"Inventory management" (Nintendo's sales tactics)

Around 1987 when Nintendo had the US market in it's hands, Peter Main (at NOA came up with a new idea of how to market their NES games. He called it "Inventory management" and the idea was basically to treat the games like movies - "release them (the games) cautiously, rationed so that  the demand outpaced availability, and then to withdraw them from circulation as soon as interest began to wane".
This way when for example SMB3 was released, all the kids rushed down to the videogame store to get hold of a copy, but all of them didn't get a copy so they bought another game instead only to wait until the next load of SMB3 cartridges came to try again.... (this way Nintendo sold 2 games instead of one) This had the affect that big games like SMB3 and Zelda 2 caused near riots when released!

Nintendo didn't provide the retailers with all the Nintendo games they had ordered (which wasn't popular among the retailers of course!). In 1988 Nintendo only sold 33 million cartridges, but a market survey had estimated that they could have sold 45 million cartridges. The retailers however had requested around 110 million carts! Nintendo had the retailers pleading for more games. This way it was the retailers and toy stores that were dependent on Nintendo not the other way around...

Nintendo began accounting inordinate amounts of money from some companies. For example: Nintendo "took" 17% of the sales and 22% of the profits from the toy giant Toys 'R Us'. In 1990 Nintendo couldn't keep up with the sky high demands of games and consoles anymore and the retailers became if possible even more furious. The move that made the retailers really furious was when Nintendo abolished their 90 day money back guarantee and replaced them with a new system... No returns at all! Nintendo did so because they thought that the defect rates on their games/consoles was so low that it wasn't necessary (0.9% for the hardware and 0.25% for the software). The biggest retailer in the US tried to force Nintendo to return to their old 90 day system by stop distributing Nintendo's games. They held out in 3 whole months before they gave up and came crawling back to Nintendo, agreeing to their terms!
This proved that by now Nintendo had nearly complete control over the retailers and could pretty much do what they wanted!

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