NintendoSWOT Analysis

Lionel BenoilidThursday 6th December 2012

As a card company (1889–1963)

Founded as a playing card company in late 1889 By Hiroshi Yamauchi Based in Kyoto, Japan Means “leave luck to heaven” Produced and marketed playing cards Put Disney characters in playing cards Became leader

History Market SWOT Recommendations Conclusion

New ventures (1963–1974)

From 1963 to 68, Nintendo set up› Taxi company› Food company› Love hotel chain› TV network› Toy market

Failed

History Market SWOT Recommendations Conclusion

Electronic era (since 1974) First venture in the video game industry Produced it’s own hardware in 77: the color TV

Game 81: Donkey kong Huge boost in profits 85: Nintendo Entertainment System (NES)

61 Million units, retired in 95

Home consoles: Super NES, N64, GameCube, WiiPortable consoles: Gameboy(s), Nintendo DS.

History Market SWOT Recommendations Conclusion

Background

Video game console industry› $10 Billion per year

Nintendo› First console: 1985

First mover Current market

› Nintendo (Wii: 1st), Microsoft (Xbox 360: 2nd), Sony (PS3 : 3rd).

History Market SWOT Recommendations Conclusion

Segmentation

Technological Segment

Sociological Segment

History Market SWOT Recommendations Conclusion

Porter five forces analysis

Competition

Entry barriers

Buyers

Substitutes

Suppliers

History Market SWOT Recommendations Conclusion

Typical life cycle

Introduction Growth Maturity Decline

X

Current Console Market

History Market SWOT Recommendations Conclusion

Individual game console cycleGrowth

(Early market saturation)

Maturity

(Full saturation, R&D begins on next generation)

Decline

(Introduction of new, phase out of

old)

Introduction

(Innovators/Early Adopters)

5-year Period (Average)

History Market SWOT Recommendations Conclusion

Game console life cycle trend

‘05-’12

Introduction Growth Maturity Decline

NES

SNES

N64

Game Cube

’85-’89 ’89-’95 ’95-’98 ’98-’05

Wii

History Market SWOT Recommendations Conclusion

1985 – 1989: The Beginning

Players: Nintendo (NES), Sega (MS) Nintendo market share: 90% Large success attributed to the

popularity of the Super Mario Bros game.85 - 89

History Market SWOT Recommendations Conclusion

1989 – 1995: The 16-bit Generation

Sega creates the Megadrive console to steal Nintendo market share.The Megadrive is superior in all areas:

Better graphics Longer/complex games More buttons Nintendo market share: 60%

89 - 95

History Market SWOT Recommendations Conclusion

1995 – 1998: Dawn of the PlayStation Players: Nintendo (N64), Sony (PS), Sega

(Saturn) Nintendo responded too lately

› Nintendo’s slogan became “Is it worth the wait? Only if you want the best!”

Pirate Nintendo market share: 23%

95 - 98

History Market SWOT Recommendations Conclusion

1998 – 2005: 128-bit and Beyond

Players: Sega (DC), Sony (PS2), Nintendo (GC), Microsoft (Xbox)

Nintendo limited its target audience. Nintendo market share: 14%98 - 05

History Market SWOT Recommendations Conclusion

2005 - 2012: Online era

Players: Nintendo (WII), Sony (PS3), Microsoft (Xbox 360)

First mover: Microsoft Nintendo market share: 48%

05 - 12

Wii

History Market SWOT Recommendations Conclusion

Nintendo's Market Share

90%

23%

14%

60%

1989 1995 1998 2006 2012

48%

History Market SWOT Recommendations Conclusion

Nintendo’s current proposition : Wii

Simple and cheap Focuses on what matters in having fun From pushing buttons to moving body Something more than game

History Market SWOT Recommendations Conclusion

Strengths Weaknesses

Opportunities Threats

Strengths Currently has the lion’s share of the market in consoles

› 48% of the market› Software market

Owns popular properties › Super Mario Bros. and Donkey kong

History of innovative gaming technology› First in the market › Created a new way of gaming

History Market SWOT Recommendations Conclusion

Strengths

Weaknesses

Opportunities Threats

Strengths Built a lot of brand equity over the past 30 years

› Sold more than 300 Million consoles› Sold 2.2 billion games

Captures a broader public

Gaming focus

History Market SWOT Recommendations Conclusion

Weaknesses Popularity of the Wii seems to have peaked

› Since 2011 sales have plummeted (earlier than competition) Doesn’t appeal to serious gamers

› Considered as a toy› Not known for sophisticated graphics› Not technologically good enough compared to competition

Strengths

Weaknesses

Opportunities Threats

History Market SWOT Recommendations Conclusion

Weaknesses The hierarchical nature of the company may cause it to not

respond quickly enough to the threats› Too hierarchical

Limited options in online gaming› Sony and Microsoft have created an online hub

Strengths

Weaknesses

Opportunities Threats

History Market SWOT Recommendations Conclusion

Capabilities based on Strengths & Weaknesses

Wii + Internet

Reduce business risk› Use global presence and geographical diversification› Reduce dependency on suppliers

Balance hardware and software focus

Appeal to serious gamers› Diversify range › Sophisticated graphics

History Market SWOT Recommendations Conclusion

Opportunities Expend demographics A large number of current Wii owners

› backwards compatibility of the new game will promote adoption by these users

Strengths

Weaknesses

Opportunities Threats

History Market SWOT Recommendations Conclusion

Opportunities Get the infrastructure better

› Home networking› Entertainment delivery technologies

Increase video game technology› Brain wave technology› holography

Strengths

Weaknesses

Opportunities Threats

History Market SWOT Recommendations Conclusion

Threats Online gaming continues to expand and Nintendo isn’t part

of it Competition: Some projects are going to cut into wii’s

market share.› Social networking games› Project Natal (Microsoft): Same technology / Same concept

Strengths

Weaknesses

Opportunities

Threats

History Market SWOT Recommendations Conclusion

Threats

Substitutes:› Popular devices like the iPad are migrating gaming away from

consoles and computers The console market is approaching saturation

› 60 million units of the current generation sold (Xbox 360, PS3, Wii)

Strengths

Weaknesses

Opportunities

Threats

History Market SWOT Recommendations Conclusion

Actions based on Opportunities & Threats

Cater to a wider public Focus on Online gaming segment Incorporate Social Networking games Target ‘mobile’ gaming segment Integrate Wii with basic activities (Extend

offering like Wii Fit) Manage shorter product lifecycle efficiency

History Market SWOT Recommendations Conclusion

Nintendo’s strategy

Spread consoles› Even if it’s for a low price› Will earn on games

Low communication› Strength of brand› Half the price of Microsoft

No subcontractor› Trust it’s own creativity

History Market SWOT Recommendations Conclusion

SWOT

- Unique and innovative products- Brand reputation and recognition

- Limited options in online gaming- Doesn’t appeal to serious gamers

- Expend demographics- Increase video game technology

- Substitutes- Competition

History Market SWOT Recommendations Conclusion

Three main recommendations

Cater to a wider public

Focus on Online gaming segment

Develop partnerships to introduce the next generation

History Market SWOT Recommendations Conclusion

Thank you for listening