1. A change in strategyat Nintendo

2. Index Introduction Market analysis Nintendo before the change The change Post-change analysis and benefits Nintendo today & Recommendations References 3. Introduction Nintendo today &Introduction Market Nintendo Change Benefits Recommendations 4. Nintendo in few words One of the three largest video game companies Workforce 5,000 Based in Kyoto, Japan Foundation: 1889 Three large markets: Japan, Americas and Europe Nintendo today &Introduction Market Nintendo Change Benefits Recommendations 5. The industry Consoles GamesAccesories Nintendo today &Introduction Market Nintendo Change Benefits Recommendations 6. The industryHome Handheld Nintendo today &Introduction Market Nintendo Change Benefits Recommendations 7. Market Nintendo today &Introduction Market Nintendo Change Benefits Recommendations 8. Market overview Red Ocean strategy Compete in existing market space Focus on gaining market share and outsell competitors Exploit existing demandDefend current position and beat the restNintendo today &IntroductionMarket NintendoChange BenefitsRecommendations 9. The Market: industry strategy Industry evolving in technological cycles product generations(currently at 7th generation)Generation XIncremental Change life cycle Disruptive RevolutionGeneration YIncrementallife cycle Generation life cycle shortening Nintendo today &Introduction MarketNintendo ChangeBenefits Recommendations 10. PESTLE analysis LEGAL Piracy, intelectual property issues, content age restriction SOCIAL Population Ageing ENVIRONMENTAL Environmentally friendly materials recyclingpackaging Nintendo today &Introduction Market NintendoChangeBenefits Recommendations 11. Nintendo Nintendo today &Introduction Market Nintendo Change Benefits Recommendations 12. Nintendo before the change Competition is based on technology performance Gaming consoles are sold at a loss Suffering years of declining market share and shrinking markets margins GameCube is out-competed by Xbox and Playstation 2Specification Comparison 2004Console Xbox GameCube Playstation 2Main Processor733MHz 485MHz 295MHzRelease DateNov 15, 2001 Sep 15, 2001 March 4, 2000Source: Own work based on NPD Group Data BaseNintendo today &Introduction Market Nintendo Change BenefitsRecommendations 13. SWOT 2004 STRENGTHSWEAKNESSES Reputed brand Financial difficulties Global enterprise Strong supply chain dependency Best sellers are first-party Targeting low margin and narrowsegment Exclusive games empower brand Less capabilities (DVD, music...) Backward compatibility Handheld market leadership Nintendo today &Introduction Market Nintendo ChangeBenefits Recommendations 14. SWOT 2004OPPORTUNITIES T H R E AT S Emerging network technologies Fierce competition Growing industry Quickly changing demand Big potential market (casual Emerging network technologies players) Short product lifecycle Backward compatibility Merchandising Increasing purchasing powerNintendo today &Introduction MarketNintendo ChangeBenefitsRecommendations 15. Nintendo 2004Game Console sales (units) Follower in a6050 Red Ocean40Millions of $ Microsoft30 Nintendo Sony20100 2003 20042005Source: Own work based on Seeking Alpha article Nintendo today &IntroductionMarketNintendo Change Benefits Recommendations 16. Change Nintendo today &Introduction Market Nintendo Change Benefits Recommendations 17. Change Drivers The lifecycle of the 6th generation consoles is nearly over7th generation, strong consoles are comingDead-end strategyPoor market focus (7-16 segment)Nintendo today &IntroductionMarket Nintendo Change BenefitsRecommendations 18. Change TIME TO REACT !!!Nintendo today &IntroductionMarket Nintendo Change BenefitsRecommendations 19. Blue Ocean Strategy Strategy focusing on creating new demand in places where there is none, thus making the pie bigger instead of fighting over whom gets the largest slice of the pie. Nintendo today &Introduction Market Nintendo Change Benefits Recommendations 20. Blue Ocean Strategy The Wii : Radical changes to the strategy1. Game Play2. New Approach3. New Consumers Nintendo today &Introduction Market Nintendo Change Benefits Recommendations 21. 1. Game-Play Nintendo today &Introduction Market Nintendo Change Benefits Recommendations 22. 1. Game-Play Focus on a more user-oriented strategy (controllers) The wireless controller "liberates" gamers Endless options (Kart wheel, fishing rod, shield and sword, blaster)Nintendo today &Introduction Market NintendoChange BenefitsRecommendations 23. 2. New Approach Game-packs giving many hours of fun and entertainment in ahighly competitive, mobile and fitness-oriented environment. Wii Sports package Wii Fit Just Dance Nintendo today &IntroductionMarketNintendo Change Benefits Recommendations 24. 3. New consumers From a younger audience into the casual gamers category More casual players arent as likely to be attracted by hardware features, so its all about delivering a fun, easy-to-use and addicting game experienceA. Frazier, Video Game analayst NPD Group (Source Forbes) Nintendo today &Introduction Market Nintendo Change Benefits Recommendations 25. 