Microsoft’s new game consoles Xbox Series X and Xbox Series S began pre-sales on Tuesday, triggering a frenzied purchase by players around the world, and sold out within minutes in most regions . At the same time, Amazon’s website always does not load pages during pre-sales, and major retailer websites also “frequently show up.” Prior to this, Sony game console PS5 and Nvidia RTX 3080 graphics card pre-sales also encountered similar troubles.
The next two months are undoubtedly the most critical hardware release season for the video game industry in the past decade. But for some reason, the giants in the interactive entertainment field seem to be unable to solve the simple problem of providing consumers with a simple and direct way to pre-order their products. So, when companies such as Apple, Samsung, and even Facebook’s virtual reality startup Oculus figure out how to properly manage consumer expectations and easily sell new devices, why are large, experienced and well-funded companies like Microsoft, Sony, and Nvidia? Big companies have suffered a series of disastrous failures in hardware pre-sales in 2020?
We still don’t know how many devices these companies plan to sell, how much quota they allocate to each retailer, or how much inventory they plan to replenish at any time this year. Now, if you don’t receive a new PlayStation or Xbox confirmation email, or a receipt for the NVIDIA RTX 3080, you may have to wait until 2021 to get them. All products have been “sold out”, and there is little information about when conditions may change.
Although these big brands have been selling products for decades, have established long-term retail partnerships, and have supply chain management expertise and massive data sources to try to predict consumer demand and manage global inventory. But these seem to be insufficient for game console manufacturers and chip giants like Nvidia to solve the problem of product sales. While consumers are so excited about their products, companies are doing poorly.
Even if I saw Sony’s various setbacks in PS 5 pre-sales, Microsoft experienced a similar dilemma on Tuesday. Although Microsoft made full preparations for fans in advance, and made proper time arrangements for the pre-orders of Xbox Series X and Xbox Series S in the fan’s area, avoiding many mistakes made by Sony, but when the pre-order page went online Later, errors and other problems began to proliferate.
Many consumers reported that they had problems placing orders from Best Buy and Target, and Xbox consoles disappeared from their shopping carts. In the critical time period before the product was listed as “out of stock” on the product page, Xbox game consoles also experienced payment processing issues. Others said that the Microsoft Store has encountered similar problems, having previously reported all Xbox products “out of stock” information, including Microsoft’s paid subscription and installment service Xbox All Access. Many of these problems have plagued Sony.
Even stranger is that these companies seem to be surprised by the high demand for their products. Nvidia publicly apologized for its terrible RTX 3080 release, stating that “we are not prepared for this level of demand, and our partners are not prepared.” The company claims that its website traffic is 10 times that of the previous generation RTX 20 series when it was released, and among its approximately 50 retail partners, some interested buyers visit their website more than “Black Friday”, resulting in Various issues with order processing and website crashes were solved.
Nvidia’s new graphics cards appear to have been snapped up by scalpers with software and sold new products. This has forced Nvidia to manually review orders to ensure that they reach legitimate customers. When PS5 and Xbox are officially released in November this year, we may see a similar rush to buy.
Sony also apologized. The company announced after the first wave of pre-ordering boom that some retailers sold out products immediately after pre-orders went online. Sony said in a statement: “Frankly speaking, PS5 reservations could have been much smoother, and we sincerely apologize for that. In the next few days, we will release more PS5 game consoles for pre-order, and retailers will Share more details. By the end of this year, there will be more PS5s on the market.”
But Sony’s statement ignores the fact that retailers have not replenished the inventory of these consoles in large quantities, implying a lack of transparency in this process. With record demand, companies like Microsoft and Sony can easily implement a lottery system or any other method to ensure a fairer pre-order process. Or, they can allow retailers to disclose how many gaming consoles they own and other ways to help manage consumer expectations.
For example, Apple, it will notify users when it will ship, such as within a few days or weeks.
However, the video game industry and its strong corporate culture of confidentiality mean that consumers don’t know when and what will happen. Sony claimed that “more PS5s will be launched by the end of this year”, but did not provide any specific details, including how many units, through which retailers, and whether these products will be released on the day of sale or weeks or days after the release Arrived in months. Microsoft did the same thing on Wednesday morning, saying that “more consoles will be available on November 10,” but there were no details, including whether Microsoft was referring to limited in-store options or offering more consoles to online retailers.
The main problem may be the imbalanced incentive mechanism. The video game industry is very competitive. Even large companies like Microsoft and Sony have begun to signal investors, analysts and consumers that a product is selling well and it is almost impossible to find a source of supply. For these companies, instant sales is a positive marketing strategy, because it means that demand is higher than supply, and they don’t have to worry about the products being produced on store shelves or retailer warehouses.
Creating an illusion of scarcity also helps create excess consumer demand. The purpose of this is not to completely limit the number of people who can buy the product. For brands like Nintendo, the long-term sense of scarcity is at the core of their business model. It can stimulate people’s interest in products by suggesting that it may be difficult to find products in the coming months or years.
Lack of expected information
We don’t know if these companies or retailers anticipated the situation that took place last week, or if they were all really surprised as they tried to issue an apology on social media.
Nvidia promised that the company will continue to manufacture new RTX 3080 GPUs to ship to its partners, and said it “will increase supply every week.” But RTX 3070, a version with weaker features and a cheaper price, will be on sale from October 15th, when the same pre-order disaster may repeat itself. The same situation will happen in November, when new game consoles will be on the market, and retailers will inevitably reserve some game console inventory for “open door shopping” or “Black Friday” promotions to encourage consumers Pick more products in each store.
In an ideal world, this would be an easy problem to solve, just as Apple has simplified the process of selling as many iPhones as possible each year. But the video game industry does not have much plans to solve this problem, and it is not clear whether these companies are willing to try.
If you think this post can be helpful to somebody else, please share it on Twitter, Facebook or Whatsapp it to friends. There are buttons below for this (easy to use too)! Join Over 5,000 + Readers. Get a free daily update via Email HERE