Will Nintendo Survive the Vastly Developing Video Game Industry in North America - Research Paper Example

Will Nintendo survive the vastly developing video game industry in North America? Table of Contents Table of Contents 1 Introduction 2 Brief overview of the video game industry 2 Main analysis 2 Evaluating the competitiveness of Nintendo through Porter’s five forces model 2 Evaluating the competitiveness of Nintendo through PESTEL analysis 4 Evaluating the competitiveness of Nintendo through SWOT analysis 5 Efficiency of the strategy for Nintendo in the market of North America 8 Conclusion 10 Recommendations 11 References 12 Bibliography 14 Introduction Brief overview of the video game industry In this age, the demands of the individual are changing just as the alterations within the economy. This is mainly due to the introduction of varied types of inventive technologies, techniques and models. Due to which, the demand and preferences of the customers are also changing at a rapid pace that enhances the rate of switchovers. However, in order to retain the customers within the brands, varied types of value-added games are introduced by the game console organizations at a quite competitive price. Therefore, due to the presence of numerous rival players, the rate of competitiveness is increasing at a rapid speed thereby enhancing its image and position to a significant extent among others (Beall, 2010, pp. 123-134). Nintendo is one of the reputed and largest, Japanese multinational organization attaining a profit margin of ¥7.2 billion and total assets of ¥1.4 trillion in the financial year of 2013. Within a very small time span, it expanded its wings in the entire globe that amplified its sustainability (Ninttendo, 2014). Main analysis Evaluating the competitiveness of Nintendo through Porter’s five forces model The competitiveness of the organization of Nintendo in the market of North America is judged with the help of Porter’s five forces. It comprises of five elements. Bargaining power of the buyers: the bargaining power of the buyers is extremely high. This is mainly due to the presence of numerous rival payers in the market of North America. As a result of which, the customers always desire to attain most advanced and modernised games at a quite low cost. However, in order to fulfil the inner desire of the customers, the organizations operating in the segment of video games or game console tries to offer value-added games at a competitive cost. So, the customers stick to the segment of video games in-spite of economic recession (Bradley, 2012, pp. 223-234). Bargaining power of the suppliers: the bargaining power of the suppliers is moderate. This is mainly because; Nintendo sorted or selected its suppliers by itself and so the suppliers desired to retain its value within this strong brand as compared to others. Therefore, in order to maintain the competitiveness, the suppliers always tried to offer varied types of modern and advanced software’s and technologies at a quite low cost to these reputed brands such Nintendo, Sony etc (Gamerinvestments, 2014). Competitive rivalry: due to the presence of numerous rival players in the market of North America such as Sony, Microsoft etc, the rate of competition is extremely high. As the customers of game console or video game market always prefer modern technologies so maximum extent of the organizations, such as Sony, Microsoft etc try to introduce varied types of products at a quite low cost. By doing so, the organizations operating in this segment try to retain their market share and brand value in the market of North America effectively (Cengagebrain, 2013, pp. 223-234). Threat of Substitutes: the threat of substitute products is extremely high such as the games of personal computers, mobiles, tables and arcades etc. Due to which, the rate of switchover costs is also extremely high in this segment. However, in order to retain the customers for a long run, the organization of Nintendo need to develop varied types of portable gaming devices such as Nintendo DS, PSP etc. Only then the brand image and loyalty of the organization of Nintendo might get enhanced in the market that may amplify its profit margin and total revenues (Dagnino, 2012, pp. 245-256). Threat of new entrants: the threat of new entrants is extremely low as it requires huge investment in developing new products, branding as well as promoting it. Moreover, as the dominance and reputation of the existing players is extremely high, so the new players may not be successful in developing a strong foothold in the market. Due to these underlining reasons, the new entrants do not desire to enter such a competitive market like game console in North America (Ellis, 2011, pp. 334-345). Thus, from the above mentioned points, it might be clearly evaluated that the rate of competition is extremely high in the segment of game console. Due to which, the organization of Nintendo need to offer high concentration over research and development to present high-technological and qualitative products at a competitive price, in order to retain its image and prosperity in the market of North America. Evaluating the competitiveness of Nintendo through PESTEL analysis The analytical tool of PESTEL is used to evaluate the competitive of the organization of Nintendo in the market of North America. Political: the enforcement of North America free trade agreement (NAFTA) proved extremely effective for the organization of Nintendo in the market of North America. As a result, the total sale and demand of the products of Nintendo such as Nintendo DS, PSP enhanced that amplified its reputation and brand value (Guillén & García-Canal, 2012, pp. 378-389). Other than this, due to the introduction of NAFTA, the market share of the organization of Nintendo increased as compared to Sony, Microsoft etc. Economic: the demand and sale of the products of the organization of Nintendo reduced to a considerable extent due to economic recession. Moreover, due to economic recession, the per-capita income of the citizens reduced that seriously affected their purchasing behaviour. Due to which, the profitability and total revenue of the products of the organization of the Nintendo declined. As a result, the loyalty and position of the organization of Nintendo decreased resulting in reduction of its sustainability in long run (Grant, 2010, pp. 442-454). Social: now a day’s the level of preference of the older segments of the society is changing rapidly. They are now becoming more inclined towards the video games rather than television and so the demand of the products of the organizations, operations in this segment is enhancing at a rapid pace. In addition, the likings and preferences of the females are also increasing towards game consoles that proved extremely effective for the organization of Nintendo (Gupta, 2010, pp. 654-676). Technological: due to the introduction of online technology, the demand of video games improved to a significant extent that amplified its market share and brand value. Other than this, as the game console became the centre of all media’s so its preference and demand also increased to a considerable extent as compared to many other rival contenders (Halimi & et. al. 2011, pp. 776-787). This proved extremely effective for the organization of Nintendo in the market of North America. Legal: in order to reduce the rate of hacking, most of the organizations restricted the contents used within the video games or game consoles. Moreover, introduction of varied types of regulatory laws, the privacy of the organizations operating in the segment of game console enhanced to a significant extent as compared to others. This proved extremely effective for the organizations that amplified its total sale and demand (Hill, 2010, pp. 553-565). Environmental: in order to reduce the environmental impacts, most of the organization, operating in the segment of game console prepared varied types of technologically advanced devices. Moreover, they also reduced the usage of energies that may hamper the environmental conditions. Due to these reasons, the demand and portfolio of the products of organizations operating in game console segment or video game sector increased to a significant extent in the market of North America. Thus, from the above mentioned analysis, it might be stated that due to the implementation of advanced technologies, the preferences of the older and females also enhanced to a significant extent. Moreover, as the contents or data’s are entirely restricted from getting hacked so its demand is increasing at a rapid pace as compared to other segments. Evaluating the competitiveness of Nintendo through SWOT analysis SWOT analysis is used to evaluate the competitive position and ranking of the organization of Nintendo in the market of North America. Strengths: High heritage in Video Games: the organization of Nintendo comprises of a wide range of video games of advanced technologies and techniques. Due to which, the games of Nintendo are highly preferred by both old and younger segments of the society. However, this is one of the prime reasons for the improvement of the market share and brand value of the organization of Nintendo in North America among many other contenders such as Sony, Microsoft. Strong brand image: it is also another important strength of the organization of Nintendo in the market of North America. Due to which, the rate of switchover costs of the customers is quite low as compared to other brands. Innovation: in order to improve its demand and range of customers, the organization of Nintendo always desires to offer high attention over innovation. Due to which, the organization became successful in creating a strong foothold in the market of North America among others. Numerous family friendly games: Nintendo comprises of a wide range of family friendly games that may improve the coordination and communication among the members. This is also another important reason that enhanced the demand and profitability of the products of Nintendo in the market of North America. Strong market share: as Nintendo is the first organization in video game market to reach the casual gamers so its market share and market demand is extremely high. This proved extremely effective for the organization thereby amplifying its competitiveness and prosperity in the market among others. Weaknesses: No HD display: as the products of Nintendo do not offer HD display, so its demand is reducing at a significant extent. Moreover, due to lack of HD display, the profitability and total revenue of the organization is also declining significantly (Pride & Ferrell, 2012, pp. 332-343). Focus mainly on video games: as the organization of Nintendo mainly focuses on Video games rather than consumer electronics, so its demand of the