Back in the day, we had to wait for TV shows to air, can you imagine? Now, it’s all about instant entertainment. With movies, games, and everything at your fingertips, the future’s here, Video games, too, have leveled up, literally, who knew we’d go from pixels to virtual reality?
The gaming industry has grown a lot in recent years, reaching a record $282.30 billion in 2024. This industry is helping the economy and boosting areas like animation, e-sports, and entertainment.
And guess who’s been dominating the real gaming world literally? Nintendo, yes, this humble company went from making playing cards to smashing the competition and creating a near-monopoly.
Nintendo is one of the biggest names in gaming, leading the way with new ideas. It sold $11 billion worth of game related Software’s and Hardware’s by March 2024, making it the best-selling company in the world, Nintendo’s success has always been tied to how well its gaming consoles do. What started off as a huge hit has had its ups and downs over the years. While projects like Super Mario Brothers, the DS, Nintendo Switch, and the Wii were massive successes, Nintendo also had its share of failures like the Wii U and its mobile gaming services.
But how did they do it? How Nintendo keeps crushing the competition? How Nintendo ruled the gaming world? Their genius strategies and game-changing moves are a masterclass in success. Their secret? Smart ideas, timeless classics, and understanding what gamers love most. It’s like they’ve got a crystal ball for gaming trends. You’ve played their games, now learn their secrets.
History of Nintendo:
Let’s talk about where Nintendo began. It all started in 1889, not with video games, but with cards. It Wasn’t Mario back then, It Was Hanuta, these were hand-drawn Hanafuda cards, representing the 12 months of the year. That’s right, Nintendo’s roots go all the way back to the 19th century, when Fusajiro Yamauchi decided to start a business. What did he do? He sold playing cards and luckily the Japanese government just made playing cards legal that year. Talk about perfect timing, huh? The name Nintendo even means ‘leave luck to heaven’ in Japanese kanji, but Fusajiro wasn’t leaving everything to luck, he worked hard, using mulberry wood for his cards and building a business that got his decks into everyone’s hands across Japan, what made him king of the cards for the rest 40 Years.
Nintendo was then passed to Hiroshi Yamauchi around 1977. Little before that, actually, he fired every manager left over and appointed by his grandfather. “Thanks, granddad; we’re making some changes.” He hired younger managers because he thought they needed to go beyond playing cards into a more innovative future. He said, “No wait a minute; what are our core competencies?” He recognized that their core competence was knowing how to distribute things and having relationships with an extensive pipeline of stores and distributors and sub-distributors. The question was what they would distribute through there because that was the strength of Nintendo.
One of their core competencies, playing cards, wasn’t a crazy innovation, but they knew how to get things everywhere. So he looked for a product category, and the one he found that really struck him was the birth of the very early video game industry. He said Nintendo was going in for video games, and they were going to use their distribution so that they could get those video games into all the shops because remember, playing cards had been dealing with toy stores, variety stores, and small stores that sold minor bits of entertainment, perfect if he could get video games going; he could go to those same customers and move them through.
In 1977, they had this little shoebox-sized orange console called the Color TV-Game 6, which stood for something you could play on a color TV, and it had six games in it that were all variations of tennis in one form or another. Later on, they doubled it with the TV-Game 15 with 15 games in 1977. They ran that; they sold it, they sold 1 million units, then they counted all their dollars, or excuse me, they counted their yen, and they lost money. But they learned something: people loved games and were willing to pay for them, and they were able to sell them through their distribution.
He then made a critical decision: “They love these things, but where is the biggest market in the world for video games? The United States! I need to get into the United States.” They looked at the game market and identified two parts: these little baby consoles that had shown up like ones they made but also full-size video games that would be found in arcades, the great big square boxes the size of a small refrigerator where people played things like Pac-Man.
Market evaluation of Nintendo:
Long before Pac-Man became popular, they began inventing their way into large-frame video games. He wanted to find somebody who could help him dive into the American market specifically with these large-scale video games. He had a relative living in Vancouver, Canada, who happened to be married to his daughter Yoko, and his name was Arakawa. He went to Arakawa and said, “You are just the man to open up Nintendo in the United States; you already live in North America.” In 1980, Nintendo of America was founded.
Fast forward 80 years, and they traded in cards for consoles, launching the Famicom in 1983, and boom, Nintendo became the name in home gaming. Who knew trading cards would level up like that?
