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Nintendo Marketing Analysis

BUS 303 - Final Project

Jessica Haynes

on 11 December 2013

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Transcript of Nintendo Marketing Analysis

Company History
The Evolution of Nintendo
Executive Summary
The Age of Video Games
- created "Computer Othello," the first arcade table game with colors
- launched "GAME & WATCH" product line, the first portable game system with an on-board processor
late 1980
- "Donkey Kong" was created (highest selling arcade game starting in 1981)
Nintendo was founded by Fusajiro Yamauchi in 1889.
began by selling playing cards ("Hanafuda")
earned large amounts of revenue in early 1900s by making Western playing cards
Remained primarily a card manufacturing company until 1963, when it started making arcade games as well.
focused on plastic playing card manufacturing until about 1970
responsible for creating the portable microprocessor in late 1970s

Age of Video Games (ctn'd)
- launched the Nintendo Entertainment System (NES) worldwide
Mario became more famous than Looney Toons!
- launched the Game Boy (first portable system with off-board software)
- Nintendo 64 was launched (first 64-bit game system)
Age of Video Games (cnt'd)
- Game Boy Color released (first attempt at portable, colorful games)
- Nintendo Game Cube launched (sold 3 million units in 1.5 months)
- Nintendo DS launched (first dual screen portable game system)
- launched the Wii (first body-interactive system)
- Nintendo 3DS, Wii U (first 3D portable platform and new controller designs, respectively)
Hanafuda cards
Computer Othello
89 years
GAME & WATCH series
Donkey Kong
Nintendo Entertainment System
Game Boy
Nintendo 64
Game Boy Color
Game Boy
Nintendo Gamecube
Gameboy Advance
Nintendo DS
Nintendo DSi
Nintendo 3DS
Wii U
founded by Fusajiro Yamauchi in Kyoto, Japan
died in 1940, before any video games were actually created
taken over by Hiroshi Yamauchi (Fusajiro's grandson) in 1949
turned the company into a video game company --> had to reconstruct the management from the top after his grandfather's death
changed the company in 1963, when he changed the name from "Nintendo Playing Card Co." to "Nintendo Co, Ltd."
passed away in September of this year at 85

mission and philosophy
"At Nintendo, we are proud to be working for the leading company in our industry. We are strongly committed to producing and marketing the best products and support services available. We believe it is essential not only to provide products of the highest quality, but to treat every customer with attention, consideration, and respect. By listening closely to our customers, we constantly improve our products and services."
"We feel an equal committment toward our employees. We want to maintain an atmosphere in which talented individuals can work together as a team. Committment and enthusiasm are crucial to the high quality of our products and support services. We believe in treating our employees with the same consideration and respect that we, as a company, show our customers."
The Industry
The total consumer spending in the games industry in 2012 was $20.77 billion.
A recent study suggests that 58% of all Americans play video games.
On average, 51% of US households have at least one game console.
and on average, the households that own a game console own a second as well.
The most influential event of the industry is the Electronic Entertainment Expo (E3), which is held annually and attracts millions of guests and visitors.
Nintendo's Market Strength
Nintendo competes in both the video game console and game publisher fields.
In 2012, Nintendo was the 4th highest grossing publisher.
In 2011, Nintendo was the 3rd highest grossing console company.
Publisher Market Share Statistics
Activision - 19.5%
Electronic Arts - 18.4%
Ubisoft - 11.2%
Nintendo - 10.8 %
Take-Two - 6.4%
Microsoft - 5%
Sony - 3.5%
THQ - 3.3%
Warner Bros. - 3.3%
Capcom - 2.4%
Console Market Share Statistics
SWOT Analysis
long history in the video game business --> could possibly lead to higher trust
only company to have a portable 3D system on the market
many famous series with HEAVY marketing
so many different products, aside from games alone!
an early start in video game making
leads to long-time fans who will come back for the "nostalgia" factor
so many popular spinoff series
Most games published by Nintendo are E-10 and under.
most new technology is easily copied by competitors
Wii U continues to have extremely low sales
Console-exclusive titles fpr Playstation and Xbox (Fable/ God of War)
Expand more on 2DS audience --> sell cheaper versions of games for this system
open up Super Smash franchise to other companies
perhaps host Capcom, SONY, Microsoft characters
expand adult audience by hosting and publishing more Teen+ ratings games
make more new remixes of classic games --> grow on nostalgia market
the coming releases of the XBox One (Microsoft) and the Playstation 4 (SONY)
bad publicity due to the Wii U and 2DS
the spread of 3D technology (3D televisions, etc) --> 3DS could lose novelty
Pokemon's (one of the company's main money making titles) moderately dropping ratings
Japan's 3rd most valuable listed company!
The world's 63rd most valuable brand!
Nintendo's marketing mix
Nintendo is most known for their video games, but they have much more to their name nowadays.
Games and consoles are distributed in a number of ways.
game franchises (GameStop, Rhino Games, etc.)
electronics retail stores (BestBuy, Radio Shack, etc.)
shopping websites (amazon, eBay)
Nintendo also has its own branch stores, such as...
The Pokemon Center
Nintendo follows a pricing strategy that is similar to all technology companies.

