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Company Overview

This multinational corporation called Nintendo (= „leave luck to heaven“) K.K (jap./Eng.
Nintendo o.! "td is going to #e re$erred as „Nintendo“) %as $ounded over &'' (ears ago in
&))* #( +usajiro ,amauchi in K(oto/-apan as a simple card manu$acturing compan(. .t is listed
on the Tok(o /tock E0change (T/E). Through the decades it has change its compan( name
several times. Nintendo started %ith simple „hana$unda “translated to $lo%er cards and #ecame
market leader in this segment. 1e$ore manu$acturing hard%are2s and so$t%are2s $or the game
industr( several #usiness units %ere tried. Nintendo2s most kno%n hard%are products are
3ame#o(! Nintendo 4/ and 5ii including their so$t%are games (6ario! 4onke( Kong! "egend
o$ 7elda..) .Nintendo is continuousl( tr(ing to $ind ne% technolog( to appl( on their products.
8mongst the Ke( people o$ the compan( are especiall( 6r .(amoto! #( %hom the compan( is
leaded as a 9resident and E: and 6r 6i(amoto the game designer o$ Nintendo.
To control market shares on a glo#al level Nintendo has several stations all over the %orld.
Nintendo started as a small -apanese #usiness #( +usajiro ,amauchi near the end o$ &))* as
Nintendo Koppai. 1ased in K(oto! -apan! the #usiness produced and marketed a pla(ing card
game called ;ana$uda.
.n &*<=! ;iroshi ,amauchi visited the >/! and this is %hen he reali?ed the limitations o$ the card
#usiness and hence moved on to di$$erent arenas o$ the gaming %orld. .n &*=@! ,amauchi
renamed Nintendo 9la(ing ard ompan( "imited to Nintendo ompan(! "imited. 4uring &*=@
and &*=)! Nintendo set up a ta0i compan(! a Alove hotelA chain! a TB net%ork! a $ood compan(
and several other things. 8ll these attempts at e0panding and diversi$(ing the #usiness $ailed!
e0cept to( making! %here the( had relativel( prior e0perience %ith $rom selling pla(ing cards.
Nintendo2s $irst step into the video games industr( %as in &*C<. 8t the time! home video game
consoles %ere ver( rare! even the seminal 8tari 9ong console %as not #een produced. .n earl(
&*)'s Nintendo created some o$ its most $amous and in$amous arcade names. The e0tremel(
popular 4onke( Kong created and produced in &*)& and released in the arcades and on the 8tari
D=''! .ntellivision! and olecoBision video game s(stems. Then! in &*)<! Nintendo hit the
jackpot %ith its Nintendo Entertainment /(stem and continued %ith their highl( success$ul
3ame 1o(. Nintendo continued producing innovations and alterations to these t%o ideas making
it one o$ the %orld2s #iggest videoEgame manu$acturers.
.n Novem#er &*! D''= Nintendo released a ne% gaming s(stem called 5ii! $acing signi$icant
competition $rom F#o0 @=' and 9la(station@. 5hile F#o0 %as released a (ear #e$ore the 5ii!
F#o0 @=' had the lead over the 5ii and 9/@. 8lthough 5ii %as #ehind Nintendo %as not #other
#( it! #eing that their target market %as aiming to pursue a ver( di$$erent market group then
6icroso$t and /on(. The strateg( Nintendo used is called di$$erentiation! their target audience
%as older $emales! couch potatoes! seniors! men! and (oung adults %ho are not the t(pical core
gamers or %ho do not usuall( pla( the t(pical 9/@ or F1:F @=' (Nintendo! D'&'). 5hen the
F#o0 @=' hit the market it retailed at GDC*.**! 9la(/tation @ retailed at GH**! and the 5ii retailed
at GDH*.**. The monthl( sales o$ the 5ii s%ept across the glo#e %ith higher sales than the
competing products. The research o$ the glo#al market had the Nintendo 5ii $irst hal$ o$ D''C!
selling more units in the >./. than F#o0 @=' and 9/@! $ello% seventhEgeneration gaming
consoles. .t %as even larger in the -apanese market! %here the 5ii led in total sales! outselling
#oth consoles #( $actors o$ DI& and =I& nearl( ever( %eek $rom its launch until Novem#er D''C.
