I. Background For many years now, gaming industry has been very competitive when big corporations occupied the industry and shared a limited pie of hard-core gamers.
In 2006, by implementing successfully the “Blue Ocean” strategy, Nintendo has had a tremendous breakthrough and explored a brand new potential market segment: Women, the elders and families. Nintendo’s successes were undeniable by implementing a brilliant strategy and capture the big time of economy development. However, Microsoft and Sony which are in the most powerful corporations in the gaming industry, also reacted aggressively in order to capture back their markets. Moreover, the economy crisis busted in 2008 has affected Nintendo’s bottom line and brought more challenges. The question stated for Nintendo: “where to go next after the big success with Nintendo Wii and how to maintain the leading position in gaming industry against giant competitors?” The paper’s purpose is to analyze Nintendo’s strategy, resources as well as the effects of the economy on the gaming industry in order to craft a generic strategy for Nintendo to adapt new circumstances and earn more success in the difficult economic situation.II. Statement of the Problem4.
Global economy downturn — The economy situation affects almost all businesses’ bottom line especially when gaming industry is not one of people’s essential needs. Although most of countries in the world are struggling, some have very impressive breakthrough in economy5. Lacking of blockbuster game titles — All the games available for Nintendo Wii are at a low quality of revolution and very simple. Although the simple game titles are suitable for families and casual gamers but they hardly keep its attractive appeal when other competitors come into play. With potential competitions of Microsoft and Sony who have experience in designing and programming very popular games, Nintendo should concentrate on developing new, attractive game titles.6. Low graphic configurations — Nintendo should upgrade the gaming configurations for its Wii console according to the rapid development of technology and the chasing of two giantsIII.
Analysis Using SWOT Analysis, the following details of Nintendo’s business dynamics were taken into consideration:Strengths? Broad and unique market? Unique products? Utilized costingWeaknesses? Lack of attractive game titles? Low gaming graphic configurationsOpportunities? First mover advantages: reputation, economies of scales, copyrights of designs and inventions.Threats? Fierce competitions from big rivals? The economic crisis affects customers’ needs for entertainmentIV. Decisions – FormulationBased on the foregoing SWOT analysis, it is highly recommended the diversify products and expand markets strategy. Due to the economy regression, demand in the traditional markets is declining. However, there are countries that are having impressive development; these are promising lands for investors and international corporations to expand their markets. With a large population and dynamic economy, Asia is more potential for development and expanding than other traditional markets. Although in most of the Asia countries, Sony has occupied as a huge electronic and gaming brand but the casual gamer segments are still vacant to exploit.
Along with expanding the market in various parts of the world, Nintendo should continue competing with Microsoft and Sony in hard-core gamer segment. The fierce competition and broad product lines help Nintendo generate more revenue and diversify risks in the new market geography. Attaining the hard-core segment also makes it harder for Nintendo’s rivals to penetrate into the casual gamer market segments.
With the inherent reputation, Nintendo will not fall into defensive position when Microsoft and Sony come to the casual gamer market. The risk that Nintendo might face when following the expansion and diversification strategy is the misallocating resources and the potential of over-extension. The strategy hence requires a careful market research before coming to each market. In such developing and dynamic markets like Asia, it is still a very promising opportunity for market expansion.In terms of financials, with a huge budget accumulated from the successful Wii product over the world and a positive financial balance, the budget could help Nintendo either acquire or cooperate with local gaming corporations to occupy the Asia markets especially China.
V. Actions – Implementation In order to execute the strategy successfully, Nintendo must consider the resources distribution to follow both hard-core gamer and casual gamer segments. The resources including capital, human resources..
.to maintain the segment and expand new geographic markets simultaneously. The second course of action, Nintendo must concentrate and invest more on game development. Apart from better graphic resolutions and powerful hardware, it is very important to contain attractive game titles.
Microsoft Xbox and Sony PlayStation are very successful with the attractive Role Playing games (RPGs) which play an important part in their strategies. If Nintendo launched the similar games, the company would be in better position to pull customers from rivals. The gaming titles programming can be contracted out to third parties in order to enjoy more creative ideas and wide range of supplier selections. Finally, Nintendo should look into the future of video games and develop more break-through technology advantages. The new hand-held console could be played in three-dimension (3DS) and have ability to integrate with social networks (e.g. Facebook and Twitter) and mobile devices (e.
g. smart phones, tablets). These integrations are important for drawing the customers and keep the company in track with newest technology.