Nintendo is a Japanese consumer electronic and video gaming multinational company. Fusajiro Yamauchi established the company on 23 September 1889. Nintendo’s headquarter is in Minami-Ku, Kyoto, Japan.
Some of the top products and services of Nintendo are; Nintendo Switches, Gaming Console, E-shop, Handhelds, Toy cars, Hardware, Wii, Arcade, Mobile Devices, and Home Console. Nintendo is one of the world’s leading video game manufacturing companies.
According to the financial report, the net sale of Nintendo in 2021 was $16 billion. Out of which, the annual revenue of the video gaming brand was $6.7 billion in the USA. Approximately 6574 employees are working for the company as of 2021.
Some of the main competitors of Nintendo are; SEGA, Disney Interactive, Sony, Activision, Zynga, Google, Rockstar, Samsung, Microsoft, Panasonic, Crescent, Amazon, Moon Games, Lego, Electronic Art, Activision Blizzard, and Ubisoft.
Our topic for discussion today is Nintendo swot analysis. We’ll be discussing the company’s internal strengths and weaknesses, and external available opportunities and potential threats.
Nintendo has established a vast distribution network in various countries across the globe ranging from Kyoto, Richmond, and Frankfurt to Australia. The large distribution network has allowed the company to amplify its market share and boost its sale.
Nintendo offers a variety of games comprising of various situations and circumstances like role-playing, simulation, races, strategy games, sports, puzzles, educational, adventure, and actions. Approximately 11 million people played the game Animal Crossing in 2020 when lockdown and pandemic hit the world.
Nintendo released Animal Crossing: New Horizons in 2020; it was a great hit and sold nearly 19.4 million units in the last nine months of December 2020, bringing total units sales to 31.2 million units.
Nintendo has been satisfying the needs of gamers for more than a century, 130 years to be more precise. Many use gaming and Nintendo synonymously because the brand knows how to satisfy the needs and wishes of gamers with a quality product.
Nintendo has effectively segmented its market into various regional areas and performs its operations there independently. It helps the company to lower the risk level, and those independent markets are Richmond, Frankfurt, and Kyoto. The gaming brand makes most of its profit from those markets.
Just like any other consumer electronic product, the gaming products of Nintendo are costly when the company launches them. Once it becomes popular among customers, then the prices go down quickly. However, the pricing strategy of Nintendo gives the company an edge against mobile-free games.
Mixed POS makes it easier for the customer to check out the gaming product of Nintendo. The brand offers its products on various channels like online stores, retailers, wholesalers, and stores. The company sold 48.5% of its software online in the first quarter of 2020, and it amplified the company’s profit by 41%.
Effective Marketing Strategies
Nintendo knows the significance of implementing an effective marketing strategy and learned from its mistakes after the market failure of the Wii U console. The company offers freedom for gamers and its marketing message is “play great content, anywhere, anytime with anyone” for the switch.
Disney and Nintendo made an alliance for the mutual benefits of each company.
Relying on Switch
The switch of Nintendo generates 85% of the revenue to the company and it comprises 9.9 billion dollars. If the sale of the company’s gaming switch drops down for any reason, then it would create a financially challenging situation for the company.
Relying on the Developed Markets
Europe, North America, South Korea, Australia, and Japan are the main markets of Nintendo. They all are saturated markets of the developed countries, and other companies are also competing for the limited market share without much growth of it.
Slow Replying to Market Demand
The gaming switch has amplified to a great extent after the breakout of the virus and lockdown of schools and businesses. Nintendo’s switch was out of stock when the demand for the product started increasing.
The failure of Nintendo’s Wii U console created a lot of hype in the market in terms of inconsistency, overpriced, and low quality. Its failure jeopardized the reputation of the company to a great extent.
Japan, the USA, and Europe are the main earning markets of Nintendo, where the gaming brand has already gathered sufficient market share. The video console company should consider expanding its market into Latin America, Africa, China, India, and other developing economies of the world.
Investment in Mobile Games
The trend of playing mobile games has been growing and continues to reach 95.4 billion US dollars by the end of 2022. It offers a very profitable opportunity to Nintendo to tap into the category of mobile-friendly games, and exploit the growing customer market trends.
Adopting AR & VR
Augmented reality and virtual reality games are the upcoming future of video games, and they would revolutionize the video gaming industry. Nintendo should also consider making an investment into this type of technology in order to offer a better customer experience.
As we know that Nintendo has the capacity and a wide catalog, and the company should consider diversifying its portfolio by including Software as Service or Game as the Service.
If we look at the video gaming market, then it comprises various types of competitors like King, SEGA, CCP Games, Zynga, Activision Blizzard, Rovio, Electronic Art, UbiSoft, BenQ, LG Electronics, Pioneer, Amazon, Google, and Xbox. Their presence in the market makes it difficult for Nintendo to expand its market share.
Imitation and alternative games are very common types of piracy issues in the video gaming industry. Technological advancement has made it easier to do this type of piracy.
Video games cause a lot of health issues like obesity, weak eyesight, and other disorders. Younger people are becoming more and more cautious about health and diet. However, they want their children to participate in the outdoor games.
Mobile games and online games are the perfect substitutes for the gaming console, handheld, and switch of Nintendo.
The interest of the young generation is playing video games online on their smartphones instead of buying a separate device for the games. Those who used to buy consoles and switch are getting old and expiring.
Tech giant companies like Amazon and Google have tapped into the gaming industry. They have got a plethora of resources and the availability of finances to make an impact. Their presence in the market has made it difficult for Nintendo to retain the market share.
After an in-depth study of Nintendo swot analysis; we have to come to realize that Nintendo is a leading video game brand. The company should be aware of its internal weakness and external threats and focus on strengths to exploit opportunities.