Prior to release = slight discount off of premium prices for pre-orders
Original release = premium price
Mature price (after about a year) = 2/3 premium to 1/2 premium
Post-sequel = half price or lower
Nostalgia/Classic = premium or higher
most major annual promotion is done at E3
new system announcements, new sequels of hit series
pop culture clothing and accessories
both profit AND advertising!
public awareness increases
promotional posters at electronics franchises and retailers
demo/trial version of games available for free play at retailers and online
video game consoles (Game Boys, Wii, etc.)
video game cartidges and files (Pokemon, Zelda, Mario)
school supplies
video game console accessories
pop culture clothing and accessories
children's toys
plush toys, action figures, trading cards
(In Japan only) Hanafuda cards
Nintendo's original claim to fame!
wii product life cycle
Due to the downward curve of sales in year 4, the Wii already appeared to be in late maturity in only 2010!
This means it is probably in the decline stage already.
Nintendo's organizational structure
Nintendo of America Distribution
Nintendo has two main distribution centers in the United States.
Nintendo North Bend
located in North Bend, Washington
is a manufacturing and distribution site
distributes directly to retailers or website warehouses
focuses on all of the US except the South and the East Coast
Nintendo Atlanta
is a distribution site only
ships to South and to the East Coast

In 2008, Nintendo unveiled its WiiWare service, which allows gamers to download new and old titles online to their Wii's hard drive.
no middle men
directly from developers to consumers
allowed gamers access to indie developers as well
Since the launch of the 3DS, Nintendo has released the 3DS eShop as well!
Contingency Plan
Even though the Game Boy line has been extremely popular and successful, the release of the 2DS has worried some.
In the event the 2DS fails, they should pull the system from the market.
To cover any potential losses from the Wii U or 2DS, Nintendo should focus developing new games in their most successful series (Pokemon, Legend of Zelda, Mario).
If the Wii U fails, the next Wii should be equipped with on-board technology comparable to its competitors.
DVD/ Blu Ray players
Nintendo Live?