products of consumer electronics is reducing (Porter, 2010, pp. 778-789). No disc player available: as the organization fails to offer discs to the players in residence, so its customer range is decreasing. This is considered as one of the most important weakness of the organization of Nintendo in the market of North America (Ritzer, 2011, pp. 178-189). Opportunities: Launch of the new product Wii U in 2012: launch of the new product Wii U by the organization of Nintendo in the year 2012, proved extremely effective. Due to which , its demand and total sale increased that amplified its profitability and market share to a significant extent in the market of North America as compared to many others (Shukla, 2012, pp. 221-223). Growing consumer bases in emerging markets: the range of customers is increasing at a rapid rate in the emerging countries that amplified its market value and brand image (Kolb, 2012, pp. 335-356). High demand of game consoles and video games: the demand of games consoles and video games is increasing rapidly in this age. This helped the organization of Nintendo to improve its market share and operating income. Threats: Games in phones and social media: presence of varied types of video games in mobile phones and social networking sites attracted a wide range of customers. This created a threat for the organizations like Nintendo (Wiid & Diggines, 2010, pp. 280-290). Changeover of customer preferences: change of customer preferences and likings is also a biggest threat for the organization of Nintendo in the market of North America among others (Johnson & et. al. 2011, pp. 657-678). Thus, it might be easily revealed from these above mentioned points that the organization of Nintendo need to implement the strategy of innovation, so as to amplify its brand image and reputation to a significant extent. Efficiency of the strategy for Nintendo in the market of North America As the market of North America of video games is extremely competitive due to the presence of strong and reputed players such as Sony and Microsoft, so in order to remain competitive and dominant, the organization of Nintendo, need to offer high concentration over innovation. Innovation is the only strategy that may prove effective for the organization of Nintendo in developing a wide range of technologically advanced games. Along with this, development of software games might prove effective in amplifying the total sale and demand of the organization of Nintendo in the market of North America as compared to many other rival players. By doing so, it might easily fascinate a wide range of customers of varying age groups and income groups. This is known as broad differentiation strategy. Moreover, with the help of broad differentiation strategy, the organization of Nintendo might easily attract the hardcore gamers and casual gamers as well. Thus, by implementing the strategy of broad differentiation, the range of customers might get enhanced along with its reputation and demand in the market as well. Hence, this strategy might prove effective for the organization in amplifying its position and leadership within the market region of North America thereby reducing the power of new entrants or other competitors. Other than this, the organization of Nintendo might also fascinate the older and female segments of the society of North America by implementing offensive strategy. This is one of the reputed strategies that are used to explore the untapped seniors and females into the gaming market. By doing so, not only the reliability and leadership of the organization of Nintendo might get improved within the existing contenders but also the market share may get enhanced. In addition, as Nintendo is the first organization to explore the market of game console and video games so, offensive strategy might be the best strategy. The launch of Nintendo game cube might amplify the total demand and sale of the products thereby enhancing its brand value and reputation in the market of North America. However, in order to enhance its position and portfolio in the market of North America as compared to Sony and Microsoft, then the organization of Nintendo need to implement competitive pricing. This means the organization needs to offer its products at a quite low price as compared to others so as to increase the attraction of the customers. Only then, the organization of Nintendo might easily retain the loyal customers within itself for longer period of time that may amplify its brand image and reputation. Such a strategy might also reduce the switchover costs of the customers and improve the dominance of Nintendo in the market of North America. Other than this, if the organization of Nintendo, implements competitive pricing then the purchasing behaviour of the customers with low per capita income and low living standard might get attracted towards the products. As a result, the demand and equity of the products of the organization of Nintendo might get enhanced to a considerable extent as compared to its contenders such as Sony and Microsoft. Furthermore, in order to retain the bargaining power of the buyers, the organization of Nintendo need to offer HD display and discs. Only then, the intention of the customers towards the brand and its products might get changed that may improve its prosperity and portfolio. By doing so, the sale of Wii U might get amplified in the market of North