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Some Retailers Face Xbox 360 Shortages

18 Nov, 2005 By: Jessica Wolf

Even as Microsoft heralds the Nov. 22 debut of its next-generation Xbox 360 — months before Sony's competing PlayStation 3 is due — retailers are prepping for high demand and potentially low supply of the hot holiday item.

“We're obviously disappointed in the production quantities of the Xbox consoles; all retailers have been reduced,” Joe Malugen, CEO of Movie Gallery, said during a Nov. 10 company earnings call. “We believe this to be an industry-wide issue, based on shortages in initial production.”

Movie Gallery reported same-store revenue is expected to be down 5 percent to 9 percent in the fourth quarter compared to the same quarter last year, primarily because of Game Crazy costs and the expected lower allocation of Xbox 360.

Microsoft representatives did not return calls for comment by press time, but company CFO Bryan Lee told investors recently that Microsoft expects to ship up to 3 million units in the first three months of release (HMR Nov. 13).

GameStop Corp. is hosting midnight events at more than 1,600 retail outlets in the United States to celebrate the arrival of Xbox 360.

Still, the company warned it would have limited supplies available.

“Due to exceptional demand, Xbox 360 hardware systems will only be available for purchase to consumers who have received confirmation of delivery by GameStop,” the company announced.

GameStop also is banking on its trade-in program to bring in new Xbox 360 fans. “Consumers can bring in their qualifying old games and receive credit toward the purchase of this new system or other video games and systems,” said Dan DeMatteo, GameStop's vice chairman and CEO.

CEO Robert Higgins, on Trans World's Nov. 10 earnings call, said the chain expected it would have sufficient supplies of Xbox 360 for its customers.

But Wal-Mart.com, as of last week, was already sold out of its “initial launch quantity” of Xbox 360 and had stopped taking advance orders. A note on the site assured shoppers that Wal-Mart locations would have systems for sale starting at midnight Nov. 22.

On Best Buy's Web site, the system was not listed as available for preorder, but as “coming soon” last week, though accessories like a memory unit and controllers for the system already were listed as “on backorder,” and the site was completely sold out of the “Xbox Live 3-Month Starter Kit.”

Rental dealers posting on the independent Video Software Dealers Association board last week were concerned they might not be able to purchase systems for use as rental units.

Online game rentailer GameFly announced last week it will carry all Xbox 360 titles as they hit the market. The site's Xbox 360 page went live last week and offered information, reviews and a place to build a rental queue in advance of the product launch.

Additional reporting by Holly J. Wagner.

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