Why did Nintendo offer Switch 2 preorders through a lottery system in Japan, but via “first-come, first-served” invites in the U.S. and other countries? A paper published by a Japanese university this month sought to answer this question, looking into why Nintendo decided to handle Switch 2 presales differently in Japan and the U.S. One of the factors it examined was the differences between what is perceived as “fair” in Japan and the U.S., which may have influenced Nintendo’s approach to getting its latest console into the hands of gamers.
The study was a collaboration between researchers at The University of Osaka’s Research Center on Ethical, Legal and Social Issues (ELSI Center) and Mercari’s R&D Department. It’s worth noting that Nintendo was not involved in the study.
First of all, the researchers looked at the points that both the Japanese and U.S. launches had in common, namely supply and demand. In both markets, there were not enough Switch 2 consoles to meet pre-launch demand, a situation that prompted both Nintendo Japan’s president and Nintendo of America’s COO to make respective statements reassuring fans that the company would produce a steady flow of units to meet demand post-launch.
The study pointed out that in such a short-supply, high-demand situation, Nintendo could have capitalized on the limited number of Switch 2 consoles available. For example, by using dynamic pricing or official auctions, Nintendo could have maximized its profits from their new hardware by making Switch 2 only available to those who were willing to pay big bucks (or heaps of yen) for a launch day console (thus balancing out demand and supply).
However, Nintendo did not go with this method. After all, for console makers the usualy focus is not on making money from hardware sales, but on the long-term profits from game sales and subscription services related to that console. Nintendo’s approach to handling official Switch 2 preorders suggests it was more concerned about purchasers’ “willingness-to-play” rather than “willingness-to-pay.”
To enter Nintendo’s Switch 2 preorder lottery in Japan, you needed to be a holder of a current Nintendo account for at least a year and to have over 50 hours of play on Switch 1. The same restrictions were in place for Nintendo of America’s invitation emails, which were delivered to eligible registrants who met these criteria, giving them 72 hours to complete their purchase. In this way, Nintendo allocated its limited supply to consumers who were likely to want to use rather than resell their shiny new Switch 2. Nintendo took this a step further in Japan, working with online marketplaces to combat price gouging and fraudulent Switch 2 listings.
However, why did Nintendo choose to implement a “first-come, first served” pre-order system in the U.S. but opted for preorder lotteries in Japan? The paper presents several hypotheses that cover various factors that may have influenced Nintendo’s decision. These center around the company’s reputational risk, as well as perceived cultural and societal differences in the two different markets.
If customers have bad experiences with a console launch, this can negatively impact the reputation of the company and subsequent profits. Although it seems Nintendo was conscious of appearing fair in its handling of Switch 2 launch consoles in both Japan and the U.S., with its restrictions that limited preorders to its existing “willing to play” customer base, the paper highlighted that it took extra steps to appear “fair” in Japan.
Even though lotteries are more costly to run, Nintendo decided to offer Switch 2 preorders using this method in Japan. The researchers pointed out that Japanese consumers tend to have high expectations that companies will implement a well-managed system that gives people an equal chance of obtaining a high-demand product. Lotteries are often used for presales in Japan (for example, advanced concert ticket sales are usually allocated via lottery). Therefore, Nintendo probably implemented a lottery system because it’s a socially accepted and common way of handling presales in Japan, and gives all entrants the same chance of snagging a Switch 2.
The paper also suggested that cultural perceptions of “fairness” may also have played a role. Whereas Japanese customers might be more likely to find the equality of lotteries more fair, customers in the U.S. may have perceived ‘first come first served’ as fairer as it rewards the efforts of the individual.
Over a month after launch, Nintendo Japan is still only selling Switch 2 via lottery on its official site, with its July lottery currently open. There are still some restrictions: one entry per person, with the rules forbidding people who have won previous Switch 2 lotteries and people who aim to resell the console from entering. However, this pattern is changing in retail stores. Japanese chain Geo announced that it will start offering some Switch 2 consoles to members on a first-come, first-served basis on July 19. So it seems that Japan may move towards “first-come, first-served” as the Switch 2 console supply increases.
Photo by KAZUHIRO NOGI/AFP via Getty Images.
Verity Townsend is a Japan-based freelance writer who previously served as editor, contributor and translator for the game news site Automaton West. She has also written about Japanese culture and movies for various publications.