America that may increase its market value and dependency. Hence, it might be revealed from the above mentioned points, that, in order to reduce the weakness or threats, the organization of Nintendo need to implement the above presented strategies such as innovation and broad differentiation. By doing so, it might easily capture the numerous developing and developed countries. Not only this, it might increase the demand of Wii U among all sections of the society. Additionally, the organization of Nintendo needs to offer high attention over advertising and promotion. This means, in order to amplify the awareness level of the customers, the organization of Nintendo need to offer advertisements through online sites, social networking sites, mobile marketing. Along with this, the organization of Nintendo might easily attract the older and female generations of the society. In addition, the organization of Nintendo might try to attract the school students by presenting free advertisements of the benefits of the games of Wii U in the schools. This might prove effective in amplifying the reliability and loyalty of the organization of Nintendo in the market of North America as compared to many others. Moreover, implementation of these strategies might also increase its competitive advantage and position in the market that may amplify its distinctiveness (Hackley, 2010, pp. 678-689). Therefore, implementing this strategy might also help the organization of Nintendo to improve its dominance and reputation in the market of North America. Not only this, these strategies might also enhance the strengths and opportunities of the organization of Nintendo in the market as compared to many other rival contenders. However, if these above mentioned strategies might not be implemented, then the organization of Nintendo may not compete with the technologies and products of Sony and Microsoft such play station move, Xbox and Eyetoy. Thus, in order to compete with the strong competitors like Sony and Microsoft, software games introduction is extremely essential for the organization of Nintendo. Hence, due to the implementation of these strategies, the customers of all age groups and income ranges might easily get fascinated towards the brand and products of Nintendo. However, implementation of such strategies might improve the performance and creativity of the organization of Nintendo and its approach in the market of North America among other existing rival players. Thus, to improve the prosperity and sustainability of the organization of Nintendo, it needs to offer high attention over the above presented strategies and policies. Therefore, all these above mentioned strategies are the most effective policies for the organization of Nintendo in this aggressive market. Conclusion Conclusively, it might be stated that in order to improve the leadership and brand value, the organization of Nintendo need to implement the strategy of innovation. By doing so, the organization might be successful in presenting varied types of new products that may fascinate customers of varied age-groups and income groups. Moreover, due to the introduction of varied types of inventive products might improve the brand value and market share of the organization of Nintendo in the market of North America as compared to many other rival players. Furthermore, the organization might also try to implement the strategy of broad differentiation. By doing so, the organization of Nintendo might easily attract the casual gamers and that may improve the profitability and brand image of the organization in the market of North America. Apart from this, the organization of Nintendo might try to offer high concentration over advertising and promotion so as to increase its demand and market value. Not only this, the organization of Nintendo might try to implement the strategy of offensive in order to attract the older segments and females of the society. This might enhance the distinctiveness and equity of the organization and product lines in the market of North America. Other than this, the organization of Nintendo needs to offer more attention over advertising strategies so as to amplify its position and ranking. Moreover, this strategy might amplify the demand and reputation of the product lines of Nintendo in the market of North America. Hence, it might be stated that these strategies might surely prove effective for it in this age among others contenders. Apart from this, the organization of Nintendo might try to introduce HD display or discs in order to reduce its weakness and amplify its strengths among other rival players. Recommendations The organization of Nintendo needs to offer higher concentration over the research and development. Only then, it might become successful in developing varied types of inventive products. This might help the organization of Nintendo to achieve its financial objectives and targets. Other than this, the organization of Nintendo might try to implement attention over new segments such as consumer electronics in order to amplify its reputation and market share. References Beall, A, E. 2010. Strategic Market Research: A Guide to Conducting Research to solve problems. Boston: Harvard Business School Press. Bradley, N. 2012. Marketing Research: Tools & Techniques. New York: McGraw-Hill. Cengagebrain. 2013. Marketing Research. 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