One of the hottest products in town the new Nintendo Wii will not be on sale at Harvey Norman Australia’s biggest CE retailer after the Japanese games giant Nintendo pulled the plug on the mass retailer because they were asking for too much margin.
In Australia CE manufacturers are being asked to give Harvey Norman a floor margin of 17% on a product or service. On top of that they also want an additional margin of around 25% for meeting targets. In addition they also want money from vendors to advertise in their catalogues as well as up to $10,000 for an internal product training system.
All of this is passed onto consumers in one form or another. A simple search of overseas web sites will reveal that in some case Australian consumers are paying hundreds of dollars more than US consumers for products such as Sony SLR camera’s TV’s and sound systems. In some cases Hi Fi systems are up to 70% dearer in Australia because of retailer and distributor margins.
Nintendo who have an absolute winner on their hands with their new console were in a perfect position to say no to Harvey Norman as consumers are already clambering to buy the product.
It was only a few weeks ago that the retail giant had to pull the plugs on a major PS3 promotion after the product launch was delayed in Australia.
Talking about the situation a senior Nintendo executive said “They are telling the market that we are in discussions with them but this is not true. We don’t like their terms or the way they operate and we are refusing to do business with them.” claimed Nintendo Public Relations Manager, Vispi Bhopti.
He added “We are dealing with most mass retailers with the exception of Harvey Norman. Their terms are ridiculous. The Nintendo Wii is set to be a hot product going into the peak Xmas buying period so why should we give away margin to Harvey Norman. We are confident that the new Nintendo gaming console will drive sales during the peak buying period that is coming up”
Richard Uechtritz the Managing Director of JB Hi Fi said “The Nintendo Wii is going to be a big seller. It is a very different type of gaming machine than the Xbox 360 or the Sony PS2. We believe that it will appeal to a wider audience other than gamers. It will reach an older audience and females and we are confident that it will be a very successful product this Xmas”
In answer to being told that Harvey Norman were being denied the product Uechtritz said “There bullying is coming back to bite them. This is one product that Harvey Norman wanted and I believe that a lot of vendors will take note of what Nintendo have done in refusing to accept Harvey Norman’s terms”.
A spokesperson for Harvey Norman was not available as we posted this story.
Harvey Norman recently reported an 18.1 per cent rise in first quarter sales to $1.25 billion. Harvey Norman said sales from its businesses in Australia, New Zealand, Slovenia and Ireland totalled $1.25 billion for the three months to September 30, 2006.
Nintendo’s Wii made its first public Australian appearance at the GAME1 Expo in Melbourne. Nintendo are also running a major national road show for the launch of their new console.
The road show will appear at key shopping centres in NSW, Victoria, Queensland, South Australia and Western Australia. At the shopping centres, Nintendo will have multiple Wii consoles set up out in the open, accompanied by in-store demo units.
The big difference between the Nintendo Wii and the Microsoft Xbox 360 and the PS 2 and 3 is its unconventional user interface. Users interact with the console using a wireless controller that is shaped like a conventional television remote.
Players can control the in-game action by waving the controller through the air. Nintendo uses tennis as an example of the unique applications this affords. “For example, in the Wii tennis game, players swing the Wii remote like a racquet to hit the ball, as in real life,” Nintendo said.
According to games web site PAGLN, Toys R Us started taking pre-orders for both the Nintendo Wii and the Sony PS3, both with the offer of a ‘free game’ at launch. Many people were sceptical of this they said – how could they possibly take pre-orders so early? Sony had promised a 2006 Aussie launch of the PS3, but there was no guarantee that the Wii would be released in Australia this year. More to the point – how could they possibly offer a free $100 game with a $399 system? It would be a huge discount, and when Wii Sports was announced as a pack-in, many assumed that it would be the ‘free game’, even though it was free everywhere else, pre-order or not.
However, in recent weeks there have been multiple reports of customers who asked for some clarification on the deal, and were told by Toys R Us staff that the free game would not be Wii Sports, but would in fact be a free Wii game of their choice. Since most people who pre-order a Wii will be of the more hardcore variety of gamers, and there is a clear #1 game to be purchased with the Wii, it’s not much of a contradiction that some Toys R Us employees have simply stated that Zelda: Twilight Princess will be the free game with a pre-order. With these revelations, witnessed firsthand by PALGN staff members, the Toys R Us pre-order started to sound like an incredible deal. Yet there still had not been confirmation in writing of this deal, just the vague promise of ‘ a free game’.