Calvert, Darren. (2008). North American WiiWare launch games. Retrieved November 18, 2013, from http://www.nintendolife.com news/2008/05/north_american_wiiware_launch_games.
Cohen, D.S. Fusajiro Yamauchi – Founder of Nintendo. Retrieved November 17, 2013, from http://classicgames.about.com/od/classicvideogames101/p/FusajiroYamauch.htm.
E3. Retrieved November 18, 2013, from http://2013.e3expo.com/show-info/1781/about-e3.
Forbes (2013). Nintendo. Retrieved November 18, 2013, from http://www.forbes.com/companies/nintendo.
Gamasutra. (2010). Analysis: Wii Down in U.S. In 2010, May Not Rebound In 2011? Retrieved November 19, 2013, from http://www.gamasutra.com/view/news/122962/Analysis_Wii_Down_In_US_In_2010_May_Not_Rebound_In_2011.php.
Graziano, Dan. (2012). Analyst fears video game industry may hit six-year low. Retrieved November 24, 2013, from http://bgr.com/2012/05/14/video-game-sales-decline-2012/
Hingley, Lizzie. (2012). Gaming Console Market Share and Forecast – A Falling 2011. Retrieved November 18, 2013, from http://www.itcandor.com/gaming-console-forecast-q112/.
Inside Nintendo’s North Bend Facility. Retrieved November 17, 2013, from http://www.nintendoworldreport.com/feature/2137.
Kohler, Chris. (2013). Hiroshi Yamauchi, Man Who Built Nintendo’s Gaming Empire, Dies at 85. Retrieved November 18, 2013, from, http://www.wired.com/gamelife/2013/09/hiroshi-yamauchi-dies.
Martin, Matt. (2013). Activision’s market share climbed to almost 20% in 2012. Retrieved November 17, 2013, from http://www.gamesindustry.biz/articles/2013-05-16-activisions-market-share-climbed-to-almost-20-percent-in-2012.
Nintendo. Corporate Governance. Retrieved November 18, 2013, from http://www.nintendo.co.jp/ir/en/management/governance.html.
Nintendo. History of Nintendo Worldwide. Retrieved November 17, 2013, from http://www.nintendo.co.uk/Corporate/Nintendo-History/Nintendo-History-625945.html.
Orland, Kyle. (2012). Nintendo slashes profit forecast 70% on weak 3DS, Wii demand. Retrieved November 24, 2013, from http://arstechnica.com/gaming/2012/10/nintendo-slashes-profit-forecast-70-on-weak-3ds-wii-demand/.
Payne, Patti. (2004). Nintendo talks DS; Harrison Ford talks turkey. Retrieved November 18, 2013, from http://www.bizjournals.com/seattle/stories/2004/11/22/newscolumn2.html.
Statistic Brain. Nintendo. Retrieved November 18, 2013, from http://www.statisticbrain.com/nintendo-company-statistics.

As can be expected, most video game sales occur in the late months of the year, due to the Christmas rush.
December is the strongest month.
After December, sales slump to a medium level until after April.
Interestingly, sales plummet during the summer, when children are out of school.
Sales begin picking up for the holidays again in September.
Video game industry seasonality
Target customers
Nintendo tends to market to children, as can be seen through the majority of their games being E-10 and below.
There is also a large marketing push towards adult fans who were interested in Nintendo during their childhoods.
Shows through their heavy pop culture production; appears in young adult stores such as Hot Topic.
Recently, Nintendo has started to market to lower-middle class income families through the release of the inexpensive Nintendo 2DS.
Before this, Nintendo had little segmentation, as their consoles and games all tended to be the same price.
But The Most Important Change Is...
Since Nintendo is also a game and software publisher...

Nintendo should offer game downloads on iOS/Android/mobile devices!
Competition is fierce right now for Nintendo due to tablet and smartphone gaming.
Fewer people need "true" video game consoles when they can play inexpensive games/apps on the go.
In late 2012, Nintendo cut their profit forecast by about 70% due to mobile competition and low 3DS/Wii demand.
Even though Nintendo is best known for its consoles, it should begin offering mobile game downloads!
Opens a potential new market
Allows consumers to enjoy Nintendo publishing without having to buy expensive consoles. (In the long run, this could prove highly profitable.)
The 2012-2013 year was the first complete year during which Nintendo suffered losses (in the video game market).

Potentially, by offering mobile games, Nintendo would be able to make up for the losses of physical software and console sales.
Make small, inexpensive games (offer at $2.99 and up, perhaps?)
People may be more willing to buy many small Nintendo publications due to their low prices.

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