Nintendo Strategy Case

Topics: Nintendo, Video game console, Nintendo Entertainment System Pages: 2 (507 words) Published: June 15, 2008
1.How did Nintendo’s strategy expand the size of video game industry PIE? 1)In 1980, Nintendo put out Game & Watch, a handheld combination of video game and digital clock. The product sold strongly. 2)The third president of, Yamauchi, directed work on an entirely new video game system that was cheaper than the competition’s, while at the same time having superior graphics and faster action. 3)In 1988, Nintendo launched the Family Computer Communications Network System. Nintendo struck an agreement with Nomura Securities that enabled Famicom owners to monitor and trade stocks by computer. By1991, a total of 130,000 households had joined the network, which offered, in addition to stock-brokerage services, home shopping, on-line banking, rail and airline reservation services, electronic mail, and access to information about new video games. Nintendo charged users for on-line time, and information and services suppliers for access to its user base. 4)In addition to licensing the rights to develop games for the NES platform, Nintendo licensed its game characters to a wide variety of other businesses. Mario and the other Nintendo creations turn up on TV shows, cereal packets, T-shirts, records and tapes, in books and board games, as toys, and elsewhere. 5)In April 1989, Nintendo launched Game Boy in Japan. Game Boy was a cross between the NES and the earlier Game & Watch. It was designed to broaden the appeal of video games beyond pre-teenagers to older children and adults. 2.How did Nintendo manage to capture so much of the pie?

1)Nintendo’s cartridges contained several chips. The “security” chip, ensured that only Nintendo-approved cartridges would be able to run on the system. 2)All manufacturing for Nintendo’s new game system was subcontracted, with final assembly alone taking place at the company’s facilities. 3)Licensees were required to place manufacturing orders with Nintendo itself and were charged the 20% royalty, and also had to absorb Nintendo’s...
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