Quoted from frolic:
Stern releases as many titles as are needed to keep their factory humming. If their release schedule has increased that tells us each title is selling less.
Yes and no... because of lead times you pretty much commit to things and either you keep piling stuff up (sitting on inventory) or you use it. They have to forecast their production schedule well ahead of their actual sales performance. For instance Stranger Things selling now in January... the parts funnel to feed the factory for Jan and Feb was put in motion months ago. You can change course, but you'd still have those parts for the stuff you didn't build. So you can only change so much or so frequently before your pile of 'prior plan' parts becomes overwhelming.
The bigger indicator is re-runs. They can hedge their bets and make initial runs smaller... and then turn to re-runs to fill demand if it's there.. instead of going risky with bigger initial runs and hoping it sells.
Stern can manage soft sales by managing/planning the production schedule with titles that are easier to pull forward in the schedule.
Stern has optimized their factory for pivoting between titles... but the supply chain and ramp up for production is still there. That means stockpiling inventory and managing the lead times.
If Stern had a steady stable of 'hit games' they could produce, you could say "well stop/slow development of new titles not yet in production... aim for 3 releases instead of 4...". But that kind of decision is more a long range outlook change.. not something you can do on a quarterly basis. And at least in recent times, Stern seems content to push the size of their catalog to grow the addressable market.