If you’ve read my blog before, you probably already know that I am something of a gamer. As such, I did my best over the holidays to track down a Nintendo Classic Edition, the mini NES gaming system that everybody wanted. I’m not sure if it was the selection of awesome classic games (Castlevania II!), the inexpensive price ($60) or just the powerful gravity of nostalgia that attracted the masses, but this little game system was impossible to find. People lined up at Wal-Mart and Target, but most of them left empty-handed. There is no question that Nintendo misjudged demand. They could have sold twice as many consoles as they did.
Now, just a couple of months later, the Classic Edition is old news as Nintendo prepares to launch its new “Switch” gaming system. (In related news, all of the 10-years-olds who got a Classic Edition for Christmas from grandpa have long since thrown it in the closet, either put off by the simple graphics or frustrated by the unforgiving difficulty level of these old games.) Chalk it up as a missed opportunity.
Nintendo’s mortal enemy, Sony, took a completely different – and distinctly more modern – approach to a similar product. The Japanese tech giant launched Playstation Now a few years ago, a service that allows you to stream classic Playstation games on your PC, your Playstation 4 or even a number of smart TVs and Blu-ray players. As long as you subscribe to the service, you have access to a growing number of games (nearly 500 at the time of this writing).
By using an old-fashioned business model, Nintendo gambled on the idea of scarcity as a motivator: “come and get it before it’s gone!” That’s how industrialism worked, for you history buffs. Supply and demand, that sort of thing. Unfortunately, that business model forces you to estimate demand as you build your supply. Nobody wants to get stuck with warehouses full of unsold inventory (just ask Atari and their unmarked desert grave filled with 700,000 E.T. game cartridges). The opposite is also true, of course, and that’s what sank Nintendo’s launch of the Classic Edition – they misjudged demand, sold half of what they could have and then watched as their window of opportunity snapped closed.
In stark contrast to industrialism, the modern information economy – informationalism, if you will – scales itself based on demand. If everybody in the world likes the new Beyonce song, then everybody in the world can pay to listen to it (either by purchasing it or streaming it on a service like Tidal). They never run out of records or cassettes or CDs. Nobody has to stand in line because supply is unlimited.
For those of you who follow Nintendo, you know that they do sell downloadable versions of the games we saw on the Classic Edition. However, you need to own one of Nintendo’s current devices, and you need to buy each game individually. It’s a step in the right direction for one of the world’s most beloved companies, but their handling of the Classic Edition proves that they still don’t completely understand the new economic realities (and opportunities) of digital content.
In one of the courses I teach at the local university, we focus a lot on this idea of scarcity vs modern digital delivery. It’s fascinating to see how the modern economy has evolved. Have you considered how your own business can evolve along with it? Do you have information to sell? Knowledge to provide? It doesn’t work for every product, obviously (we still need to buy hard goods after all), but lean manufacturing methods are even influencing supply and demand for non-information based products.
I think my point is that the web has changed everybody’s economic reality, whether they choose to acknowledge it or not. Embrace this new paradigm, and you can succeed where others falter.