Market Strategies And Competition Of Nintendo Wii

The report competitive analysis watch “Wii will rock you” briefly describe about Nintendo Wii, it also examine its powerful competitors and also market analysis. It highlights the strategies that it employs in the market. It analyses the technology industry and the charisma and profitability in the industry.

COMPANY’S BACKGROUND

Nintendo Entertainment system (Japanese Company) was introduced in 1985. It almost single-handedly revitalized the video game industry, selling over 60million units. In 2006, Nintendo introduced the Wii with several advanced revolutionary features. Wireless motion-sensitive remote controllers, built in Wi-Fi capability and a host of other features have made the Wii the best- selling latest generation console system in the world.(Nintendo,2010)

The goal of the company is reaching the non gamers with products that are playable and enjoyable to everyone.ie gamers and non gamers. (Capua, 2007)

Nintendo’s mission statement is “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” 

The mission statement reflects its core purpose, identity, values and principal business aims. Nintendo’s vision is to produce an entirely new product like nothing that has come before it, aimed at greatly expanding the gaming population. Nintendo’s vision led it to produce a console that was smaller, cheaper, quieter and simpler to use than either of its competitors. This led to an instant hit. It sold more units than Microsoft’s Xbox 360 and Sony’s play station 3.its because while Sony and Microsoft both rushed to develop more powerful high definition consoles, Nintendo stuck with standard resolution hardware and instead sought to develop a console that would appeal to non gamers. (Colborne, 2009)

STRATEGIES EMPLOYED BY NINTENDO

Nintendo’s strategy has led the market in portable gaming with its game boy line of handheld games, and has in the last year been challenged on that front by Sony’s PlayStation Portable. Its whole strategy is to focus on segments that can do very well in, and one way to do that is by being different. Microsoft’s Xbox 360, introduced in November 2005, have been in the market for a full year before Nintendo Wii came out with different controllers that might help to recapture some of its prestige.

BACKWARD INTEGRATION

With the enormous experience in the business, the company key to its cost advantage involves through analysis of its cost driver such as backward integration. Nintendo Wii used off-the-shelf parts from numerous suppliers. Sony co-developed the PS3’s screaming-fast 3.2- gigahertz “cell” and does the manufacturing in its own facilities. Nintendo bought its 729-megahertz chip from a supplier It’s marginally better than the PS2 and the original Xbox and also next to PS3 and Xbox 360. So this route helped the company to introduce the Wii at $250 it vs $599 for the PS3 and as much as $399 for the $360) and still turn a profit on every unit. The advantage that Nintendo Wii has achieved through the economies of scale and differentiation has boosted its profit. The Wii comes with Wi-Fi which gives customer access to the internet, and features an incredibly addictive to Mii channel. Six months after Wii launch, sales were accelerating. Nintendo sold 360,000 boxes in the US in April, Its 100, 00 more than in March. (Brien, 2009)

DIFFERENTIATE FROM COMPETITORS

Many game developers were focusing on the “hard-core” demographic customers and at the same time games were more complicated and difficult to learn for casual gamers. This gave the Nintendo an opportunity to create a console and games that appeals to people who had been ignored by Microsoft and Sony. They invented the Wii remote. The Wii Remote had features speaker, a rumble pack that makes the device shake, and even a mystery feature or two that have yet to be exploited, like a microphone jack. And also a chip known as three-axis accelerometer, this chip precisely measures movement in three dimensions. The primary advantage of this strategy is that it is one that Microsoft and Sony cannot effectively copy. In order to appeal to the hard-core market, both companies were competing on the hardware performance and features. To reduce costs enough to compete with Nintendo, they would need to abandon these goals, alienating their customers.

PORTERS 5 FORCE

Michael Porter’s 5 forces model is one of the more refined analysis tools available today, and allows an accurate picture of a business’s position in the market place to be build up.

The first part of the five Forces analysis involves the threat of substitute products, this choice could be affected by any number of factors, but the most common are related to cost, either the alternative product is materially the same but cheaper, or it’s the same price but offers more features. The Nintendo Wii had no concerns on this front when it was launched; the USP was the control system, which in turn allowed for a particularly innovative range of games. As O’Brien has noted, The Wii was so technologically advanced that other companies knew they would have to spend a number of years catching up. Furthermore, the Wii arrived at the market fully formed, and as it were, it had no serious deficiencies that could cause consumers to look elsewhere.

Porter’s 5 Forces analysis then goes on to consider the threat of new products entering the sector. Nintendo had enough reason to be concern about this, since the launch of the Wii instantaneously showed that consumers were interested in the possibilities offered by this new piece of technology. During the time of Wii’s launch the other competitors of Wii, Sony and Microsoft would effectively have to abandon their most basic research and development program’s in order to follow a path that already appeared to have been almost entirely colonized by the Wii. In other words, while the Wii opened a new market that was incredibly attracting other businesses had to radically re-design their product to in order to enter that market, with the result of lost profit and innovation in other area. Nintendo can also rely on the curve advantage that it had gained with the Wii.

Porters model than looks at the intensity of competitive rivalry. The Wii has only two genuine competitors the Xbox 360(Microsoft) and the Play station 3 (Sony), and the market before the WIi launch was considered to be extremely matured. The informal complexity of the market was largely based on strong shared values, and Nintendo broke these values in a number of ways with the Wii, furthermore, the company was confident that it would develop a sustainable competitive advantage that would lessen the effects of any perceived industry overcapacity.

The final force to be analyzed is the bargaining power of buyers and suppliers, an area in which the Wii has a stint advantage since it offers something that neither of its competitors has that is a unique way of gaming style and strong game-play. Nintendo designs some of the hardware and games for the consoles but manufacturing and assembly are often out sourced as stated in the article. And many components are purchased “off the shelf” from large companies. It buys parts from companies such as Panasonic (batteries), IBM (processors), ATI (video cards) Nintendo commissions a number of third-party manufacturers to produce key components or assemble finished products. The Wii has a distinct advantage since it offers something that neither of its competitors has – a unique gaming style and strong game-play. In terms of the market of outputs, the Wii had significant leverage from the outset, as is evidenced by the fact that software manufacturers, initially reluctant to commit to the Wii, and they quickly changed their minds and began to develop titles for the console. In this way, the Wii was able to avoid the need for backward integration, and although buyer switching costs were certainly a factor, the market was at a point of change anyway and consumers were waiting for all three major consoles to be released before deciding which one to choose.

PERSONAL EVALUATION

Nintendo changed the perception of the videogame and its industry by this product. It was an act of inviting participation from everyone as this extract states. Nintendo defined a need for a new direction of development; they recognized the way things were in a state of revolutionary technological direction. They used different strategies like backward integration, differentiation and innovation to maintain and stick to their goals. The new Nintendo Wii was appealing to all ages. The current market surveys shows that the Wii remote controller (Wii mote) is more wide spread and is the most used computer input device worldwide.

The success of the Wii depended on software and successfully identified and it took gaming into ints main stream the Wii has arguably changed the world of consoling game forever.

CONCLUSION

Nintendo Wii’s competitive advantage is product differentiation, backward integration and porters 5 force. They continue to produce a product that creates value to all the customers. And Nintendo has a good relationship with all its suppliers and this helps them to sell their product cheaper than the competitors. The research shows that the Nintendo Wii is very convenient to everybody. The difference Nintendo is establishing with the Revolution is a low-cost device with an accessible interface. Nintendo believes its easy-to-use controller will give it an edge.