External Effects on Nintendo

Topics: Video game console, Video game, Nintendo, Wii / Pages: 3 (732 words) / Published: Apr 22nd, 2014
Task No. 3 Monday 11:00am Tutorial

Introduction: Nintendo Co. Ltd has experienced a recent decline in sales as a result of the rising popularity of smartphone gaming apps. The information sheet addresses the company’s thoughts to introduce a free-to-play format of a Steel Diver video game in an attempt to entice customers back to the brand.

Macro-Environmental Analysis:

Demographic Forces: Changing demographic forces have undoubtedly contributed to deteriorating sales. Gamers who played Nintendo as children and who helped the original Wii to achieve its unparalleled market status are older now, with many moving into adulthood (Hopkins, 2004). At the same time, Nintendo has become increasingly aware of their primary target audience; families with young children, consequently alienating these aging fans with a preference for more mature games.

Economic Forces: The gaming console industry has proven to be recession proof, with the company experiencing record sales of US$21 billion in 2008, as it falls under the category of packaged entertainment and relies on things like launch period and spare time. Fluctuations in foreign exchange rate and disposable income levels can both affect financial performance but are not noteworthy factors towards the company’s recent loss of sales.

Natural Forces: Natural forces haven’t affected the company’s progress to any great extent. However, the release of the Nintendo 3DS got off to a great start on February 26th 2011, but 2 weeks later an earthquake and subsequent tsunami weakened sales in Japan. The company made the decision to cut the price of the 3DS and ramp up development of the machine software. As a consequence, fewer developers were available to work on the Wii U launch titles, weakening the console’s overall performance.

Technological Forces: Technological factors have played a significant role in Nintendo’s decline in sales. A new generation of young users is typically downloading free-to-play gaming

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