Nintendo Porters Five Forces
12/6/2005
Strategic Computing and Communications Technology
Fall 2005
Individual requirement 2
Koji Murao (18468500)
Note
I intentionally focus on one industry, the game industry, for all the four reports and analyze the strategy of each player in conjunction with the news I chose. Focusing on one industry made me realize how much the strategic aspects that we have learned in the class are working to shape the industry dynamics.
News
Nintendo has joined forces with McDonald's to offer free wireless internet access in the US for its DS handheld games console. (BBC News, October 18, 2005, retrieved from http://news.bbc.co.uk/1/hi/technology/4353480.stm)
Analysis
This deal reflects a Nintendo’s strategy to 1) ramp up the network effect and 2) create a lock-in of game players who play games outside. One of the key features of Nintendo DS, a successful portable game device, is its Wi-Fi connectivity, which allows users to play games with other players online around the world.[i] The utility of such online gaming will increase as the number of game players increases. Therefore, the network effect plays an important role. “McDonald’s already offers wireless connection in many US restaurants, but charges a fee.”[ii] Nintendo is attempting to remove the barrier of game players to enter the online gaming world by paying a sum to the access point provider, Wayport, and providing free and safe proprietary Wi-Fi connection. Another important factor to ramp up the network effect in this case is the number of “Hotspots” where Wi-Fi connection is enabled. McDonald’s is one of the world’s most recognized restaurants, operating and franchising more than 30,000 local restaurants in 119 countries.[iii] It is a perfect partner of Nintendo in terms of boosting up the network effect.
Also the easy and free access to the online gaming service suggests that Nintendo is attempting to lock in game players. One of the characteristics of online gaming is that gamers tend
Strategic Computing and Communications Technology
Fall 2005
Individual requirement 2
Koji Murao (18468500)
Note
I intentionally focus on one industry, the game industry, for all the four reports and analyze the strategy of each player in conjunction with the news I chose. Focusing on one industry made me realize how much the strategic aspects that we have learned in the class are working to shape the industry dynamics.
News
Nintendo has joined forces with McDonald's to offer free wireless internet access in the US for its DS handheld games console. (BBC News, October 18, 2005, retrieved from http://news.bbc.co.uk/1/hi/technology/4353480.stm)
Analysis
This deal reflects a Nintendo’s strategy to 1) ramp up the network effect and 2) create a lock-in of game players who play games outside. One of the key features of Nintendo DS, a successful portable game device, is its Wi-Fi connectivity, which allows users to play games with other players online around the world.[i] The utility of such online gaming will increase as the number of game players increases. Therefore, the network effect plays an important role. “McDonald’s already offers wireless connection in many US restaurants, but charges a fee.”[ii] Nintendo is attempting to remove the barrier of game players to enter the online gaming world by paying a sum to the access point provider, Wayport, and providing free and safe proprietary Wi-Fi connection. Another important factor to ramp up the network effect in this case is the number of “Hotspots” where Wi-Fi connection is enabled. McDonald’s is one of the world’s most recognized restaurants, operating and franchising more than 30,000 local restaurants in 119 countries.[iii] It is a perfect partner of Nintendo in terms of boosting up the network effect.
Also the easy and free access to the online gaming service suggests that Nintendo is attempting to lock in game players. One of the characteristics of online gaming is that gamers tend