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There Could Be Switch Shortages This Holiday And Here's One Reason Why

Reggie Fils-Aime talks about the "choke points" in the Switch's supply chain.

47 Comments

Nintendo cannot guarantee that there will be enough Switch units in the marketplace this holiday season to meet demand, executive Reggie Fils-Aime said during a recent speaking event. Now, Fils-Aime has provided some further context about what he called "choke points" in the manufacturing chain.

The executive told The Financial Times that the supply chain for the Switch is "complex," adding that there are multiple components that could be "choke points." The FT quotes analysts in Japan who call out one company in particular, Alps Electric, which makes components in the Joy-Con controllers. However, Fils-Aime wouldn't give any details on particular sections of the Switch's supply chain.

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"There is not one choke point, there are multiple choke points," he explained. "I won't go into any more detail but it's not just one component. I'm going to make millions of these units to flow into the marketplace. But what I don't know is what the demand is going to be. And there is a potential that demand is going to outstrip supply."

Fils-Aime went on to say that he wants to avoid a situation where consumers want a Switch and can't get one. But the reality of the production of any piece of technology and strong demand means he cannot guarantee there won't be shortages. "We don't want to have a consumer disappointed by not being able to get one for the holiday season. But managing that complex supply chain is a challenge," he said.

Last month, a Nintendo spokesperson said, "We're doing everything we can to make sure everyone who wants to buy a Nintendo Switch system can do so," adding that the company will "ramp up production for the holiday period."

As The Wall Street Journal notes, if Nintendo is looking to produce more Switch units than it had previously modelled, that could lead to some delicate conversations with suppliers over terms. Nintendo has modelled 10 million Switch sales for the current fiscal year, which runs through March 2018. As of June 30, the latest period for which official data is available, the Switch had sold 4.7 million units worldwide.

The holiday season is an important time for Nintendo and others. One of Nintendo's biggest new game releases during the period is Super Mario Odyssey, which comes out on October 27 for Switch.

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silv3rst0rm

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Edited By silv3rst0rm

First of all, I do have a switch of my own and I'm enjoying it!

But, I think this is nothing but a sales strategy to pretend there might be a shortage for the hollidays.

Indeed there might be a shortage, like pretty much anything since people go shopping frenzy around hollidays period and Switch might make a great "family" gift like the Wiis about a decade ago.

Then again, it seems like the Switches now manage to stay on store shelves nowadays.

For the first 3-4 months, they were nowhere to be seen but lately, when I'm shopping around for stuff, I happen to see a bunch of them on shelves in most stores.

As if Supply/Demand might have been met and the sales are slowing down.

I think Nintendo just tries to make the sales keep up the initial pace for as long as possible!

The imminent release of Mario Odissey might indeed helps the sales get back up!

Lots of people I know usually wait for a good Mario/Pokemon/Metroid/Donkey kong title before they hop aboard a new Ninty console!

To my own surprise, I own every current gen console and the switch became my go-to console!

I barely play my PS4/Xb lately!

Nintendo isn't quite as doomed as people liked to pretend due to the Wii U failure.

The switch seem to be a great success story thus far and the best titles for it has yet to be released!

We see a silver lining on Nintendo's grey Wii U's cloud!

Hooray!

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deactivated-6793e8ba0e8bf

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Eh, by the time I get one the tech will be woefully outdated anyway.

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Elranzer

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@lionheartssj1: Same for the PS4 Pro and Xbox One X. If you want "bleeding edge" your only option is a well-specced PC.

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jyml8582

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Those people at Nintendo are really bad at math.

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Elranzer

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@jyml8582: Apparently not when it comes to their checkbook numbers...

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MeatyMisto

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Edited By MeatyMisto

If you still haven't been able to get a Switch, you haven't been trying very hard. They have been online a ton and have had quite a few restocks over the last 6 months. If you're waiting around to get one, you may as well jump in now. It is only getting better from here with how many games are going to be coming this winter.

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effinjay

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Im going to go ahead and say,you sre not missing out on anything,unless you are on a bus,train, airplane ect alot,then i wouldnt bother. Unless u loved your 3ds, then knock yourself out.

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tingtong

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@effinjay: or if you know, like Nintendo games.

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iandizion713

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Damn, Apple just continues to grow.

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Nabinator

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Such a FOMO marketing ploy here.

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lostn

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"We want the product to remain out of stock for years to make it look even more desirable than it is. We saw what happened when we produced enough units for the Wii U. People wouldn't buy them."