:ver a long period o$ time! #oth /on( and 6icroso$t %as operating at a total lost hoping the(
could make a pro$it in so$t%are and gaming sales. 9/@ %as generating a GD<' loss %ith each unit
sold! %hile the 5ii %as making pro$it per console estimating around G&@ in -apan G<' in the >./.
and GC* in certain parts o$ Europe.
:n D@rd /eptem#er &))*! -apanese #usinessman +usajiro ,amauchi $ounded a compan( he
initiall( named Nintendo Koppai. 1ased in K(oto! the compan( produced handmade pla(ing
cards /ee 8ppendi0 +igure & $or a game called ;ana$unda (J+lo%er ardsJ). ,amauchi retired in
&*D* and .n &*<*! ,amauchiJs grandson and president o$ Nintendo! ;iroshi ,amauchi! secured a
deal %ith 4isne( to use their characters in their pla(ing cards.
KKKThe name Nintendo can #e roughl( translated $rom -apanese to English as IA"eave "uck to
KKK9roducts produced #( Nintendo areI
The 3ame 1o( line! olor TB 3ame! NE/! /NE/! Birtual 1o(! Nintendo =H! Nintendo
3ameu#e! 3ame 1o( 8dvance! Nintendo 4/! 5ii! Nintendo 4/i! Nintendo 4/i F"! Nintendo
@4/! Nintendo @4/ F"! 5ii >. (5ikipedia
Nintendo vs the Competition
The %orld2s electronic games industr( is dominated #( three pla(ersM
KNintendo! 6icroso$t and /on(.K
+urther .n$ormation a#out the products o$ these companies can #e $ound on 9age = N omparing
Nintendo 5ii To F#o0 @=' 8nd 9la(station @
8s can #e seen in 8ppendi0 +igure D! The Nintendo 5ii is designed in a ver( modest %a(. .t is
possi#le to purchase this product in %hite and #lack colour. The console itsel$ is ver( innovative
and eas( to handle. The s(stem is called motion controlled gaming and it is also possi#le to
connect to the .nternet.
KE, 9"8,EO/ .N T;E B.4E: 386E .N4>/TO,
/on( (9la(station)! Nintendo (5ii) and 6icroso$t (F#o0)
... The competition
.n this section! %e %ill $ocus on game consoles market. ! dominated #( @ main competitors!
namel(! Nintendo! /on( and 6icroso$t. The market is #ecoming increasingl( similar to cinema
in its scope and $unding level. The game consoles o$ the last several decades are primaril(
responsi#le $or this phenomenon.
/ince the &**'s! /on( has #een the king o$ video games market %ith its 9la(/tation D!
accounting $or nearl( &<' million consoles sold since its creation. ;o%ever! since D''<!
Nintendo %ith its 4/ and 6icroso$t %ith the F1:F @=' are gaining a larger market share. The
/on( 9la(/tation @ introduced in ''* has not met the e0pected sales level anticipated... This can
#e e0plained #( several $actorsI $irstl(! the strateg( taken $rom /:N, has not hesitated to launch
a console at a price o$ ='' P. .n addition! the compan( relies on technolog( constantl( ahead o$
the societ( (the technolog( o$ ;4 and 1luEra()! these characteristics are the main /on(2s
challenge in recent (ears.
