Nintendo has been one of the companies that lead the gaming industry, with their non-traditional techniques for games intended for the untapped general users. They have established new ways to attract and attain customers in the gaming world especially those who are aging. Wii Fit is a fitness game intended for the adults who are concerned for their fitness and sagging looks. Through this, Nintendo has entered into the adult users market and it seems to be doing rather well ever since the launch of this new novel product. In the following sections we will see how well Nintendo is doing in the market, what are its strengths, weaknesses, opportunities and threats, what external forces are influencing its business and what strategic planning the companies has used to deal with them.
Nintendo has well positioned itself in the market and is enjoying high returns as a consequence of an advance strategic venture. During 2008 after successful launches of Wii Game Console and Wii fit Game, Nintendo recorded growth through high revenue records. But the company has met with some inability to meet the growing demands for the games, retailers took advantage of which by doubling the prices of the games (Global Industry Analysts, 2008).
Nonetheless, Nintendo recorded growth in the revenue of around 90% from 2007 after the launch of Nintendo Wii Fit along with their supplementary software (Global Industry Analysts, 2008).
Nintendo with its pricing strategy has seen increasing demands for its games, which are significantly cheaper for the customers compared to the competitors’ games.
SWOT analysis stands for Strengths, Weaknesses, Opportunities and Threats. It is a strategy formulation tool used by managers to formulate strategies by analyzing the internal and external strategy situation (Kotler, 1999). Where, strengths and weaknesses look at the internal elements of the business, the opportunities and threats are obtained through external audits of the business. For Nintendo, the following SWOT analysis is established.
- Nintendo Wii Fit’s strengths include its uniqueness in the application of hardware motion detection vested in the games unlike any of the competitors.
- The low cost it incurs for the development of the hardware and the software for the games.
- The games have an intuitive usage compared to the competitors.
There are also some weaknesses which include the following:
• Joystick liability in the game
• there is a limited selection of software in the game
Through external audit of the company the following opportunities can be highlighted for the company.
• The opportunity to penetrate into new markets in Middle East, Europe and in Asia.
• It can market the games to senior customers and increase its market share.
- The company is losing potential customers due to lack of software selection and the lack of sophistication of the games.
- The software developers are not getting returns for their services so they can abandon their services by not developing the software required for the games.
PEST analysis is an examination of the external forces that influence the business and the success of its strategies. These forces are political, economic, social or technological (Keller, 2005).
For Nintendo, the following PEST analysis can be established.
There are fewer political forces that can affect the success of the games by Nintendo, but mainly like the success of any other company is affected through the political stability of the country, such can be the case with Nintendo as well.
The economic force that can affect the success of the strategy of Nintendo can be a fall in the average income of the target groups, and short comings in the preferences of the adults for fitness with their shrinking incomes. Since, the game is merely a luxury its demand will fall with the decreasing disposable income (Global Industry Analysts, 2008).
The social factors do well for Nintendo as it has targeted the audience of adults for their own betterment in the form of a fitness game. This places an ideal image for Nintendo as a socially responsible company that caters not only for the fun needs of the kids but also looks over at the adults for their healthy needs. But in doing so it is also encouraging the social masses to be more beauty conscious, which is likely to provoke some social groups.
There has been a growing demand for technologically advance products such as games that Nintendo produces. But the production of these games is highly reliant on the software developers, who can increase their demands and the overall production at Nintendo can fall short to meet its demands.
Nintendo’s main strategy is to expand its market of gamers to include users of all ages, genders and video game playing experiences. Its strategy has been to position itself in the young as well as adult gaming markets with cheap prices compared to the competitors to provide a game that is reliable for fitness, fun and affordable. Wii fit is for adult users who want to keep themselves fit. This strategy was taken so as to enhance the demography and increase the effectiveness of the positioning of Nintendo by availing the opportunity to provide user friendly control and fitness games like Wii Fit to adults in the form of a fitness game which is one of a kind . The result of which was that Nintendo faced huge revenue streams that only highlights the success of the strategy (Global Industry Analysts, 2008).
Nintendo, with its Wii Fit, is enjoying high revenues through market expansion, customer base expansion and innovation at its peak. The latest game has allowed it to expand its profit avenues, and show its concern for the adult users in the market. But therein lie some threats and external influences with the chance of ruining its successful arena. The current strategy seems to be doing it wonders, but will it be able to sustain its successful marketing for a prolonged period? Although the strategy has been successful enough to grant the company streams of revenue but there are some risks associated with it such as entering in the adult market may reduce its appeal to the young user markets. The company would have to continually assess its marketing and overall cost effective strategies to ensure the long-term durability and profitability of the company in the gaming market.