3. New Consumers Nintendo today &Introduction Market Nintendo Change Benefits Recommendations 26. Benefits Nintendo today &Introduction Market Nintendo Change Benefits Recommendations 27. BenefitsComplementary Benefits Wider customer profile bring more money Competitive advantage on cost Brand awareness increaseCore Benefits Sales explosion Profits as never before Nintendo today &Introduction Market NintendoChangeBenefits Recommendations 28. Price Decrease Release Pricing (US) Xbox 360PlayStation 3Wii $279 Low-end modeln/a n/a (Xbox 360 Arcade)$349 $399 Mainstream model$249 (Xbox 360)(PlayStation 3 40 GB) $449$499 High-end model n/a(Xbox 360 Elite) (PlayStation 3 80 GB)SpecificationsXbox 360PlayStation 3WiiMicro Processor3,2 GHZ /3Dual Core3,2 GHz/ 7 Core 729MHz 5 CoreVideo Memory Bandwith21,6 GBps 22,4 GBps3,9 GBps 512 MB GDDR3265 MB XDR RAMMain System RAM 64 MB GDDR3(700MHz)(3GHz) 12x Dual-Layer DVD HD DVDOptical Drive Blue Ray Proprietary Optical driveDriveSource: Own work based on NPD Group Data Base Nintendo today &IntroductionMarketNintendo Change Benefits Recommendations 29. Non-conventional uses Fight obesity Used for medical rehabilitationHelps with range of motionand helps me extend andpush it as far as I can go Chris Schroeder, 24, Walter Reed ArmyMedical Center Used in retirement homes"But once they get it, you can see the change in some people.They are more talkative and have a sense of humor. Theres a lotof joking going on in here."Earl Davis, 73, retired Marine, USA TodayNintendo today &Introduction MarketNintendoChangeBenefitsRecommendations 30. Sales Increase Console sales in the US161412Millions of units10 8Xbox 360Wii 6PS3 4 2 0Source: Own work based on NPD Group Data BaseNintendo today &Introduction Market Nintendo Change BenefitsRecommendations 31. Profit Increase Overall Nintendo Profit 3000 2500 2000 millions of $ 1500 10005000 20052006 20072008 Source: Own work based on NPD Group Data Base Nintendo today &IntroductionMarketNintendoChange Benefits Recommendations 32. Conclusions &Recommendations Nintendo today &Introduction Market Nintendo Change Benefits Recommendations 33. ConclusionsThe strategic change was a big SUCCESS Low-cost Focus on new market (casual gamers) Generating revenues from both sidesIs the change still appropriate?NO Nintendo today &Introduction Market Nintendo Change Benefits Recommendations 34. Current situationNet sales 20,000 Competitors have catched up: 18,000 16,000 14,000 Loss of competitive edgeMillion of $ 12,000 10,0008,000 Blue Ocean turning Red6,0004,0002,000 0 2012 losses: ($526,884,000) 200620072008 2009201020112012Source: Own work based on Nintendos Annual Reports Nintendo today &Introduction Market NintendoChange Benefits Recommendations 35. Current situationSales 2012 Loss of leadership Again a follower 33%45% Sales 2009 Xbox PS3 24%31%22% Wii 45%Source: Own work based on www.vgchartz.com Nintendo today &IntroductionMarket Nintendo Change Benefits Recommendations 36. Current situation Nov2012 Next launch: Wii U Widely pointed as an early failure Incremental change Nintendo today &Introduction Market NintendoChangeBenefits Recommendations 37. RecommendationsIn a market that evolves in waves: Nintendo have resigned itself to compete in a Red Ocean Dropping sales loss of market share - follower 1) They need a DISRUPTIVE change! Either blue, green, or purple 2) When they compete in the classic market no good results areachieved 3) We suggest to look for competitive advantages that could bring the differenciation Nintendo needs to get back to the leadNintendo today &IntroductionMarket NintendoChangeBenefitsRecommendations 38. ReferenciesPatricio OGorman (2007) Wii: Creating a Blue Ocean The Nintendo WayNintendo corporate site (2001-2012) Financial Statementshttp://www.nintendo.co.jp/corporate/en (accessed 03/12/2012)The Video Game Industry Why Nintendo Has Dominant Market Sharehttp://sites.duke.edu/soc142-videogames/global-value-chain/market-power/why-nintendo-has-dominant-market-share-2 (accessed 04/12/2012)Gamespot UK (2006) 2005 a record year for US gaminghttp://uk.gamespot.com/news/2005-a-record-year-for-us-gaming-6142407(accessed 04/12/2012)Seeking Alpha (2006) Seventh Generation Gaming Consoles: ThinkingOutside the Box http://ce.seekingalpha.com/article/22075(accessed 06/12/2012) 39. ReferenciesForbes Magazinehttp://www.forbes.com/2008/11/28/nintendo-wii-wii2-tech-personal-cz-cs-1201wii.html (accessed 03/12/2012)Toy Directoryhttp://www.toydirectory.com/monthly/article.asp?id=3350 (accessed 03/12/2012)Time Magazinehttp://www.time.com/time/business/article/0,8599,1584697,00.html(accessed 03/12/2012)USA todayhttp://usatoday30.usatoday.com/tech/gaming/2008-05-14-wii-retirement-medical-centers_N.htm (accessed 03/12/2012) 40. Questions please Nintendo today &Introduction Market Nintendo Change Benefits Recommendations 41. A change in strategyat Nintendo