Case Analysis
NINTENDO
Presented by:
Abiel Solomon, Sandra Lopez, Dawson
Dawson Ricker, Solia Pham, Joseph G.
Joseph G. Domolky
Agenda
General Environment Analysis
Porter's Five Forces Analysis
Internal Analysis
Competitive Analysis
Recommendations
General
Environment
Quick Look into The Game Console Industry
Demographic
- The industry appeal
broader age range,
attracting player
under 18 to 50+
- The industry offers
range of products,
high-end gaming
to more affordable
games, to cater to
income levels
Sociocultural
- The increase in
female gamers has
changed marketing
strategies to be
more inclusive
- The gig economy
might impact gaming
habits as flexible
work schedule
Legal/Political
- American with
Disabilities Act
(ADA): impacts the
industry's focus on
creating more
accessible games
- Regulations and
laws in different
countries influence
game development
and distribution
strategy
Quick Look into The Game Console Industry
Technological
-
-
Economic
Advances in AI, VR, - Inflation and
unemployment affect
and cloud gaming
consumer spending
revolutionizing
power, affecting
interactions
industry sales
Increased internet
- There are
mobile access
cryptocurrency and
gaming markets,
blockchain
especially in
technology are
regions
being integrated
into gaming for new
game mechanics
Global
- Tariffs and global
trade agreements
shape operational
strategy across
international
markets
- The economic growth
of emerging markets
influence to gaming
firms; expansion
strategies
Porter's Five
Forces
Threat of New Entrants – Low
• High barriers to entry: The video game console industry is
dominated by big corporate like Sony, Microsoft, etc which requires
significant capital for infrastructure and expertise in hardware and
software
• Exclusive game libraries: Major companies have established a
strong brand name and game libraries, IPs, etc which are costly to
develop or license
Bargaining Power of Buyers - Low
• High Switching Cost
o Consoles range from $59.99 to $499
o Nintendo, Microsoft, and Sony all have exclusive games that can only be accessed
on their consoles
• Low threat of backward integration
o Buyers are not likely to produce their own gaming consoles or games
• Products in the market are differentiated with unique features
Bargaining Power of Suppliers - Moderate
As gaming becomes
increasingly digital with the
emergence of streaming,
gaming software developers
are becoming less dependent
on suppliers for software
materials.
THEREFORE
Bargaining power of
suppliers
is decreasing.
Rivalry Intensity - High
• Main industry competitors (Sony, Microsoft, and Nintendo)
are quick to adapt to market trends
o Ex. Nintendo released the Wii, introducing motionsensing controls to the market (2006), Microsoft and
Sony both caught up to this new technology with their
Kinect (2010) and Move (2010).
• Competitive pricing
• Moderately high exit barriers
o Specialized assets (technology, software, etc.)
o Fixed closure costs
Threat of Substitutes - High
The gaming industry is a form of entertainment
There are a wide variety of alternative entertainment options,
including mobile gaming, PC gaming, and streaming services all
compete for the same consumer preferences
•
•
•
•
•
•
Alternative Platforms
Cloud gaming services
Subscription model (eg. Xbox
PC gaming
VR & AR gaming
Streaming services
etc
Internal
Analysis
Tangible resources
• Financial Resources:
o Strong sales revenue with significant capital reserves
• Technological:
o Advanced manufacturing facilities for high-quality consoles
o Extensive inventory of consoles, games and accessories
• Distribution Networks:
o Global supply chain and retail presence including eShop
Intangible resources
• Human Resources: Creative talent and leadership driving innovation and
strategic direction
• Organizational Culture: Focus on innovation, quality production, and
employee development
• Brand equity: Nintendo’s brand is globally recognized, associated with
customer loyalty
• Intellectual Property: Its iconic game franchises and patents in gaming
technology
Nintendo's unique and immobile resources
drive competitive advantage
Resource Heterogeneity: Nintendo's unique mix of advanced technology,
extensive global distribution, and iconic intellectual properties
differentiates it from competitors.
Resource Immobility: Key resources such as Nintendo's advanced
manufacturing capabilities, deep financial reserves, and proprietary
intellectual property are costly and complex, making them difficult to
replicate or transfer.
