Nintendo YOO - The next generation of Console Gaming

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Nintendo YOO - The next generation of Console Gaming

  1. 1. NINTENDO<br />Competitive Analysis and Strategic Recommendations<br />Prepared by<br />Sudhish Subhash | Theron Korda | Mridul Katial | Sumit Deo<br />M-290A EDGE : FTMBA10 - PaulMerage School of Business<br />
  2. 2. Vision Current state Board of Directors Employees Investors Conclusion<br />Corporate Vision<br /><ul><li>Expand Gaming Audience
  3. 3. Devotion to entertainment </li></ul>business<br /><ul><li>Devotion towards employees</li></ul>Vision<br />
  4. 4. Vision Current state Board of Directors Employees Investors Conclusion<br />Sustaining Innovation<br />Better Console gaming<br /><ul><li>New Experiences Not new consoles
  5. 5. Portable Gaming Platform – Nintendo DS
  6. 6. Simplified touch screen controls</li></ul>Performance<br />3D TV hooked to current consoles<br />Target overshot customers<br />Different Performance Measure<br />New end disruption Innovation<br /><ul><li>Emotion sensing
  7. 7. Controller free
  8. 8. Screen free - 3D</li></ul>Time<br />3D presentation techniques non bound by CONTENT – games, music, shows<br />Compete against non-consumption<br /> Next?? <br />Consumerism and Socializing<br />Time<br />Non-consumers or non-consumer context<br />Vision<br />Company improvement trajectory<br />
  9. 9. Vision Current state Board of Directors Employees Investors Conclusion<br />Technological Segment<br /><ul><li>Past: Internet
  10. 10. Future Developments: Holography, brain wave technologies</li></ul>Sociocultural Segment<br /><ul><li>Family entertainment is the fastest growing segment
  11. 11. 63% of parents feel that video games were a positive addition (2008)</li></ul>Current State - Industry<br />
  12. 12. Vision Current state Board of Directors Employees Investors Conclusion<br />Opportunity Insights<br />Competitors & Substitutes<br />Mega Global Forces<br />Consoles: PS3,Xbox360<br />PC Games<br />Handheld: iphone, PSP, Gameboy, DS lite<br />Social Gaming: MMORPG, Xbox live, PS network<br />Home Entertainment: Movies, Songs, Netflix, Redbox<br />Upcoming: Microsoft’s Project Natal, Health vault<br />Interactive education: languages, architecture, environmental issues, exploration<br />Health<br />Virtual Shopping<br />Social/interactive gaming<br />Online dating<br />Gesture based interaction<br />Home entertainment<br />E-readers, file management<br />Current State - Industry<br />
  13. 13. Vision Current state Board of Directors Employees Investors Conclusion<br />Nintendo’s current Value Proposition: Wii<br /><ul><li>Delivered technology to consumers in a way it doesn’t scare them: simple and cheap
  14. 14. Focused on what matters in having fun rather than what is looking or having cutting edge
  15. 15. Changed the way how game was played: from pushing buttons to moving body
  16. 16. Used game for something more than game such as fitness and family entertainment to make this other activity fun</li></ul>Value Proposition<br />
  17. 17. Vision Current state Board of Directors Employees Investors Conclusion<br />STRENGTHS<br /><ul><li> Currently has the lion’s share of the market in consoles
  18. 18. Owns popular properties such as Super Mario Bros. and Donkey</li></ul>kong<br /><ul><li> History of innovative gaming technology
  19. 19. Built a lot of brand equity over the past 30 years (sold 49 million Super Nintendo Entertainment System consoles in the 90s)
  20. 20. Captures a broader demographic than other console makers
  21. 21. Solely focused on gaming, unlike competitors Microsoft and Sony</li></ul>Current State - Nintendo<br />
  22. 22. Vision Current state Board of Directors Employees Investors Conclusion<br />WEAKNESSES<br /><ul><li> Doesn’t appeal to serious gamers
  23. 23. Not known for sophisticated graphics
  24. 24. Popularity of the Wii seems to have peaked
  25. 25. The hierarchical nature of the company may cause it to not respond quickly enough </li></ul> to the threat of an insurgent<br />Current State - Nintendo<br />
  26. 26. Vision Current state Board of Directors Employees Investors Conclusion<br />CAPABILITIES (Based on Strengths & Weaknesses)<br /><ul><li>Wii + Internet = More
  27. 27. Leverage first mover advantage, bargaining power and easy customer recall
  28. 28. Utilize global presence and geographical diversification to reduce business risk
  29. 29. Reduce dependency on suppliers
  30. 30. Balance hardware and software focus
  31. 31. Diversify range and appeal to serious gamers
  32. 32. R&D to include sophisticated graphics without significant costs