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AuthorD

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@lostn: Nintendo is probably telling the truth this time. The modified Tegra SOC is probably semi-easy to come by as it is based off of the updates Nvidia made to the X1 for the new Shield console, but other parts are less so. Every single NAND Flash manufacturer is reporting shortages and prices are going up because of it. Apple is snapping up everything single NAND Flash chip they can get their hands on right now. The same is true of DRAM chips, also Apple's fault. There are only a small handful of companies making these chips and not a single one of them can keep up with demand anymore. The chip shortage is so bad that it is causing price increases for desktop graphics cards, over the already increased prices thanks to the mining craze. Nintendo is too small of a customer to get the kind of chip access that someone like Apple does so they're left fighting with other companies over Apple's leftovers. All that is just issues with getting a hold of memory, that isn't even talking about other potential supply issues they could run into with other hardware.

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lostn

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@derangel: Why is apple snapping everything up this year? What changed compared to last year and the years before it?

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Doctor_MG

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Edited By Doctor_MG

@lostn:

NAND shortages in particular started last year, and are predicted to last well into 2018. Apple purchases around 17-19% of the worlds NAND components on average, and that's set to fluctuate this year. That doesn't include every other company that uses these components either, such as Samsung, Motorola, Kyocera, Huwei, Google, etc.

This is just one component of the Switch. There are others that also are affected by shortages or competition between mobile companies. There are a few good articles about it you could read online.

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AuthorD

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Edited By AuthorD

@lostn: More iPhones then before. If the rumors are right we could be seeing 4 separate editions of the iPhone announced and released this year. There are talks of a new version of the SE, or something similar. There will be the 7s and 7s + (unless they skip the s this year and go right to 8 and 8+). Then there is the $1000+ iPhone X (or iPhone Edition, no one is exactly sure what it will be called). The 7s/8 line will have different models with different storage options. If there is an SE model that might as well. Who knows how many versions they'll do of the X. On top of that, all reports are saying that Apple will be selling far more phones this year then before. Estimates are talking somewhere in the range of 100 million, or more, of the 7s/8 phones. There are enough people with money to burn that the high-end phone will probably sell several million as well. With those kinds of numbers Apple is able to bully manufacturers into doing what they want.

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lebanese_boy

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@lostn: Suuuuuuuuure, that's why the WiiU didn't sell. >__>

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lostn

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Edited By lostn

@lebanese_boy: It's not the reason it didn't sell. It didn't sell for a range of reasons. But if they kept supply artificially low, they would have sold more units.

Low supply can make a bad product more desirable. But it's not the sole factor.

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AuthorD

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Edited By AuthorD

@lostn:Yes and no. I don't think Nintendo intentionally met demand on the Wii U. I think they ended up meeting demand just because people stopped buying the system. Nintendo's abysmal marketing and naming killed the Wii U out of the gate. The Wii U was sold out for the first couple months and then sales dropped like a rock. Nintendo probably expected to get Wii-like sales from the Wii U but massively overestimated demand and didn't realize just how badly their marketing screwed them.

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ninjaguiden78

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Edited By ninjaguiden78

@lostn: lol there not just pretending that they can't buy parts to build more systems .

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lostn

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@videogameguru20: It's always had demand. It would have even more demand though if people can't buy one. Those who weren't interested will see a long queue and want to see what the fuss is all about. They did this with the Wii, and NES classic, and looks like they will be doing it again for the SNES classic.

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catsimboy

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Local Joy-Con ruins everything. But it's worth it for the motion controls nobody wants and the HD rumble feature nobody cares about.

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Jaxith

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@catsimboy: Well, yeah. I'd say it's worth it. But I do care about those things. Arms and Splatoon 2 have been tons of fun for me, but I guess it would be easier to just shove a processor in a box like the other consoles and call it a day, huh?

...But what would the point be then?

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agramonte

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Well, looks like the rush is ending in Europe. For work in the UK and they pretty easy to get retail. My cousin in Madrid also says you can simply get them on Amazon at retail price now.

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gamingdevil800

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This could potentially make people who were going to buy Switch end up buying a PS4 or Xbox instead... Plus the Xbox One X is out before xmas. Nintendo Nintendo...

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Jaxith

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@gamingdevil800: How exactly would you propose they get the parts they don't have then? It's not like it can be helped.

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gamer162594

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@Jaxith: You believe them..........bwahahahahahahahaha

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Jaxith

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@gamer162594: You believe they have some reason for lying, and denying themselves sales? I would love to hear your theory. I also have a really good deal on tinfoil hats I could offer as payment for your thoughts on the matter.

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gamer162594

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@Jaxith: Exhibit B will be SNES Classic. Just wait.

