First introduced in November 1996, the Tamagotchi (pronounced TAH-MAH-GOH-CHEE) is sold in toy stores, and marketed as "the original virtual reality pet". It might be described briefly as a tiny hand-held LCD video game that comes attached to a key chain or bracelet. The object of the game is to simulate the proper care and maintenance of a "virtual chicken", which is accomplished through performing the digital analog of certain "parental" responsibilities, including feeding, playing games, scolding, medicating, and cleaning up after the ersatz pet . The popularity of this device has been nothing short of phenomenal.

Over four million units have been purchased in Japan since the toys release, meaning that an estimated 3% of the nation's population owns a Tamagotchi. Priced at about $16, stores have consistently sold out of the item, inspiring an entire market of Hong Kong and Tawain based counterfeit toy manufacturing operations. ii Would-be Tamagotchi owners camp-out overnight at stores expecting new shipments the next day, and some consumers resort to purchasing the toy eggs from a black-market dealers, at prices ranging from 20 to 60 times the store price. Enterprising con-men sell fraudulent rain check coupons that can supposedly be exchanged for one of the electronic toys when the next shipment arrives.

In a highly publicized incident, four high school boys bullied a school mate and stole his Tamagotchi. Police employed several patrol cars and a helicopter in the pursuit of the juveniles, and eventually recovered the electronic toy and returned it to the rightful owner.

And after 6 months on the market, the Tamagotchi craze shows no signs of slowing: April 30th the Tobu department store received a shipment of 1000 units, and despite efforts to keep potential customers in the dark about shipping schedules (to avoid enormous lines and unruly behaviour) the new stock sold out in 45 minutes. iii

Bandai Co., the producer of Tamagotchi, is running ads in major newspapers in Japan apologizing for its inability to meet with consumer demand, claiming that the popularity of the toy caught them unsuspected, and that they are in the process of up-grading the output of their production facility in China to 3 million units per month.

Critics suspect Bandai of intentionally undersupplying in order to increase consumer demand. If so, they're in good company - by keeping supply tight for the Nintendo Entertainment System and its subsequent reincarnations (Super Nintendo, Game Boy, and the Nintendo 64), the Nintendo Co. was able to maintain high consumer interest yielding legendary sales figures.iv

That Bandai is milking the phenomenon for all it's worth seems unquestionable: in March the company announced a free give-away of one Tamagotchi to each owner of at least 1000 shares of stock, and the following day the price shot up considerably.v

Some say that the expected $160 million in revenue from the Japanese release of Tamagotchi is a much needed boost for Bandai, suffering from waning interest in Mighty Morphin' Power Rangers and the failed attempt to introduce Sailor Moon Products to America.vi

And predictably, associated merchandizing has appeared, ranging from Tamagotchi shirts, hats, and underwear to stuffed animals, stationary and decals that can be applied to the plastic casing of the plastic game to personalize it. A second generation has been released, with decorated plastic casings, and the hottest item yet is a portable phone with an LCD display that doubles as a Tamagotchi game interface.

After test marketing the product in select California and Hawaii toy stores, Bandai made its first official shipments of the product to an anxious consumer public on May 1st, 1997. Based on sales in Japan, American stores had already placed preorders for 6 million units, promising as much as $80 million in possible sales. vii

Within 24 hours the FAO Schwartz flagship store in Manhattan sold out of its first shipment of 10,000 units. An armored Brinks truck delivered 3000 Tamagotchis to the sister store in San Francisco, and these were gone within 5 hours.viii

At first, one might expect that this curious form of delivery was simply a mediagenic gesture - "tamagotchi are so important, they require special delivery procedures". On the contrary, Bandai has been capitalizing on unconventional delivery methods as a way to gain leverage in the market. For large chain stores, toy suppliers usually ship directly to store-owned warehouses on fixed schedules, from which the store manages and controls its own supply. For the Tamagotchi, Bandai has chosen to deliver undisclosed (but relatively small) quantities directly to retail stores on unannounced schedules. The unpredictable times and locations of delivery have resulted in a consumer frenzy similar to the Japanese market.

Further market manipulations have yielded even more interesting results. By releasing the same video game packed in six different colored cases and generating shortages of certain case colors, Bandai entices shoppers to seek out certain variations of the game, and some stores have responded by scaling the prices of the "different" toys accordingly.ix And since the American release of the product differs in subtle ways from the Japanese release (which is not at all available in the U.S.), the Japanese version is widely regarded as the more desirable.

Consumers have generally tried to avoid the counterfeit Tamagotchi knock-offs and response to a legitimately released series of Tamagotchi look-alikes called "Giga-Pets" has been lukewarm x (suggesting, ironically that while consumers apparently can't wait to purchase a "virtual pet" they balk at a "virtual-virtual pet").