/:N, N introduced 9la(station (9/)! attracted late teens and (oung adults %ith disposa#le
income! o$$ered more sophisticated and more violent gamesM #ack%ard compati#ilit( (9/&! 9/D
and 9/@)! can also pla( 4s and 4B4s. 8lso launched 9la(station 9orta#le (9/9)
&. 9/@ N a multimedia entertainment hu#M allo%s users to chat online! listen to music! vie% ;4
D. results %ere disappointing #ecause o$ /uppl( pro#lems and the high price tag
/:N, produced H'Q o$ its components inEhouse. 6assive costs o$ investing in the game
console eRuipped %ith 1luEra( and ell chip
9/9 @
The 9la(station @ supports the highest num#er o$ controllers o$ an( o$ these s(stems. >p to
seven 5ireless ontrollers can #e used at the same time. .nitiall( 9la(station@ %as priced around
G='' mark much higher than Nintendo 5ii. (Keli! D'&' )
The 9la(station @(9/@) major $eature %hich neither 5ii or F#o0 @=' has is the #uilt in 1luEra(
4B4 pla(er %hich neither the 5ii nor the F#o0 @=' have. The games availa#le $or pla( on the
9la(station @ are much more limited than %hat is availa#le $or the Nintendo 5ii or F#o0 @='.
This s(stem! like the F#o0 @='! is geared to%ard the more dedicated gamer %ith e0cellent
graphics and #( $ar the #est top o$ the line technolog(.
8t its inception! the compan( produced pla(ing cards in -apanI the ;ana$uda. /ince the&*='s the
compan( has diversi$ied its product lines to include to(s production! instant rice! etc.
/ince &*)'s! Nintendo has launched into the market $or consoles and video games. urrentl(! it
is a leader in this market. .n D'&'! is ranked $irst Nintendo video game pu#lisher in -apan and
second in the >./. (N94 3roup).
/ince 4ecem#er! &st D''=! Nintendo has sold @)C million consoles and D.D #illion video games
%orld%ide. This makes it a %orld leader in the market $or video games. This phenomenal success
is attri#uted to the apparition o$ the 4/ and 5...
The Nintendo 5ii is designed $orI children %ho are just #eginning to enter the %orld o$ gaming!
$amil( game night! $itness needs and social gatherings (9art(! special occasion etc). The games
can #ring #ack a lot o$ old memories $or the adults. The colours! cartoon like graphics and
characters are ver( enjo(a#le and $un $or kids.
The 5ii is not the #est choice $or those %ho are looking $or a game console that2s an all purpose
entertainment hu#! %ant ;4 graphics! enjo( a tough online gamers communit( and those %ho
pre$er a %ide selection o$ adult targeted titles. The 5ii console is though more a$$orda#le $or
$amilies than its competitors and it is sold in #undle packs %hich includes the 5ii! 5ii /port a
ver( popular game and remote controllers! strap! sensor #ar that the other competitors don2t have
included. The 9rice o$ sale $or the 5ii is around GD<EG@'' mark! the cheapest out o$ the other
t%o (Keli! D'&')
6icroso$t orporation is an 8merican multinational compan( $ounded #( 1ill 3ates and 9aul
8llen. .ts annual revenue has reached ='.HD #illion dollars over the D''CED'') $iscal (ear and
emplo(s *H! D)= people in &'C countries. .ts main activit( is to develop operating s(stems and
so$t%are $or microcomputers. 6icroso$t entered the highl( competitive video game console
#usiness in D''& #( launching the F#o0... .t %as replaced a$ter H (ears #( the F#o0 @='. The(
#oth o$$er hundreds o$ games and no% online gaming communit(! F#o0 "ive. The F#o0 @=' has
gained a @'Q video game market share #( +e#ruar( D''*.
6.O:/:+T N a diversi$ication move! addressing a potential threat the video game market %as
posing in the 9 market.
&. F#o0 N compete directl( %ith 9/D and 3amecu#e
The F#o0 @=' has geared its console and games $or hardcore gamers. The F#o0 @=' uses a
%ireless controller and headset (this allo%s $ello% gamers to communicate %ith one another).
/imilar to the 9la(station F#o0 @=' has a &D'31 hard drive %hich also gives the a#ilit( to store
games! TB sho%s! movies! music and pictures.
,ou can connect %ith $riends $rom “F#o0 ".BE 6arketplace!Lan online service that gives the
a#ilit( $or online multipla(er gaming! to do%nload games and other media and instant
messaging. There is an additional G)*.*< annual mem#ership $ee to join“F#o0 "iveL .nitiall(!
