Bryan Cashman is the founder of Callvention, a service enabling phonecalls with game developers.
The strength of amiibo sales is surprising, but even more so is Nintendo’s effort to get more revenue out of the company's biggest fans, all while using scarcity to promote consumer uncertainty and drive consumers to purchase the toys immediately.
The strength of amiibo sales surprised CONSULGAMER, especially given the competition of established players Skylanders and Disney INFINITY in a heated holiday market. Yet amiibo sales currently shine. A review of Best Buy's online sales show Disney INFINITY and amiibo in a dead-heat for the top 20 game-to-toys on the market - each having ten toys in the list. By expanding to Best Buy's top 50 selling products on their site, the two remain tied: amiibo and Disney INFINITY each have 18 products in the top 50, with Skylanders trailing with 14 products.
Share of the Top 50 selling Interactive Gaming Figures at BestBuy.com (12/15/14)
In just three weeks, Nintendo sold 710,000 amiibo toys, selling roughly one figure for every buyer of the game’s main compatible game, Super Smash Bros. for Wii U.
The current high attach rate is impressive, and only a sign of future sales to come. Toy-to-game products tend to sell beyond the initial game’s release.
“If you look at this category, you sell a number of figures during the holiday selling season, but the bulk of the volume comes in the next six months,” said Nintendo of America President Reggie Fils-Aime ahead of the amiibo launch. “That’s where the consumer mentality is, “Okay, I have one figure that I’ve started to play with, but now I need the next, and the next, and the next after that.”
With amiibo, Nintendo is following a popular free-to-play video game monetization strategy and finding ways to maximize the average revenue per user (ARPU) of their biggest gamers.
In the past, the most a gamer could spend on a favorite Nintendo release would be capped at the price of the game – for example, the most Nintendo can make off of a die-hard fan of Super Mario 3D World is $59.99, the cost of the retail game. With amiibo, Nintendo can generate up to $463.70 from each of the company's biggest fans.
Nintendo’s biggest fans may want to purchase every toy offered in the Amiibo line, and will likely purchase Super Smash Bros. for both 3DS and Wii U. With 28 amiibo toys announced through February 2015, that will net Nintendo $463.70 for each of their biggest fans who buy each toy. That’s a significant boost over the $59.99 revenue limit the company used to face.
|Price||# of SKUs||Total Revenue|
|# of Amiibo Toys||12.99||28||363.72|
|Wii U Game||59.99||1||59.99|
The financials tell a great story for Nintendo – consumers can buy as much or as little into the amiibo world as they want. Some can buy just the toy and not a game. Some can be three toys and the game. Some fans can be whales, and buy everything available. The variability of the model lets Nintendo monetize every Super Smash Bros. fan to their own unique demand-levels – and will maximize Nintendo’s revenue across their base. Super Smash Bros. will be Nintendo’s most successful revenue-per-use product in the history of the company.
The scarcity of Amiibo products is boosting the demand for the toys, and generating interest among core gamers to expand demand beyond children. Scarcity is a common tool for generating demand, and can be managed as solution for when manufacturing delays or weak forecasting (or just unexpected high demand) force a product to be hard to find in store shelves. Nintendo is managing the shortage of select toys with finesse, as current shortages of Marth, Wii Fit Trainer and the Villager have made them must-have holiday toys to collectors, and added uncertainty across all of Nintendo’s amiibo figures (besides more common figures like Mario and Link, which seem to be everywhere). Nintendo’s silence about which toys will be restocked and which will vanish forever adds uncertainty to the full amiibo product line, and creates an urgency to purchase toys immediately that did not previously exist.
CONSULGAMER wrote in July how inventory management could be Nintendo’s biggest challenge with amiibo, but the company is now strategically using this problem to its advantage. Rare toys are still restocked on a normal basis at the Nintendo World Store in New York, indicating the toys are still available in Nintendo's storage facilities, and while it is true that some toys may be phased out permanently, brick & mortar retail reports indicate that most toys will be restocked.
Look who is back in stock at #NintendoWorld: Villager amiibo! While supplies last. pic.twitter.com/uZpuOaaX8b — Nintendo World Store (@Nintendo_World) December 5, 2014
The biggest challenge for Nintendo is maintaining amiibo sales momentum. Brick & mortar channel checks indicate that much of the scarcity is due to low initial orders and low initial inventory provided by Nintendo. While many toys are sold out in stores, amiibo products still need further sales before they can mirror the long-term success of competitor Skylanders.
Further, as amiibo toys are only compatible with the Wii U in the U.S., their biggest crutch is the console itself. Due to the Wii U's overall weak sales performance, amiibo has a far smaller customer-base than Skylanders, which can be played on every major console and mobile devices. Will amiibo drive the sale of additional Wii U consoles, bringing back more gamers to Nintendo's console, and in turn bringing more buyers for Nintendo's amiibo toy line? Or will amiibo sell only to Nintendo's fans who already own Wii U - enabling Nintendo to earn hundreds of dollars from their biggest fans through the toy line. Either solution will boost Nintendo's financial performance, but only one will make the Wii U console a mainstream success.