I can't wait for N to say it is "trying to obtain the parts" to make more SNES Classics......and all of a sudden halt production.

This is what N does!!! They create false shortages so their name is always in the news. "The Nintendo {insert product here} is impossible to find this holiday season".... that kind of thing makes people buy them as soon as they see them instead of waiting for deals. No deals = more money for N.

I honestly can't believe you haven't realized it by now. Open your eyes!!!!! Just look at Amiibos. Why do they sell so well, and SkyLanders don't??? Because SkyLanders are super easy to find, and Amiibos are intentionally short stocked to create fake demand.

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gamer162594

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Edited By gamer162594

@Jaxith: Yes. Yes I do.

Exhibit A: NES Classic. A cheap, very basic Raspberry Pi clone. Nothing fancy. N claimed it was hard to obtain parts for it. Made very little, and it sold out instantly.

What's your excuse, I mean umm theory, about the NES Classic?

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Jaxith

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@gamer162594: So, your theory is that they make more money by increasing demand with a sense of rarity and selling fewer units? ...Here's the problem though... There *is* demand for these things. There is demand for the retro Nintendo consoles, as has already been made clear. It was true before these shortage problems began. If you actually think Nintendo makes more money by selling 10 units with inflated demand than they would selling 20 and they're cutting it short intentionally, you're crazy. There's just no way to justify that, no matter how they could try to manipulate demand.

And as for the amiibo vs Skylanders thing, other than Spyro, I don't really know any of the Skylanders. They're all original characters and their appeal is exclusively to the people who actively *play* Skylanders. Amiibo though? They're neat little figures of some of the most beloved and iconic figures in all of gaming! There's appeal for that even without them adding extra little bonuses to your games. So it ends up being a completely different market than Skylander's physical dlc packs.

And as for my theory on the NES classic, I do believe them. They had a trickle of parts coming in and a higher demand than they expected. If they kept producing NES classics at the rate they were the shortage would continue indefinitely. So rather than drag it out, they made the decision to shift their focus to the SNES classic, pouring their resources into that instead. In my mind the most logical course is for them to therefore keep producing those until demand dies out, while eventually porting and moving their N64 and Gamecube releases to the Switch digital store (hopefully). So rather than create retro systems of those, they'd probably go back and relaunch the NES classic at that point. In the long run they probably lose out on some of the sales they would have gotten from the NES classic, but they avoid locking it in indefinite production and delaying their likely more popular SNES classic, somewhat evening things out.

That's my theory anyway, and I do believe it makes more sense than "Conspiracy, conspiracy, 10 = 30; har har har," nonsense that seems popular with people. Just because things don't work out doesn't mean people are out to get you. Nintendo doesn't benefit from creating ill will with all the nuts on the internet, no matter how much it inflates demand. That's a short term game, and Nintendo's been around long enough to know better than that.

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gamer162594

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Edited By gamer162594

@Jaxith: It's not a conspiracy, the proof is right in front of you. Why does it consistently happen with Nintendo......but not Sony or Microsoft?? Can you answer that? Why are Nintendo products ALWAYS super hard to find.

Nintendo is worth $32 billion, Sony is worth $40 billion. And all Nintendo does is video games, Sony does movies and music and TV's and speakers on top of video games.

So, you're telling me that a $32 billion dollar VIDEO GAME company, that ONLY does video games, can't keep up with demand on ANY of the products they make??? Boy, you are a fool.

So if Nintendo products are always in high demand and sell out instantly. And Nintendo is making as many as they possibly can, then why aren't they the market leader? Why are they third behind Sony and Microsoft for console market share? Your logic is flawed.

TL;DR: Nintendo's only job is to make video game products. A $32 Billion company can't keep up with one industry. Yeah right...

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Jaxith

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@gamer162594: The reason it happens to Nintendo and not Sony and Microsoft is because the latter two have simple needs. Every new system they come out with uses the same basic parts as the last system, only better. They don't change. They just upgrade. Then when they try to do something different, such as the Kinect or PS Move, it ends up not catching on, so they never get to the point of hitting any sort of choke point. And if the question of why Nintendo products are hard to find was intended as a separate question, I already answered that above.

