NINTENDO CASE: Ques.1 How did the home video games industry evolve (choose your own timelines that you feel are most relevant for this analysis)? A console, controllers, and cartridges were the three different sorts of parts that made up a home video game system. A signal was sent to the console whenever a player pressed the buttons or joystick on top of the controller. Cartridges contained chips encoding the instructions for a particular game. They were designed to be inserted into the console. 1970s In the early 1970s coin-operated game machines that played games such as pinball, shuffleboard and football were popular. Atari which was founded in 1972 conceived the idea of a fixed-purpose gameplaying computer. They launched a computer-based arcade machine called Pong which brought in more revenue than the best arcade games. To target the home market, they launched Home Pong which attracted a lot of audiences. In 1976, Fairchild came up with the first video game system and Atari came up with a similar system named 2600 VCS in late 1977. In the late 1970s, the home video game business attracted a lot of companies but due to low sales only Atari and Coleco survived. Although the home video game market quickly bounced back following the success of the arcade game Space Invaders. Space Invaders was later licensed for the VCS by Atari. Following Atari’s success, Coleco and Mattel came up with second-generation game systems with better graphics and also developed modules to allow Atari games to be played on the machine. 1980s 17% of US homes had video game systems by 1982. By 1983, there were several players in the Japanese home video game industry. It was this year that Nintendo launched Famicom which looked more like a toy than a computer and with a low price was able to significantly cut the competition. Although in 1985 the video game market collapsed again blamed on the flood of low-quality software. During this time, Nintendo approached Atari about licensing Famicom's non-Japanese rights. But the talks broke down as Atari started to fall apart. The hardware divisions of Atari that Warner sold off were reorganized. Meanwhile, Nintendo engineers were constantly making more complex games with powerful new chips. Nintendo chose to license other firms to create games for its system because the demand for Famicom games was greater than the available supply. By 1988 there were 50 licensees. Later, licensee contracts were modified to limit the number of game titles that any one company could release in a year. In 1988, Nintendo launched the Family Computer Communications Network System. Meanwhile, in 1980, Nintendo established a U.S. subsidiary, Nintendo of America (“NOA”). In 1983, NOA entered the U.S. consumer market with Game & Watch, brought over from Japan which was a failure. In 1985, Arakawa decided to try to launch the Famicom in America. He launched a direct sales campaign in New York City to promote the $100 Nintendo Entertainment System (NES), the name given to the redesigned video game console. The response from customers was positive, surprising the trade. In 1986, a countrywide roll-out came next. NOA launched a similar licensing program as Nintendo in Japan but limited licensees to 5 NES titles a year. By 1991, there were 100 licensees of NES. Ques.2 How did Nintendo create a monopoly position in the industry? Analyze its strategies Ques 3: What do you expect would be the dynamics for future and how should they plan for it?
