Jake Cashion
Jonathan Popa
Tommy Than
Michelle White
Vision & Mission
•
•
•
•
•
•
Attract new user segments
Provide affordable entertainment
Enhance customer value
Maintain profit margins
Utilize innovative technology
Create an active , social gaming experience
Gross Profit Margin
• 20% Profit Margin
– Revenue: $199
– COGS: $158.60
30%
20%
• (40%) Profit Margin
– Revenue: $599
– COGS: $840.35
10%
0%
Wii
-10%
-20%
-30%
• (42%) Profit Margin
– Revenue: $299
– COGS: $425
-40%
-50%
Playstation 3
Xbox 360
Five Year Summary
$2,000,000.00
$1,500,000.00
$1,000,000.00
Net sales
Net income
$500,000.00
$0.00
2013
2012
2011
2010
2009
-$500,000.00
Net sales
Net income
2013
2012
2011
2010
2009
$635,422.00 $647,652.00 $1,014,345.00 $1,434,365.00 $1,838,622.00
$7,099.00 -$43,204.00
$77,621.00 $228,635.00 $279,089.00
Japanese Yen in Millions ($1 Yen = $.97 USD)
Porter’s Five Forces
• Competitive Rivalry
Within the Industry
– High
• Threat of Substitutes
– High
• Bargaining Power of
Suppliers
– High
• Threat of New Entrants
– Medium
• Bargaining Power of
Buyers
– High
Key Rivals
Nintendo Wii
•
•
•
Microsoft’s Xbox 360 and Xbox One
Sony’s Playstation 3 and Playstation 4
Apple and Android Devices
Macro Environments
• PESTLE Analysis
–
–
–
–
–
–
Political
Economic
Social
Technological
Legal
Environmental
• Political: Mostly concerned with
violence in video games
• Economic: Industry life cycle tends to
match with computer industry
• Social: Most video game players are
young males. Nintendo tried to open
up the demographic by catering to the
“causal gamer”.
• Technological: Processor and graphics
card improvements plays a major role
in the market. Technology in Smart
phones has created a new market for
gaming.
• Legal: Issues with copyright, trademark
and intellectual property cases
• Environmental: Consoles, games and
accessories use a lot of metals and
plastic
VRIO Analysis
The Question of Value
• Nintendo’s high stocks and reputation allows them to grow in their
product and technology development.
The Question of Rare
• Resources are built from based users which give the advantage to
enhance in their unique wireless and motion experience compared
to other consoles.
The Question of Imitability
• Nintendo games genre is easily imitated, but its reputation and
style cannot.
The Question of Organization
• Nintendo Wii current resources and capabilities in its supply chain
are sufficient enough to compete with the largest players in the
industry. (Sony and Microsoft)
SWOT Analysis
Strength
Opportunities
• Low cost hardware/software
• Unique use of free motion of Wii
controller
• Large selection of multiplayer
games
• Leading game console brand
image
• Leading of “all age” games
attracts family and friends play
• Attract many consumers because
lower unit price sales compared
to others
Weakness
• Limited selection of software
• Trailing in online experience
opportunities
• Weak graphic compared to other
consoles
Threats
• High competitor units in market
• Software developers abandoning
Wii software development due to
low profit projections
Porter’s Analysis of Three
Generic Strategies
Narrow
Market
Scope
Segmentation Strategy
•Focused on market segment of gamers not interested in expensive hardware
•Focused also on non-gamers, brought on the development of the motion sensor controller system and
interactive gaming
•Competitors more focused on power user gamers, expensive hardware and HD graphics
•Competitors also encouraged and funded development of more immersive and engaging games with
intricate storylines and intense graphics
Differentiation Strategy
•Developed the first motion sensor controller
system
•Competitors quickly implemented improved
controller systems including voice command
Broad
Market
Scope
Uniqueness
Competency
Cost Leadership
•Lower cost of production due to less robust
hardware
•Able to provide lower price than Microsoft and
Sony given their more built out, higher tech
consoles
Low Cost
Competency
Diversification
Failed Attempts:
• Started as playing card company
in 1889, but was abandoned as a
business venture by 1970s
• Late 1960s saw attempts at a
“Love Hotel”, TV network, a Taxi
service, and also an instant rice
food product.
• Were able to make money with
these ventures to get by, but
unable to sustain growth until the
creation of the video game
industry
• Ran Nintendo Power magazine
from July 1988 until December
2012
Present:
• Primarily focused on video game
hardware and software
manufacture and development
globally
• Majority owner of the Seattle
Mariners of Major League
Baseball in the US
• Joint venture with Chinese firm to
manufacture and sell similar
game console
• There is a push from investors to
make new attempts at
diversification, but there is little
current activity in that arena
Acquisitions, Joint Ventures
& Divestitures
Acquisitions:
• A software developer like Square
Enix, Ubisoft, or Gearbox
Software
– Could help provide insight into
the development of competitors
games, hardware, etc.
• A mobile game developer like
Rovio or Glu
– Could help with marketing or
further monetizing games in the
handheld market
Divestitures:
• Discontinue Wii production
– Focus on WiiU and 3DS
Joint Ventures:
• Large and ever growing list of
development partners, most
notably: Bandai Namco Games,
Square Enix, and Game Freak
• Several subsidiaries involved in
the video game industry, most
notably: Creatures, Inc., Nd Cube,
and Retro Studios.
• Recommend to continue to rely
on these types of relationships
for all future projects
BCG Portfolio
Matrix
Industry Growth
High
Stars
Nintendo
3DS
???
WiiU
Dogs
Cash Cows
Seattle Mariners
Wii
Low
High
Market Share
Low