You call attention to Nintendo focusing on video games and not being able to meet demand on any of their products. You're practically answering your own question there. Sony has their PS4, and technically the Vita to produce. Microsoft has the Xbox One. What does Nintendo have? The Switch, multiple incarnations of the 3DS, the SNES classic, and Amiibo, all of which require distinct parts from one another. Sony has to worry about their non video game products, sure, but to the best of my knowledge no one's super hyped for any of those, so the only thing they have to worry about a sudden demand on is a new console. It doesn't really lap over with Nintendo's supply issues because of a point you yourself were so adamant to present. Nintendo focuses entirely on video games. That's huge. If Nintendo makes something new, you hear about it. And there's demand for it because it's something new and unique. If Sony or Microsoft makes something new, it's an iterative product, likely not much, if any better than whatever came before it, excluding new consoles (which have demand while still being iterative) which are a rare occurrence.

Honestly, the only question which I can't really give you an answer for is your final one, simply for the reason that I don't follow things like 'market share' to give you a detailed analysis of it. I was under the impression that companies themselves had share values. I wasn't aware that there was such a thing as a 'console market share' so I'm afraid I'm not in a position to answer that one for you. I apologize for that.

That all said, it hasn't escaped me that you didn't really make an argument against any of my previous points. I've still yet to hear an explanation as to *why* you think Nintendo would intentionally cut their supplies short. The logic of supply and demand only goes so far. Once you have demand, I don't see any reason to further truncate it. Maybe I'm wrong and there is some psychology to it, but to my mind, there's just no reason to eat flack and not get paid for it.

Meanwhile, I'm just sitting here thinking about how literally two hours after my last post I hear about how Nintendo's planning to relaunch the NES classic later next year, right about the time they finish production of SNES classics. It's interesting how that's exactly what I said they'd do. So it's starting to feel like the way they've been handling both the Amiibo, and NES classic supports my claim. They did the same thing with the Amiibo, running through their scheduled waves before returning to older, popular models and relaunching them. They keep demand not from cutting their supplies short, but because they're always working on something new. And when they aren't they're rotating what they have. That's a whole lot more complex that just ordering a slightly faster processor.

All that said, we're really never going to see eye to eye on this. We see the world differently, you and I. You look at this situation and you see greed, and ineptitude and can't help but to call it out. This isn't a bad thing really. It's good to be skeptical, even cynical because it can help protect you from being taken advantage of. I don't fault you for that, though caution that it can lead to a leap in logical conclusion. I on the other hand, try to take others at their word and try to methodically conclude how that could be the case. This allows me to rationalize the situation from a foreign perspective. The down side here, is that sometimes people do lie, so I stand more the risk of being the fool, and being taken advantage of. I suppose I must seem willfully ignorant to you, just as you seem, quite honestly, negative, and shortsighted to me.

I'm really not trying to ridicule you, so please forgive me if it feels like I am. People are just people, and we have our own perspectives. It stands to reason that one of us is right, and the other is wrong. I naturally believe to be in the right, and trust the logic that led me to my conclusion. I trust you feel the same. So I hope you'll agree with me when I said I'd rather not draw out this discussion too much further, lest it become unnecessarily heated.

So, shall we simply agree to disagree? At the very least I had fun discussing it.

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gamer162594

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@Jaxith: I can sum up what's wrong with your point of view in one sentence:

You're making excuses for a $32 billion company.

Say that out loud and you'll realize the fault in your logic. A $32 billion company should NEVER have a problem keeping up with demand six months post launch. Stop making excuses for them and give them the flak they deserve :)

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If_master_1

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Edited By If_master_1

@gamingdevil800: People looking for a $300 device aren't gonna suddenly buy a $500 one just because they can't find the first one lol

Economics 101 man.

However, it may be due to Nintendo battling Apple for parts, can't blame them for that. Anyone would side with Apple as that is an industry giant in technology, bigger than all 3 gaming divisions combined.

Meeting demand can be a tricky thing. You can't just press a big red button and suddenly crap out an extra 5 million consoles when demand is there. Ask THQ, the makers of U-draw. Going overboard can bankrupt you.

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gamingdevil800

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@if_master_1: The PS4 and Xbox One are cheaper so it is likely people/families who were on the fence could get a different system as a result of this.

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lodoss900

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@gamingdevil800: plus you can score a ps4 bundle cheaper then a switch

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gamingdevil800

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@lodoss900: I wouldn't be surprised if there is a holiday discount too.

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Richardthe3rd

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Edited By Richardthe3rd

I want an SNES classic.

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Dev-RAiD1

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@Richardthe3rd: why

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SubtheScrub

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Edited By SubtheScrub

I'm never getting a Switch at this rate

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darksouls

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I didnt see this coming!

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SubtheScrub

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@darksouls: Really? The stock has been a problem for a while now

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Doctor_MG

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@subthescrub: I'm like 105% sure it's sarcasm lol.

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