Nintendo Market Analysis

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4C stakeholder’s analysis of Nintendo Wii Market in 2006

Customers: Nintendo Co Ltd (Nintendo) and its new president Satoru Iwata believed potential existence of a consumer market that distanced itself from gaming. They opined that existing games were not only difficult to understand and play, but also found the consoles complex to operate. The games were built more on fantasy and targeted towards traditional over 18 year old male[1] population.

Nintendo made a conscious attempt to bring the non gamers into the spot light and create a new consumer segment. They decided to concentrate on simplicity and real life game scenarios. Nintendo designed and marketed “Wii” as family entertainments devise involving all age and gender groups including those who enjoy watching others play. This encouraged not only young members[2] of the family asking parents to buy gaming devises, but the elders started showing interest and started buying Wii. Wii was able to remove the traditional negative barrier between “the child” and “the parent”.

Wii also found a competitive edge by getting female (A NDP[3] press release suggests 5% point increase in female gamers during 2009 compared to previous year, mainly attributed to successes of Wii) and other adult population who has not been very keen in playing earlier.

Company: Nintendo after entrance of new players like Microsoft and Sony into the industry did not see many successes and was fighting for its survival. Nintendo’s net sales remained static for three consecutive years from 2004[4]. The vision of the new leadership was being tested with launch of Nintendo DS and its other variants. However the biggest change came in form of Nintendo Wii in November 2006.

The company financial results showed tremendous growth with net sales and net income tripling by end of 2008. Share holders received dividends of 1,260 Japanese yen, almost 3 times higher than year 2006. Company’s stock prices rose to 64,500 Japanese Yen by end of 2008 from 17,880 Japanese Yen in year 2006.

Since the November launch of Wii until September 2009, company has sold over 53.97 m[5] representing 48% of the total hardware sales by three main competitors(X Box 360, PS3 and Wii).

Competition: Nintendo instead of going in for a direct competition with Sony and Microsoft, created its own niche market. While Sony and Microsoft increased computing power and graphics of its game, Nintendo used a combination of infrared, motion sensor and blue tooth technology to create a user friendly, plug & play console.

The simplicity made it easy for its developers to design new games and helped them to reduce cost, a competitive advantage over its rivals. Nintendo gave a feeling of personalization by allowing users to create characters. (“Mii” feature). The lack of high graphics could have been a competitive threat, but turned out to be an advantage. The new market segment did not fancy high graphics.

Nintendo must though also keep an eye on the ever increasing online and computer games market. During 2006 as per report from ESA[6] 51% of the frequent game players were also seen to be gaming online as well.

Low price of Nintendo discussed later in this paper, has proved to be its biggest competitive advantage.

Community: There was no major regulatory resistance or restriction from any of the major markets areas. The company was free to operate in any of the markets and took full advantage to capture a high market share in US and Europe. The simplicity of the games made it easy for the programmers (complements[7]) to design more and more games at very low cost. Nintendo has now over 792[8] games for users to choose from and still counting.

Entertainment Software Rating Board (ESRB[9]) a self regulatory body has set some standards and guidelines for the industry to protect gamers and parents rights.

Now having analyzed the 4C’s of Nintendo, let us discuss the product mix strategy of the company in...
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