Nintendo Case Short Version

CAN NINTENDO
KEEP WINNING
IN THE VIDEO
GAMES' WAR ?
For much of its history, the video game industry has focused on hard-core gamers and ways to improve
the speed and realism of their gaming experience. As a business model it had proved highly successful
for the three main players in the field, Sony, Microsoft and Nintendo. In recent years, Sony's expertise
in engineering and technical capabilities and Microsoft’s financial resources had given them a
significant advantage over their smaller rival Nintendo. However, In 2006 a new round of competitive
moves began with Microsoft's launch of the Xbox 360, it was Nintendo that came up with the game-
winning strategy by creating a new marketplace for Its innovative products. In 2005/6 it looked like
Microsoft would sweep the board as it had got to market first in November 2005 with its new generation
console. Sony's PlayStation 3 had been dogged with technical problems and was not launched until
nearly 12 months after the Xbox 360. Nintendo was also not ready to launch its new offering, the Wii
(pronounced 'we') until late 2006.
The Wii console proved to be a winner virtually from the start and beat both the Xbox 360 and
Playstation3 during 2007, selling over 16 million units world-wide to Microsoft's 7.85 million and
Sony’s 7.7 rnillion. The Wii outsold the other consoles and by the end of 2011 had turned over 89 million
units world-wide compared with 56 million for the PS3 and 58 million for the Xbox 360. Nintendo's
success came from a variety of sources. First, the Wii was a genuinely innovative product. Players used
a wand-like controller that was able to detect their hand movements and this translated into much more
life-like gaming, especially for sports such as tennis, golf, boxing and bowling. However, the Wii was
part of a much broader strategy developed by Nintendo President, Saturo Iwata, to target non-gamers
and expand the market for video games as a whole. Nintendo's DS, a hand-held gaming device, was the
first element of this strategy. The DS was launched in 2004 and was designed to appeal to occasional
gamers with simple controls (touchscreen and stylus) and short, simple games. The Wii continued this
approach with its simplicity, but was also promoted as family entertainment. In future gamers would
play on their feet and in groups rather than alone and on the couch. The DS also allowed multiplayer
games through its Wi -Fi connection. In 2008 Nintendo was named as one of the world's 10 most
innovative companies by Business Week and was the second most valuable listed company in Japan.
However, Nintendo's success was to be relatively short-lived. Despite record sales of its consoles in
2008 and 2009, elements of its strategy were already being imitated by its direct competitors, with Sony
and Microsoft both launching competitor products to the Wii, in the form of the Move for the PS3 and
Kinect for the Xbox 360. But also the popularity of hand-held consoles and targeting new segments of
occasional gamers had been picked up by smartphone manufacturers and their allied software/apps
producer networks. 'Angry Birds', a game developed for the smartphone market by Finnish firm, Rovio
Mobile, is thought to have sold over 500 million copies in 2011. Having taken gaming to a new market
it now seemed that another group of organizations was intent on taking a share of Nintendo's profits
using their own integrated platforms.The disruptive possibilities did not stop there either. Brands such
as 'World of Warcraft' (a multiplayer online fantasy game from Blizzard Entertainment) were benefiting
from an increase in group gaming via the Internet thanks to faster broadband. There were also
developers, such as Zynga, designing games Such as Farmville and Cityville to link with social media
sites such as Facebook. In September 2011 Nintendo announced half-year losses of 70.3 billion Yen
(€702 million) and saw its share price fall by over 13 per cent following disappointing sales of its latest
3DS hand-held game player. To survive and prosper in the new complex and fragmented world of video
games, which it can take much of the credit for creating, Nintendo now needs another game changing
strategy.

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CAN NINTENDO

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