  33. 33. Adopt a flat structure to ensure faster response to threat of insurgents</li></ul>Current State - Nintendo<br />
  34. 34. Vision Current state Board of Directors Employees Investors Conclusion<br />OPPORTUNITIES<br /><ul><li> Microsoft’s Xbox Project Natal will prime the market for the next generation in </li></ul> console technology<br /><ul><li> A large number of current Wii owners  backwards compatibility of the new game </li></ul> will promote adoption by these users<br /><ul><li> The right infrastructure is in place: home networking and entertainment delivery </li></ul> technologies is becoming more sophisticated <br />Current State - Nintendo<br />
  35. 35. Vision Current state Board of Directors Employees Investors Conclusion<br />THREATS<br /><ul><li> Microsoft’s Xbox Project Natal is going to cut into Wii’s market share
  36. 36. Online gaming continues to expand at a breakneck pace
  37. 37. Social networking games in particular are encroaching on the ‘broad appeal’ </li></ul> demographic targeted for the Wii<br /><ul><li> Popular devices like the iPad are migrating gaming away from consoles and </li></ul> computers<br /><ul><li> The console market is approaching saturation – 60 million units of the current </li></ul> generation sold (Xbox 360, PS3, Wii)<br />Current State - Nintendo<br />
  38. 38. Vision Current state Board of Directors Employees Investors Conclusion<br />ACTIONS (Based on Opportunities & Threats)<br /><ul><li> Cater to a wider demographic
  39. 39. Focus on Online gaming segment
  40. 40. Incorporate Social Networking games
  41. 41. Target ‘mobile’ gaming segment
  42. 42. Leverage the power of home networking and entertainment delivery technologies
  43. 43. Integrate Wii with basic activities (Extend offerings like Wii Fit)
  44. 44. Online promotion of specific games
  45. 45. Manage shorter product lifecycle efficiently
  46. 46. Adapt to changes in consumer preference</li></ul>Current State - Nintendo<br />
  47. 47. Drivers<br />User interfaces in gaming environments<br />Body gesture, Voice detection, Emotion detection<br />Current Strategy<br />Repertoire of Games<br />Subscription fees paid (Online Service Xbox Live)<br />Future Strategy<br /><ul><li>What will the company’s future strategy be?
  48. 48. Product : Project Natal
  49. 49. Place : Target Advertisers
  50. 50. Price : Competitive ($150)
  51. 51. Position : Casual Gamers</li></ul>Assumptions<br />Realism – More effective representations and interactions in 3D <br />Hardware-less controls<br />Capabilities<br />Strengths: Brand awareness, Loyalty, Presence<br />Weaknesses: Manufacturing costs<br />Competency: Operating Systems/ Computing<br />Vision Current state Board of Directors Employees Investors Conclusion<br />4 Corner’s Analysis for Insurgent (Microsoft)<br />Current State - Competitor<br />
  52. 52. Vision Current state Board of Directors Employees Investors Conclusion<br /> COMPETITIVE RESPONSE<br /><ul><li> Counter threat of MS Project Natal and Sony PlayStation Move by introducing the next generation of gaming utilizing emotion sensors
  53. 53. Ensure that Nintendo 3DS (pipeline) is positioned correctly
  54. 54. Partner with 3D holographic companies (Musion)
  55. 55. Partner with Cisco (Telepresence)
  56. 56. Acquire smaller players with a potential to disrupt</li></ul>1UP<br />Current State – Nintendo Vs Competitor<br />
  57. 57. Partner with other companies<br />Execute<br />Execute<br />Build in-house<br />Vision Current state Board of Directors Employees Investors Conclusion<br />?<br />SHORT-TERM STRATEGY A<br />Y<br />N<br />Y<br />N<br />Strategy<br />
  58. 58. Vision Current state Board of Directors Employees Investors Conclusion<br />SHORT-TERM STRATEGY B<br />TouchscreenWii - One Controller, Multiple Uses<br />Strategy<br />
  59. 59. Vision Current state Board of Directors Employees Investors Conclusion<br />SHORT-TERM STRATEGY C<br />YOO can control your emotions<br />EMOTION SENSING<br />Strategy<br />
  60. 60. Vision Current state Board of Directors Employees Investors Conclusion<br />SHORT-TERM STRATEGY D<br />Cater to a broader demographic<br />From ages 5-95 yrs<br />Strategy<br />
  61. 61. Vision Current state Board of Directors Employees Investors Conclusion<br />MILESTONES<br />Strategy<br />
  62. 62. Vision Current state Board of Directors Employees Investors Conclusion<br />LONG-TERM STRATEGY<br />Strategy<br />
  63. 63. Vision Current state Board of Directors Employees Investors Conclusion<br />PRODUCT LEADERSHIP<br />Why NINTENDO?<br /><ul><li>Proven Product Leadership: Nintendo introduced a gaming revolution in the Wii console.
