In the spring of 1998, Bandai had a problem no toy company plans for: too many Tamagotchi, and nowhere to put them.
Two years earlier, the egg-shaped pet had arrived in Japan on 23 November 1996 and turned into a social phenomenon. By spring 1998, Bandai had sold roughly 20 million units in Japan and about the same number overseas. Then the returns started.
Retailers sent back boxes. And boxes. And more boxes.
The reason was a demand signal that lied. Customers desperate to get one had reserved the same Tamagotchi at several different shops, then bought a single unit when stock arrived. To Bandai, the reservation numbers looked like proof the boom was still climbing. Internally, the message did not travel: according to the Japanese TV programme Shikujiri Sensei, which examined the episode in May 2022, new Tamagotchi models were still being designed and manufactured while unsold stock piled up in Bandai's warehouses.
The bill was enormous. More than 2.5 million unsold units were disposed of, and the overproduction produced a loss of 6 billion yen, roughly $38 million in today's money, per Automaton's reporting on the programme. The wider damage showed up in Bandai's accounts too: in 1999 the company announced a 16 billion yen special loss for the 1998/99 financial year tied to restructuring, and revised its parent net forecast from a 3.5 billion yen profit to a 14.5 billion yen loss, partly because of unsold Tamagotchi inventory, as GameSpot reported at the time.
Then came the legend. Word spread that the surplus eggs had been buried on Odaiba, the man-made island in Tokyo Bay, during a period of redevelopment, an echo of Atari's E.T. cartridges in a New Mexico landfill. It is a great story. It is also unsubstantiated. The programme treated it as rumour, and there is no evidence Bandai buried anything there. The likelier truth is duller: the units were destroyed in the ordinary way.
Abroad, Bandai had a second headache. Copycat virtual pets appeared, often cheaper than the real thing and sometimes flashier, packing several creatures into one shell. They probably ate into overseas sales just as the genuine article was losing its novelty.
What makes the episode worth remembering now is the contrast. In July 2025, Bandai announced that cumulative Tamagotchi shipments had passed 100 million units worldwide, with more than half going outside Japan. The line that carried much of that growth is the Original Tamagotchi, the reissued 1990s shell, at 11.52 million units by the end of July 2025. The same company that once drowned in unsold stock now leans on limited shells, regional drops and collaborations that sell out.
There is a lesson in there for anyone who collects. The 1998 crash was not caused by people loving Tamagotchi less. It was caused by a company mistaking enthusiasm for infinite demand, and by a supply chain that could not hear the difference until the warehouses were full.
The eggs came back. Bandai survived, rebuilt, and thirty years on has passed its hundred-millionth pet. But somewhere in Tokyo, a rumour about buried Tamagotchi still refuses to die, which is its own kind of afterlife.