Forecasting Sales of Nintendo Game Consoles
2010; Volume: 29; Issue: 1 Linguagem: Inglês
ISSN
1930-126X
Autores Tópico(s)Complex Systems and Time Series Analysis
ResumoLogistic models often work well for forecasting technological products ... gives sales forecasts of WU for years 2009 & 2010 ... shows stepby-step how to use Excel to generate forecast with a logistic model. With new game console products released every few years, Nintendo executives need to be able to forecast future unit sales of the company's game consoles. Logistic functions are often very effective in modeling cumulative unit sales of technology-based products. Technology tools such as Microsoft Excel can be used to analyze data and create logistic function models for game console sales at companies such as Nintendo. HISTORY OF NINTENDO GAME CONSOLES The basic business strategy of Nintendo executives is to expand the worldwide gaming authence regardless of age, gender, language, cultural background, or gaming experience. In the company's 2008 Annual Report, Nintendo President Satoru Iwato heralded the company's Wii product as a machine that puts smiles on people's faces and promotes fun and interaction among the entire family. The Wii system had a significant impact on the sales of Nintendo, more than tripling average annual net sales in 2008. Net sales at Nintendo are driven in large part by the popularity of products the company introduces. Table 1 shows the years in which various game consoles were released. The dramatic increase in net sales in fiscal years 2007 and 2008 appears to be tied to the release of the Wii game console. An analysis of unit sales data for the four major game consoles produced by Nintendo may provide an accurate way to forecast net sales. CHOOSING A MODEL FOR NINTENDO UNIT SALES In the company's annual reports, Nintendo analysts published cumulative unit sales data from 2003 to 2008 for Nintendo game consoles, (see Table 2) Figure 1 shows the data graphically. It shows that the cumulative unit sales of the older products (Game Boy Advance and GameCube) are increasing at a decreasing rate whereas the cumulative unit sales of the newer products (Nintendo DS and Wii) are rising at an increasing rate. Logistic models are characterized by a period of slow growth, followed first by a period of rapid growth and then by a period of slow growth. This partem of growth suggests that a logistic model may be appropriate for cumulative unit sales data of Nintendo game consoles. The Appendix shows a step-by-step procedure for preparing forecasts with a logistic model. Forecasts of Nintendo DS game console sales prepared by this model are plotted in Figure 2. It shows that forecast numbers fit exceptionally well with the actuals. All forecasted values are very close to the actual values. One key feature of a logistic function model is that the maximum value of the function always appears in the numerator of the function. This is beneficial because it allows us to quickly get a sense of what will be the maximum cumulative sales. For example, the maximum cumulative sales for the Nintendo DS arc predicted to be 103.1 million units. LOGISTIC MODEL FOR THE Wii GAME CONSOLE With only two years of data available, we cannot construct a logistic model for Wii cumulative unit sales. However, the historical unit sales data for the Nintendo DS can be used as a basis for forecasting the cumulative unit sales of Wii for 2009 and 2010. (See Table 3) The year-overyear growth factors are calculated by dividing the next year's unit sales by the current year's unit sales. For example, at the end of year 1, cumulative sales for the Nintendo DS were 5.3 million units. At the end of year 2, cumulative sales were 16.7 million units. This means that the cumulative unit sales for Nintendo DS increased by a factor of 3.15 (16. …
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