Nintendo has a sustainable competitive
advantage due to its product's value and rarity
Valuable
Rare
Yes - Strong brand, Yes - Iconic
IP, and hybrid
franchises (e.g.,
gaming
Mario, Zelda,
experiences (e.g., Pokémon) and a
Switch) provide
unique innovation
significant
culture
customer value
Imitate
Substitute
No - Nintendo’s
iconic franchises
(Mario, Zelda), its
fanbase built over
decades, and
unique approach
to blending
hardware and
software, like the
Switch
Yes – Many direct
competitors like
Sony PlayStation,
MS Xbox and
other indirect
competitors from
mobile gaming
Key activities across Nintendo's value chain
Procurement : Strategic partnerships and effective supply chain
management
Technology Development: Innovate in R&D for hardware and software
advancements
HR Management: Offer supportive work environment
• General
Efficient supply
• TimelyManage global
• Distributes
Utilize
culture are
• Provide
afterAdmission:
operations• and
leaders
who drive
chain
production
through physical
and celebrity
sales support
decision-making
• Manages
aligned with
and online
endorsements
and software
supplier
market demand
channels
• Emphasize
updates
relations to
• Efficient
unique features • Focus on user
mitigate risks
manufacturing
to differentiate
experience
from
competitors
Inbound Logistics
Operations
Outbound Logistics
Marketing & Sales
Service
Competitive
Analysis
Nintendo's Ongoing Competitive Landscape
The Switch's Continued Success:
• Strong Sales: Despite the increasing competition, the Switch has
maintained strong sales figures, demonstrating its enduring
popularity.
• Expanded Offerings: Nintendo has continued to expand its Switch
lineup with models like the Switch Lite and Switch OLED, catering to
different preferences and budgets.
• Exclusive Game Releases: The company has consistently released
highly anticipated exclusive titles, such as the latest entries in the
Mario, Zelda, and Pokémon series, solidifying its position as a gaming
powerhouse.
Evolving Competitive Threats:
• Cloud Gaming: Services like Google Stadia and Microsoft xCloud offer
a subscription-based model for playing games on various devices,
potentially challenging the traditional console market.
• Mobile Gaming: The growing popularity of mobile gaming platforms
like iOS and Android presents a competitive threat, especially for
casual gamers.
• Next-Generation Consoles: The release of the PlayStation 5 and Xbox
Series X/S, with their advanced hardware capabilities, could
potentially draw away consumers seeking the latest technology.
Nintendo's Response
• Leveraging Exclusivity: Nintendo focused on building a strong library
of exclusive games, such as the Mario and Zelda series, to attract and
retain customers.
• Hybrid Design: The Switch's unique hybrid design offered a distinct
advantage over traditional home consoles, allowing for both docked
and portable gameplay.
• Family-Friendly Appeal: Nintendo continued to focus on a familyfriendly image, appealing to a broader audience beyond hardcore
gamers.
Recommendations
Nintendo's Strategies for the Future:
• Innovation: Nintendo has a history of innovation, and it will likely
continue to explore new gaming concepts and technologies to stay
ahead of the competition.
• Partnerships: Collaborations with other companies can help Nintendo
expand its reach and offer unique experiences to its customers.
• Subscription Services: Nintendo has introduced subscription services
like Nintendo Switch Online, providing additional features and
content to its users. Expanding these services could be a source of
recurring revenue.
Discussion Questions
• What do you think Nintendo should do next to keep up with
competitors?
• In which areas of its value chain should Nintendo focus its efforts to
further strengthen its competitive advantage?
• Considering the challenges posed by cloud
gaming and next-generation consoles, what do
you believe is Nintendo's best path forward to
maintain its relevance in the gaming industry?
Thank you!
Appendix
• 15 stats on mobile gaming demographics for 2024.
https://playtoday.co/blog/stats/mobile-gaming-demographics/
PlayToday.co.
(2024,
February
23).
• 2024 essential facts about the U.S. video game industry. the ESA. (2024, May
https://www.theesa.com/resources/essential-facts-about-the-us-video-game-industry/2024-data/
16).
• Barriers to
Market
Entry.” Barriers to
Market Entry - Advantage, Type, Cost,
www.referenceforbusiness.com/small/A-Bo/Barriers-to-Market-Entry.html#google_vignette. Accessed 2 Oct.
2024.
• Carmely, M. (2023, December 25). Nintendo Target Market & Audience Segmentation. Start.io - A Sell-side
Omnichannel Advertising Platform. https://www.start.io/blog/nintendo-target-market-segmentationmarketing-strategy-main-competitors• expert, O. L. work. (2024, April 16). How the gaming industry can equip itself for a future with ai. HRForecast.
https://hrforecast.com/how-the-gaming-industry-can-equip-itself-for-a-future-with-ai/
• Herridge, Stephanie. “A Strategic Audit of Nintendo Co., Ltd. - UNL Digital Commons.” Nintendo Strategic
Audit, May 2023, digitalcommons.unl.edu/cgi/viewcontent.cgi?article=1149&context=honorstheses.
• Team, M. S. (2023, April 30). Xbox Porter Five Forces Analysis. https://www.mbaskool.com/five-forcesanalysis/companies/18355-xbox.html