  64. 64. Gaming Focus: Nintendo is dedicated to games, while competitors worry about broad high tech and electronic sectors.
  65. 65. Strength of Brand: Customers know that they can expect quality and creativity from Nintendo.
  66. 66. Scale: Nintendo has the capability to launch the next gaming revolution on a global scale.
  67. 67. Sustain: Nintendo must continue to build
  68. 68. on its success to maintain market share </li></ul>Employees<br />
  69. 69. Vision Current state Board of Directors Employees Investors Conclusion<br />EMPLOYEE EMPOWERMENT<br />Who will lead NINTENDO into the next gaming era?<br /><ul><li>Innovation Leadership: Creative teams of engineers, marketers, & designers will be empowered to make decisions that drive product development forward.
  70. 70. Knowledge Base: Key individuals that brought us Wii and Nintendo DS are assigned to the project.
  71. 71. Research & Development: Multiple R&D professionals will be summoned to experiment and collaborate on the project, and continue the rich development tradition of Nintendo.
  72. 72. Resources: The executive team is committed to providing the necessary capital, both human and monetary, to make the next gaming venture as successful as the last.</li></ul>Employees<br />
  73. 73. Vision Current state Board of Directors Employees Investors Conclusion<br />STRATEGIC ALLIANCE<br />Who are the key players aligning with NINTENDO?<br /><ul><li>Partnership: Cisco has the cutting-edge communications technology to enable Nintendo’s gaming vision.
  74. 74. Infrastructure: Communications providers are crucial participants as Nintendo needs to secure network capacity.
  75. 75. Content Developers: Nintendo needs allies in independent content providers that share the vision of the possibilities of the new gaming platform.
  76. 76. Manufacturers: Outsource production to best-in-class gaming hardware manufacturers.
  77. 77. Financial Support: Communicating value to ensure continued financial backing from investors and lending institutions is key.</li></ul>Employees<br />
  78. 78. Vision Current state Board of Directors Employees Investors Conclusion<br />Our Goal – You are the game<br />
  79. 79. Vision Current state Board of Directors Employees Investors Conclusion<br />Its perfect time to launch the next big innovation<br />NINTENDO YOO!!<br />Financial Health Analysis<br />
  80. 80. Vision Current state Board of Directors Employees Investors Conclusion<br />Nintendo transformed the game console market in 2007 with launch of Wii. Sales jumped 104% over an year. We have reclaimed our throne as #1 Console producer.<br />Revenue Analysis - Retrospect<br />
  81. 81. Vision Current state Board of Directors Employees Investors Conclusion<br />35%<br />40%<br />Over 75% of our installed base for new products are in the US and Japan, with our diversification strategy we shall target emerging markets and markets with higher disposable income for the simultaneous launch of Nintendo YOO<br />Revenue Channel Analysis - Retrospect<br />
  82. 82. Vision Current state Board of Directors Employees Investors Conclusion<br />Even with conservative estimates (50% of Wii figures) accounting <br />for saturation and increased competition we see a CAGR of 40%<br />Revenue Forecast – Nintendo YOO <br />
  83. 83. Vision Current state Board of Directors Employees Investors Conclusion<br />Nintendo enjoys the lion’s share of the console market<br />Strategic Advantage: Highest Installed Base will provide a huge advantage to convert Wii ‘Fan Base’ into YOO customers.<br />Nintendo DS and Gameboy Advance – 42% of revenues<br />Strategic Threat: Decline in sales of the Handheld account for 45% loss in revenues<br />Threat: iPhone, iPad<br />Competitive environment<br />http://www.edge-online.com/news/ps3-takes-31-per-cent-market-share-in-q1-report<br />
  84. 84. Vision Current state Board of Directors Employees Investors Conclusion<br />Phased Implementation<br /><ul><li>Go/No-Go Decision Process
  85. 85. Cross Functional Steering Committee
  86. 86. Timeline of >18 and <30 Months</li></ul>KEY FEATURES<br />1. Centralized team in each geography (to understand growing demographic trends)<br />2. Steering committee will assure delivery/termination (no premature swap ins/out)<br />3. Lucrative product lines will be adopted globally (Technology has no barriers)<br />Innovation Model<br />http://www.innovationtools.com/PDF/Integrated_Innovation_PLI.pdf<br />
  87. 87. Vision Current state Board of Directors Employees Investors Conclusion<br />Survival of the Adaptive!!<br /><ul><li> Adaptability
  88. 88. Dynamic Marketplace
  89. 89. Technological Innovations
  90. 90. Cloud computing
  91. 91. Transition towards the new normal</li></ul>Conclusion<br />

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