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
Nintendo
Pricing strategy
Presented by:
Angela Ng, Filip Jahoda, Kim Manh Tuan,
Sabrina Lee, Zhen-rui Chen
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About Nintendo
World’s biggest video game company
Innovator of games hardware and
software – has sold over 600 million
hardware units and over 4 billion software
units
Creator of some of the most popular
game franchises including Mario, Zelda,
Donkey Kong and Pokémon
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Business Scenario
 Nintendo is having problems to compete in the video game wars and
facing a greatly reduced market share. It is unable to keep up with
the powerful hardware and realistic graphics required by the
traditional gamer segment. Video game business is growing, but
Nintendo’s business is shrinking.
 Nintendo then chooses a new strategy to broaden the gaming
demographic and bring gaming to the masses, through motionsensitive and casual games that are more accessible and fun to play.
 “Not fighting Sony, but how many people we can get to play games.”
- Satoru Iwata
 Media and many gamers are skeptical that Nintendo can succeed
with their ‘gimmicky approach’
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New Opportunity: Broadening the
Demographic & Casual Gamer
Moms / women
Including the whole family
 Attracting the ‘playing gene’ of customer groups who have
traditionally not played video games
 Redefine “who” is a “gamer”
 Casual game: simpler rules, ease of use, lack of
commitment
Elderly
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Positioning
 Innocent, fun and refreshingly simple!
 Inclusive play
 Playing together – group entertainment, family interaction,
parties
 Being active
 Working against the gamer stereotype to broaden the
customer base:




NOT violent
NOT passive
NOT isolated
NOT complicated
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Nintendo’s Product
Offering products to different segments including both hardcore
gamers and casual gamers

Traditional titles: Metroid Prime, Zelda:
Twilight Princess, Super Mario Galaxy

Casual titles: Wii
Fit, Wii Sports,
Cooking Mama,
Crosswords
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Key activities
 Software development:
•
Develop popular games for the console
 Hardware development:
•
Develop consoles and accessories for various games
 Platform management:
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Managing the relationships and development
platform with third-party game developers
 Marketing :
•
Maintaining contacts with many potential partners
and customers (contractors, OEM partners,
distributors), media representatives help them to
deliver their value proposition to all stakeholders.
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Non portable
games market
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Competitors classification
Direct competitors
• competitors providing platform for nonportable, non-browser games –>
substitutes (more or less)
• PSX, Xbox, PC, Apple
Indirect competitors
• other competitors in the games market
• smartphone environment, (tablets),
handheld
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Direct competitors
 Playstation (PSX) + Xbox
• High performance
• Backed up by big companies Sony & Microsoft
 PC (Windows)
• Still the highest number of players
• characteristic controls mouse + keyboard
• high level of piracy
 Apple - relevant gaming market in development
• users typically not focused on gaming
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Target groups of consumers
 Gamers
• Responsive to all kinds of games
 Casual players
• Responsive to simpler, quick to get into games (action,
sports, racing) games, multiplayer preference
 Non-players (people who are not into gaming)
• Responsive to simple, quick to play games, + multiplayer
(social aspect), motion control +
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Tools
 High Performance
• PC
 Special Features
• special controllers and game titles
 User friendly
• xPC
 Exclusive game titles
• Higher demand for exclusive game
titles also rises the demand for the
game platform (complement).
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Beginnings
 Wii hit the market with innovative system of controls
and gameplay
•
•
•
motion controller and games designed for simple, typically
multiplayer gameplay
simple access and intuitive use
new aspect of entertainment: not playing the game, but
playing WITH the game and the controller as with a toy
 Many users from casual gamer or non-gamer segment
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Current development
 Consoles has gone online, C = PC
• + access to detailed data about
consumers and their behaviour via
their online accounts
•
+ direct marketing with shopping
right from the couch
 All platforms now have their motion
controllers
•
Low support on PC
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Current situation
 Latest Nintendo release Wii U
had insufficient sales even
before the new releases from
Sony and Microsoft
 Last month PS4 and Xbox One
were released, resulting in
serious increase in
competition
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Questions
 What can Nintendo do in this
situation?
 As a producer of a console
and also publisher of a
popular exclusive game title,
would you agree to release
the game on PC?
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Answers
 The solution would be to find a way to differentiate our
platform again, like it happened before with the motion
controller. Other platforms which have lots of strengths
has to be as little substitute to ours, as possible
 Effect
• Increased sales
• Piracy on PC would lead to large number of illegal copies
•
Lowering demand for our platform, as we create substitutes
this way
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Nintendo Pricing Strategy
 The price of a Nintendo Wii ($130) is
already a lot cheaper than a Xbox 360
($300) and a PS3 ($250). This is
competition based pricing (where
companies use their competitors’ price
to judge theirs). => making Wii more
competitive.
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A Loss Leader Strategy
 A loss leader is a good or service which is advertised and
sold below its cost price.
 Purpose: Bring in (lead) customers in the retail store on the
assumption that, once inside the store, the customers will be
stimulated to buy full priced items as well.
 Applied by Nintendo: The cost of manufacturing the touch-
screen controller, known as the Wii U GamePad, forces
Nintendo to sell the machine at a loss, a trade-off to draw in
a large base of consumers who will eventually buy the highmargin Wii U software.
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Pricing strategy is “Tying”
 This strategy is to force customers to buy one product in
order to use another.
 Accordingly, buyers pay a relatively low price for the console
but then choose a greater or lower price based on how
heavily they consume games. Thus, hardcore gamers will
purchase more games, resulting in an overall higher price,
while lighter gamers will be able to achieve a lower overall
price. Additionally, games exclusively made for the Wii U
will pressure gamers to purchase the new console.
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Video Game Pricing
Special editions and DLC (Downloadable
content)
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Get more money from high willingness-to-pay
customers without losing sales from low
willingness-to-pay customers
Games dropping in price
•
•
People just wait if they are only willing to pay less
Higher price that early adopters pay is “early adopter
tax”.
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Final Question
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Thank You!
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 Question for other groups:
As a producer of a console and also publisher of a popular
exclusive game title, would you agree to release the game
on PC ?
Contact:
In case you need information:
Contact: kimmanhtuan295@gmail.com