You are on page 1of 3

by: Dwitya Aribawa/61 Int/343554 Case in Brief The 7th Generation of console game was started fire up since

Microsoft in holiday season of Christmas 2005 launch Xbox 360 with the future technology and fabulous connectivity (Xbox Live). Sony with most successful brand PlayStation (the third generations) is totally being late (PS3 enter the market a year after Xbox 360) to face Xbox 360 in the technology console war, even with best performance of PlayStation 3, supported from trademark titled of games and connectivity with PlayStation Portable (PlayStation Network), PS3 cannot beat the Xbox 360 in the 7th Generation technology console war. Nintendo has been in their comfort zone in handheld gaming system by successfully of Nintendo Game Boy Advance and following by Nintendo DS (Dual Screen) in the market. The first ever Nintendo failed console (GameCube) is most issue to be concern by Nintendo management, they tend to wait and see the console industry pattern of movement before launched the new console to fulfill the unique kind of consumers needs. In September 2006, Nintendo Shocked Video game analysts and writers by introducing Nintendo Wii (pronounced We). Nintendo Wii has consists of technological limitation, weak graphic detail, the old DVD compatibility and childish name. Nintendo CEO Satoru Iwata said; I want totally change the market perception of the Wii by providing an entirely different video game experience that would be less irritating by casual gamers and the people who had not previously played video game. This statement strengthen position of Nintendo in 7th Generation of console game in the different side of market demand (game play, the story line and party/family game approach) from Sony and Microsoft business focus. Nintendo realize in this era, games is not only for hard core gamers that demanding high quality graphic and brilliant effect (sound and visual) but video games is for everyone, even for they whom disregarded by gaming effort before. After launched Nintendo Wii, the amount of Net Profit for Nintendo is extremely growing from $974 million to $1,725 (growing 77%) and further grows up 47% in 2008 and 15% in 2009. Nintendo Wii from 2009 data is the most demanding console compare to Xbox 360 and PlayStation 3. Now, Nintendo a toy company with brand Wii is the market leader in 7th Generation of Video Game Console. Sony and Microsoft arent doing anything with that phenomena of different gamers market that created by Nintendo, Sony introduce Move (2010) and Microsoft introduce Kinect (2010), both of those things are high technology motion detector that plug in as new controllers devices to meet casual gamers demands. Microsoft and Sony are the most powerful corporations with huge resources and high technology capabilities in this industry to react aggressively in order to get back their market shares. Moreover, the economy crisis in 2008 has affected Nintendo net profit growth slowly and brought more challenges to attract sluggish video game market. The problem statement for Nintendo at this time is how Nintendo Generic Competitive Strategies can apply in order to maintain the leading in video game market and grab more opportunity in difficult phase of global economic.

SM Case #3 - Nintendo Strategy in 2009: The Ongoing Battle with Microsoft and Sony

Nintendo Sustainable Competitive Strategy Analysis A Company competitive strategy deals exclusively with the specifics of management game plan to competing successfully in order to reach company vision. Competitive Strategy related to company specific efforts to please customers, its offensive and defensive moves to counter the maneuvers of rivals, its response to shifting market conditions, its initiative to strengthen its market position and the specific kind of competitive advantage it is trying to achieve. There are two factors that should be consider before company decide to applied competitive strategy, first is whether company market target is broad or narrow and second is whether the company is pursuing a competitive advantage linked to low cost or product differentiation. Based on two of consideration factors and three of Porter strategy classification (Overall Cost Leadership, Differentiation and Focus), there are five generic competitive strategies; (1) A low cost provider strategy, (2) Abroad differentiation strategy, (3) A focus (Niche) low cost strategy, (4) A focus (Niche) differentiation strategy and (5) A best cost provider strategy. There are the steps to analyze Nintendo Competitive Strategy analysis, (1) Determine Industry Key Success Factor based on industry attractiveness, (2) Determine core competency of Nintendo that successful to open new market access, (3) Fit and proper analysis to Nintendo actual competitive strategy and Recommend the action plan in order to maintain the leading in video game market and grab more opportunity in difficult phase of global economic. (1) Determine Industry Key Success Factors Video game industry is an attractive growing industry with high industry competition, high competitors barriers to entry, low bargaining power of suppliers, medium bargaining power of buyers and low threat of substitute product. This industry sustained by three main products, there are the consoles that sold by producers to gamers, the games that paid and play by gamers and sales of accessories that support console or games. Growth in the industry had been driven by (key success factors) technological advancements, societal trends, and continuous development new products (console, games and accessories). (2) Determine core competency of Nintendo The mission statement of Nintendo is to expand the game play experience. Nintendo is not a technology based company like the other competitors. Combinations of marketers ability to analyze the market from different perspective (opportunities), the products (Games, Consoles and Accessories) developer (designers) that able to applied right technology on the right time and condition of market and the last but not the least is the culture of Nintendo that not resist to the outstanding changes and out of the box creativities (new invention) are the core competencies of Nintendo to face video game industry key success factors in order to leading the market and expand new market access to gain more (unique) revenue stream.

SM Case #3 - Nintendo Strategy in 2009: The Ongoing Battle with Microsoft and Sony

(3) Fit and proper analysis to Nintendo actual competitive strategy Nintendo - A Best Cost Provider Strategy Key to Maintaining Strategy Nintendo Action Plan Effort to customers Casual & New gamers treat by simple and unique interface. satisfaction Ordinary gamers offer new game play and artistic elements. Moves to counter rivals Focus on creating product differentiation advantages over maneuvers competitors and create barriers by create agreement to exclusive developers (ex. Natsume: Harvest Moon Series). Nintendo play well in pricing strategy to meet gamers Response to shifting market valuable experience, global market declining is the conditions challenge for Nintendo. Strengthen its market Nintendo is a leader in console market and handheld game position system. Continuous improvement in game development and is applied in order to maintain position Based on analysis above, Nintendo able to implement a best cost provider strategy very well. Nintendo also be a most successful in 7th generation console wars based on product development that serve a new market access (Casual and New Gamers). To faces maneuvers of competitors that play in high technology based console engine, Nintendo focus on creating product differentiation and create barriers to competitors based on agreement to exclusive developers. Further the competitors will follow to enter the market that opened by Nintendo, as long as Nintendo successful to keep customers heart by doing continuous improvement, the followers are only getting little shares in the market. Global market recession that will drive consumers to decreasing expenses for non essential goods and services (Console and Game included) is the challenge for Nintendo. The action plan for this condition is marketing research by analyzing the intention of purchasing and demanding of future product, the actual Nintendo consumers and potential consumers will be analyze. The marketing research is important to determine conditions of actual market and consumer tendency to purchase in this certain condition. The result of research will be defensive or aggressive strategy, for instance by distribute games in Nintendo Online Access directly from DS and Wii with special discount price. That action plan can minimize cost of producing physical goods (DVD and SD card) and also give benefit to consumers by providing discount and minimize risk of broken DVD or SD card.

SM Case #3 - Nintendo Strategy in 2009: The Ongoing Battle with Microsoft and Sony

You might also like