F#o0 @=' %as priced at G<H*! much higher than the Nintendo 5ii! %hich toda( it is priced at
GD<' less. (Keli! D'&')
Nintendo Case
S&I 5as Nitendo just luck(! or does the 5ii2s success has strategic merit
Nintendo %as nt just a luck( adventure. The( had such a #ig success #ecause the( $ocused on
1e$ore 5iiI D groups %ere targeted &)E@< (ears old (oung adults and children and teens.
Nintendo changed this and e0tended to people o$ all ages. The( took a step #ack $rom
technologies and $ocused on the $un aspect o$ pla(ing video games.
1( creating the 5ii $it and the #alance #oard the( %ere a#le to reach out to ever( one (e0ercising
is more $un). .t #ecame the reason $or $amil( games at night and also a reason $r e0ercising (the
console similar to remote control allo%s to pla( #o0 or tennis $or instance).
The( didn2t compete %ith /on( and 6icroso$t! the( tried to di$$erentiate. 1E >N.S>E
SDI ;as Nitendo put the $ad Ruestion to restT /tate a case as to %h( the 5ii is or is not here to
Nintendo managed to e$$ectivel( target a large population segment o$ common gamers that are
not going to disappear soon.
8lthough Nintendo is not out o$ the red $rom #ecoming a $ad! increasingl( adding supplemental
products has the a#ilit( to make them last. 3ames are di$$erentiated $or those %ho use the 5ii
just as a console and $or those %ho are using this as an entertainment tool %ith a scope (#e $it or
pla( %ith $amil( and $riends)
The clearest indicator the 5ii is here to sta( are the imitation e$$ects o$ other gaming companies.
The 9/@ 6otion is a clear imitation o$ the 5ii and 6icroso$t Kinect de$initel( took some hints
$rom Nintendo.
;o%ever Nintendo has to keep on his uniRue $eature and the competition could #e a dangerous
threat $or the 5ii i$ the producers don2t think a#out competitive advantage to%ards other
.$ %e take the case o$ the .pod! at the #eginning this could have #een a potential $ad (just think
a#out 69@ pla(ers)! #ut via .tunes and other application that are allo%ing users to connect to
social net%ork ad #e a part o$ their technological li$e .pod is still trend(.
Nintendo should $ocus on the di$$erentiation $rom the others.
The real pro#lem $or Nintendo is not the risk o$ #eing a $ad! #ut %e %ill see that later.
S@I .n %hich stage o$ the product li$e c(cle is the 5iiT 1ased on that stage is Nitendo emplo(ing
good marketing mi0 strageties
Nintendo 5ii has attained the 6aturit( stage. The product has alread( achieved acceptance in
the market and other companies tr( to compete #( innovating the product that alread( e0ist
To avoid the decline Nntendo has to create good marketing strategies.
No% let2s have a look to the 9roductI Nintendo is tr(ing to achieve more %ith less (more $un and
satis$action $or a product that is not the top o$ high technolog().
.ntroduction o$I
K 6otion sensing %ireless technolog( 3et out o$ the coach to pla(
K 5ii controller similar to a remote Natural and eas( to pla( the game
K .ntroduction o$ the 5ii +it ;o% to sta( $it %ith $un
9rice I
K Keep cost at D<' G (F #o0 and 9s %ere! at the time this case %as %ritten over @<' G)
K heaper games than F #o0 and 9s
9lace I
K Ever(%here around the %orld! to( stores! supermarket! %e# sites
K +ree 5i$i connection and o$$ers
K :nline games
This could #e $ine $or a %hile! #ut the $act that the target has shi$ted to a more e0tensive segment
could #e counterproductive $or Nintendo! since it risks to #e seen a lass 1 console.
The price strateg( is a good one! %hereas other companies gain $rom the sale o$ consoles!
Nintendo has the most $or the games. /tarting $rom here the( should implement (and the( are
alread( %illing to do so) a s(stem to attire also the classical video game pla(ers.
SH! 4evelop a strateg( $or the 5ii2s ne0t product li$e c(cle phase
/tud( the needs o$ the customers and create value.