As this unfolded during early ’80s there was also a bubble forming within videogames as everyone jumped into making them, including companies like Purina (pet food), which led eventually led toward market collapse where companies like Atari went bankrupt while Sega sold for pennies on dollar as this market crashed.
Amidst all this turmoil however Nintendo survived riding high on Donkey Kong profits while introducing its console, the NES, to America after launching Famicom successfully in Japan prior! In 1984 at Consumer Electronics Show NES faced skepticism but marketing consultant Sam Boroff saw promise believing American consumers would embrace video games if done right.
Eventually launching NES became one of most popular consoles ever selling 61 million units across America leading toward incredible penetration, one console per every 30 American homes.
Nintendo sold 6 million consoles just within 1988 alone while simultaneously expanding into handheld devices such as Game Boy which sold 118 million units as children who played Super Mario wanted gaming on-the-go!
Nintendo’s business model
Nintendo’s USP:
Nintendo, no it has never been Individually only a video game organization. It develops both hardware platforms and the software to support them and in today’s market, most companies focus on one or the other. For example, Microsoft and Sony primarily create hardware and rely heavily on external studios through collaborations and financial contracts to develop their first-party titles. Nintendo does both.
This is important for two reasons. First, Nintendo built its legacy as a company that integrates hardware and software seamlessly. People expect not just great systems from Nintendo but also exceptional, handcrafted first-party titles to go along with them. When you hear the name Nintendo, you likely picture this synergy.
How Nintendo Marketed the Switch and how it changed the game?
Nintendo employed two marketing techniques that were essential in promoting the Switch: integrated marketing communications and branding. In October 2016, the Nintendo Switch was officially announced through a short three-minute video. This video showcased kids’ ability to switch anywhere and play however they wanted, allowing Nintendo to immediately demonstrate how the console could be used while building anticipation for the Switch’s reveal of its release date and price point in January, which generated even more buzz for its launch.
Nintendo then went on to spend four million dollars for a Super Bowl ad showcasing the Switch alongside its main launch title, The Legend of Zelda: Breath of the Wild. The ad aimed to reach millions of people and increased awareness of the Switch as its launch approached. Additionally, Nintendo launched a campaign called “Nintendo Switch in Unexpected Places,” where it built kiosks in three very different locations to show how the Switch can be played anywhere. The kiosks were located in a desert in California, a ski resort in Aspen, and a park in New York City.
Nintendo also utilized partnerships with Best Buy and Target to create in-store advertising for the Switch and its games. For example, when Mario Kart 8 Deluxe launched on the Switch, Target featured Mario Kart branding throughout its stores to help promote it. Finally, Nintendo collaborated with influencers such as John Cena and Jimmy Fallon to promote the Switch. John Cena attended the unexpected desert kiosk event and played the Switch with fans to draw attention to the console, while Jimmy Fallon played the Switch on The Tonight Show and expressed enthusiasm about being one of the first people to play it before its release.
In terms of branding, Nintendo employed various elements to ensure that its products stood out in the market. The Switch’s logo featured a distinct design that highlighted its main features. Moreover, the color scheme for Nintendo’s logo reverted to the original red and white used in the past, which also matched the color scheme of the Switch’s logo. This created a unified brand image between the company and its products. The packaging for the Switch was designed to appeal more to young adults compared to their previous consoles, which were more child-oriented. This presented the Switch as a high-tech device rather than just a toy.
For Nintendo to maintain momentum in the market, it should find ways to further connect with customers by implementing a seamless omni-channel marketing strategy. Omni-channel marketing is about integrating all physical and digital channels to offer a seamless and unified customer experience. In this approach, companies must view their marketing efforts from their customers’ perspective.
One-way Nintendo can do this is by integrating its shop into future smartphone communication apps, this integration is intended to bring more attention to online product offerings and promote special offers through push notifications and reminders. Additionally, Nintendo should consider establishing relationships with more third-party game developers in order to have more games available on the Switch and attract new gamers.
The Blue Ocean Strategy:
The Blue Ocean Strategy, introduced by W. Chan Kim and René Mauborgne, focuses on creating new markets where there is little to no competition (Blue Oceans), instead of fighting over existing markets (Red Oceans).
- Red Ocean: Competing in a crowded market with many players, leading to lower profits.
- Blue Ocean: Finding a new, untapped market with minimal competition, leading to higher profits.
Key Concepts:
- Value Innovation: Offering something new and valuable to customers, while keeping costs low.
