Many in the retail business are very wary of games increasingly becoming offered digitally. However, Nintendo CEO Satoru Iwata sees a silver lining for retailers, as he thinks that retailers will no longer have to order as much surplus, thus increasing demand and increasing profitability.
“One of the challenges in the video game distribution industry in Japan is the higher inventory risk; it is a bigger challenge than ever before,” said Iwata to shareholders. “Since it is common practice in this industry that retailers take the inventory risk, their profits from good sales can be easily wiped out by surplus stock.”
“When you visit a store for a game only to hear from the clerk that it is now out of stock and the next shipment will not be until three weeks later, you will be discouraged to buy it,” he noted. “The demand sometimes does not lead to actual sales, like in the case I just mentioned. The reason we will start the digital download sales is that decreasing the inventory risk will be of great benefit to the video game business.”
Most digital sales numbers are usually kept secret by the distributors, be they Xbox Live, PSN or Steam. Nintendo, however, says they will share the download numbers for New Super Mario Bros. 2, the first retail 3DS game to be released as a digital download.
“This is so that those in this industry can make the next move after finding out the consumer behavior toward download versions,” said Iwata. “When they know the size of the digital distribution market, they might be inclined to accept a certain inventory risk to try the download sales with special features.”