;o%T -ust think a#out the intrinsic po%er o$ the seniors as customers! Nintedo could propose
itsel$ not onl( as a console #ut as a tool $or aged people to e0ercise! monitor health status! learn
languages and other activities linked to the %ill o$ sta(ing not too $ar a%a( $rom ne% generations
and stick on natural needs (e.g. special apps to #e linked %ith a pharmac(!).
There is another segment that needs to #e targetedI hildren.
The 5ii could #e an ama?ing tool to learn %ith $un. Nintendo should di$$erentiate proposing
itsel$ also as an educational instrument.
S<I 4iscuss the potential threats to Nitendo $uture success! 5hat %ill help Nitendo avoid a
premature decline $or the 5iiT
5e think that the #est %a( to ans%er to this Ruestion is to do a 9E/TE" anal(sis to have a clear
idea o$ the %orld in %hich the product has to survive.
The general environment in %hich Nintendo operates is completel( di$$erent $rom the past. .n
targeting such a vast demographic Nintendo can even create niche market. ;o%ever the $act o$
#eing so popular as a $amil(E$riends mean o$ entertainment can lead to the threat that the pu#lic
could see Nintendo 5ii as a lo% Rualit( product. There$ore go #ack to classics %ould #e a good
idea! or eventuall( $ind another tool to add to the 5ii to make happ( those pla(ers (@ 4 video
games are alread( #eing used #( no%! #ut %h( do not create a real communit(! a kind o$ a virtual
%orld $or Nintendo2s classics pla(ers $or instance).
The economic environment could #e de$initivel( the #iggest threat $or Nintendo. ;o% to $igure
people that have pro#lems in #u(ing oil $or their cars going to a shop and #u( a consoleT +or this
reason Nintendo should invent a virtual Nintendo 5ii %orld! in %hich people can share the
console and the games. :r also lease a console $or a %hile renting games $or cheaper price.
+e% political or legal restriction $ace Nintendo! #ut $or the time #eing the producers should think
a#out #eing sustaina#le! the idea o$ leasing a console could #e also an opportunit( $rom this
point o$ vie%.
The competitors are mostl( D! there is not a real danger o$ entr( o$ other companies! #ecause the
vise game %orld is Ruite tight and there is no space $or ne% names. ;o%ever there is space $or
su#stitutes and the onl( thing Nintendo could do to avoid the competition is to #e di$$erent and
To capture the hardcore gamer market that Nintendo2s competitors alread( have like online
games such asM ;alo! 6odern %ar$are or all o$ 4ut( %ould greatl( e0pand Nintendo2s gaming
market. 8s an alternative ideal solution! to ensure the 5ii2s continued success! Nintendo should
also $ocus on e0panding their competitor2s market #ase. To do this! 3reg a gaming 9ro$essor
states (9assani! D'&') Nintendo %ill need to advance their technological hard%are to their
competitor2s standards or #e(ond. Nintendo must shi$t to%ards a trans$orming its main console
into a complete home entertainment s(stem to keep ahead o$ 6icroso$t and /on( .
Nintendo must continue pressing $or%ard %ith innovative technolog( and game concepts. The
compan( $aces a great deal o$ competition! #ut also has man( options to help maintain its current
competitive advantage. Technolog( is a huge and ever changing part o$ our ever(da( li$e! and
crucial to keep up to date %ith the latest technological tools and resources necessar( to keep a
#usinesses pro$its and reputation high.
To conclude! Nintendo is not all a#out gaming. Nintendo has man( $ine Rualities one that needs
to #e mentioned is its donations to good causes! %hich hal$ the population are not a%are o$.
Nintendo o$ 8ustralia and Nintendo o$ EuropeJs >K #ranch has #een %orking %ith the /tarlight
hildrenJs +oundation! a nonpro$it organisation that provides support $or seriousl( ill children
undergoing treatment and their $amilies. This is not advertised enough to the pu#lic .
Nintendo needs to $ocus on this important $act and let societ( kno% ho% the( are contri#uting to
the real %orld and its not all just a#out sales and gaming. The( need to sho% the %orld ho% the(
#ring smiles to ever(one that Nintendo touches.