- Strategy Canvas: A tool to spot market gaps and see where you can stand out.
Nintendo and Blue Ocean Strategy
A perfect example of Blue Ocean Strategy is Nintendo’s Wii. Instead of competing directly with Sony’s PlayStation and Microsoft’s Xbox, which focused on graphics and power, Nintendo created a new gaming experience. The motion-sensitive controls made the Wii fun and accessible to everyone, including casual gamers, families, and older adults.
Nintendo didn’t try to outdo its competitors in terms of power. Instead, they:
- Eliminated focus on high-end graphics.
- Reduced the price and complexity of gaming.
- Raised user interaction with motion controls.
- Created a new gaming experience for everyone.
This allowed Nintendo to open up a new market, with little competition at first, and made the Wii a huge success. However, as other companies saw the demand, they started offering similar features, turning the Blue Ocean into a Red Ocean.
Still, Nintendo’s Wii shows how Blue Ocean Strategy can break through competition and open new opportunities.
Problems Nintendo is facing:
Nintendo’s strategy of making both hardware and software in-house gives them a big advantage. They have full control over both, ensuring that their games offer a unique, high-quality experience. The success of their games is closely linked to the success of their consoles. If a console does well, the games on it can thrive, but if a game is on a less popular system like the Wii U, its success is limited.
There are a few issues, though. Nintendo didn’t make the most of its IP during the Wii U era. For example, there was no original Zelda game, and not many new titles were released.
Mobile gaming is another challenge. With 3 billion mobile users compared to the smaller Wii U and DS user base, Nintendo faces tough competition. While Nintendo is known for casual games, mobile games are often seen as cheaper alternatives, which pulls attention away from Nintendo.
Lastly, Nintendo had issues with having both handheld and home consoles. The Wii U and DS didn’t really work together, which created problems for developers. The Nintendo Switch solved this by combining both platforms into one system.
SWOT Analysis:
A SWOT analysis is traditionally used in business cases to help visualize the most important elements of an organization the strengths of Nintendo are as follows, a globally accepted brand Nintendo is synonymous with gaming Nintendo has a lot of consumer loyalty Nintendo has the bestselling AAA IP they’ve got multiple revenue streams both in the mobile and console sectors they’ve got innovative product offerings and their recent consoles occupy a very unique Niche lastly they’ve got affordability in their game architecture. With strengths come weaknesses and they are plenty, Nintendo has a lack of third-party relationship development for one they also have low-end technology when compared to other consoles Nintendo holds a Casual Image in the market that could be a bad thing they also have a lack of a centralized gaming Avenue as do all companies who focus on many different things their online functionality it’s definitely behind the times they’ve also got a high dependency on a few gaming titles and a lack of diversification in its AAA offerings.
Now let’s talk about the opportunities for Nintendo because there are a lot link the bridge between mobile and Casual gaming with the switch that’s a big one online subscription paid DLC the season pass market and microtransactions those streams remain unexplored for the most part Indie Market expansion and of course the technological advancements will come at reduced cost to catch up.
Now the threats mobile games can be substituted for Nintendo’s handheld and future console design and its first-party software the hardcore Market demanding State of the art technology the changing gaming environment resulting from the virtual reality boom and lastly YouTube’s platform and concessions to automatic copyright claiming reduce awareness for Nintendo’s offerings because they quite often just piss a lot of people off.
The life cycle of a video game can lead an organization to focus too heavily on the future of its Hardware capacity consoles that focus on the present support their Hardware develop the third-party relationships and at the same time set aside resources for R&D for their new systems are the consoles that will be successful the future for Nintendo will be decided with it support for its new system the Nintendo switch.
Finally, We’ve prepared a simple checklist of my recommendations to Nintendo in light of all of this objective information:
- Number one explore the possibilities with your existing successful intellectual property.
- Number two allow third-party companies the flexibility and support to develop great games.
- Number three develop a robust and fairly priced online platform where competitive play modding and community development can coexist.
- Number four communicate clearly and consistently what the switch does how it works who it’s for and more importantly how we will be using it
- Number five continue the development of amiibo based toyis system interfaces to supplement the consoles in the future as an additional Revenue Source
- Number six understand the importance of the system life cycle and how it is necessary to continually support the Nintendo switch as New Economic phases occur
- Number seven and finally Implement a long-term plan to be a major ball player in the mobile gaming Market.
