The Wii: Nintendo's Video Game Revolution

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Case Study – The Wii: Nintendo’s Video Game Revolution
Problem Statement:
Mr. George Harrison, senior vice president of marketing for Nintendo of America has to create a plan to manage product shortages as part of marketing campaign for the 2007 holiday season.

Situation Analysis:
Objective and Goals
* To deliver sufficient product supply to the market (distributors, then retailers and down to consumers) before the 2007 holiday rush

Background
Nintendo came into existence in 1889 in Kyoto, Japan. The company is basically a manufacturer of games and toys. It started with producing handmade paying cards, and then ventured into toys and games after World War II. In 1970, it shifted from traditional toys to electronic entertainment products. The company began designing home video gaming consoles and arcade games for arcade centres, shopping malls, and taverns. When computer market emerged in 1983, most console manufacturers did not survive the business and withdrew from the market either through bankruptcy or by diverting their attention to their other product lines. Despite this decline in home video gaming market, Nintendo still pursued the home video gaming console and made its own Nintendo Entertainment System (NES). The company also changed the video games from the usual structure of violence to games that have themes of “good and evil, honour and disgrace, beauty and horror.” The company has experienced several challenges especially during the rise of the home computer market. Nintendo was slow to tap the opportunity of home computer games until such time in 1995 that Sony introduced PlayStation console, then followed by Microsoft’s Xbox. Since Nintendo could not topple Sony and Microsoft within the market of core gamers, it decided to expand its target market to non-core gamers. It started to develop new uses for handheld console DS (e.g. DS is used in Japan to teach English through special character recognition software). Wii was also launched later in 2006, and became a hit due to its innovative feature of motion-sensing controller which is also a multifunctional device. As the product is becoming popular, Nintendo cannot cope up with the demand of supply as the holiday moves in.

S.W.O.T. Analysis

Strengths * Innovative and quality product (advocates cannot be swayed easily to buy other than Wii) * Excellent management support * Affordability (reasonable price) * Human resources (talented company programmers and game developers) * Simpler game system * Least expensive next generation console * Strong third party support| Weaknesses * Insufficient productivity line (cannot meet demands) * Cannot compete with the faster processor and better graphics by the competitors * Possibility of sports injury and property damages caused by controllers flying out of users’ hands| Opportunities * Tapping other potential segments ( e.g. seniors, non-core adult gamers, children) * Tapping social networks to spread the good things about Wii and counter the negative publicity| Threats * Consumer may buy competitors’ product if product stock-out continues * Uncontrolled increase of price by retailers due to demand (may discourage consumers to buy due to high price compared to competitors) * Negative publicity (accused of intentional scarcity) * Pricing war|

External Environment
Market Analysis
There is no doubt that home video and computer games are continuously popular in this era of technology. From 1970, the market shifted from traditional toys to electronic entertainment products. The rise of home computer market in 1983 contributed to the growth of home video and computer games. The manufacturers of these video and computer game hardware are not only targeting the traditional 9 to 35 years old males, but rather expanding to non-traditional age brackets of 40’s, 50’s and even senior citizens. According to Satoru Iwata, president and CEO of Nintendo, games should...
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