conclusions for future Amiibo figures. They have a good thing going here and a lot of people invested. Now they need to go about it wisely.

What do you make of this Amiibo struggle? Why do you think Nintendo is limiting production of certain Amiibos, and do you think this trend is smart or not? Do you own any or plan on doing so? I have Mario and Donkey Kong currently. Let me know in the comments, because I love hearing what you guys think?

I’m SBox180. Thanks for reading!

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