Nintendo Company Limited is a conglomerate that was established in Japan in the year 1947. The company primarily manufactures entertainment products that are computer operated. A gaming specialist, Nintendo has games under the categories like action and adventure, games teaching educational concepts, puzzles, strategy games, simulation, role-playing, races and sports and also music-based games.
Nintendo also gives options to the customer to choose their games from an online store that sells Nintendo systems, games, and accessories.The company registered a revenue of ¥ 489.095 billion in the year 2017 from both its software and hardware products.The hardware manufactured by Nintendo include gaming consoles, handheld devices, and home consoles.
Strengths in The SWOT analysis of Nintendo
Strengths are defined as what each business does best in its gamut of operations which can give it an upper hand over its competitors. The following are the strengths of Nintendo:
- Widespread distribution: Nintendo has a widespread distribution channel and they distribute both wholesalers and retailers.The company also sells through its own stores and also has through various high-end retailers. Nintendo products and also be purchased through Amazon and other online retail websites.
- Skim Pricing: One of the core strengths of Nintendo is their pricing strategy. The games are sold at high prices initially and even at the order stage the games are priced at a premium and then later as the products gain acceptance they lower the prices to those of competitors till they get sufficient bargains. This skim pricing strategy has been one of the reasons for their success.
- Marketing: Nintendo is a classic example of how good marketing can sell anything. Being specialist products the games developed by Nintendo do not serve a specific need and thus right from need creation to distribution Nintendo takes care of each aspect of marketing.
- Long-term outlook: Quite unlike other gaming companies Nintendo has a long-term outlook for its products. Thus the company gives a lot of importance to the research in its products and this results in customer satisfaction. There is also a lot of focus on stakeholder relationship management as well.
- A tie-up with Disney: Nintendo has entered into a tie-up with Disney and this has increased their appeal amongst their biggest customer group namely kids. The strategy was to use Disney characters on the Nintendo playing cards and this helped them penetrate the household market.
- People savvy employer: Nintendo is known to take care of its people and their salaries are also high.
Weaknesses in The SWOT analysis of Nintendo
- Console failure: The top-selling product Nintendo is their Wii gaming console. The gaming console could not click and this resulted in a massive product failure which caused a lot of losses for the business.The company also mismanaged the distribution of the console by promoting the sales of cheap imitations.
- Loss of goodwill: The company lost face after the Wii console fiasco and this resulted in the customer losing their trust in the company. Even brand loyal customers started switching to other brands.
- Inability to meet margins: The games are a low margin business and the company needs to look at volumes for profits. However, because of increased competition from both big and small players, the business is shared and the margins are becoming increasingly difficult to meet.
- High cost of promotions: Nintendo launches new products on a frequent basis and many of these product launches are expensive and extravagant affairs. Some of their regular practices during launches include handing out of freebies which is also eating into promotion budgets.
Opportunities in The SWOT analysis of Nintendo
Opportunities refer to those avenues in the environment that surrounds the business on which it can capitalize to increase its returns. Some of the opportunities include:
- New segments: With the increased usage of games over smartphones, the scope for games are increasing since the number of segments is growing. Today the gaming companies can target anyone from young children to senior or aged people.
- Growing infrastructure: The growth in infrastructure like internet bandwidth in even remote locations has increased the number of users of games. Yet another trend that is supporting the usage of games is the increased demand for smartphones.
Threats in The SWOT analysis of Nintendo
Threats are those factors in the environment which can be detrimental to the growth of the business. Some of the threats include:
- Competition: The main competitors of Nintendo are Sony Playstation and X box.
- Low barriers to entry: The barriers to entry into the gaming sector are low and even individuals with a minimum knowledge of gaming can develop games. Moreover, there is also a threat of substitution from online and phone games.