The document discusses Nintendo's current struggles, including significant financial losses and a declining market share due to competition from smartphones and changing consumer behaviors. It suggests that Nintendo needs to adapt by redefining its business models to focus on customer experience, open game development, subscription-based consumption, and innovative interaction methods. The author argues for a strategic shift towards embracing new gaming trends and technologies to remain relevant in the evolving landscape.

1. - A Case for Change
By Mathieu Lacaze
June 19th 2013

2. Through its history, Nintendo never stopped to amaze its customers. It introduced new ways of playing and
created legendary characters that lived along every console generation.
A historic disruptor
1
Zelda Mario Pokemon Nintendo 64
Wii Wii FitGameboyNintendo NESDonkey KongGame & Watch
80 85 90 1000

3. A supremacy in decline
Nintendo is currently loosing two battles at the same time
Consequence:
The company lost $366 million over 2012
Its portable market is being eaten
by Smartphone gaming.
It failed to engage customers with
its anticipated next-gen console launch.
2
Source: Flurry Analytics
Bob Summerwill’s tweet - Electronic Arts developper

4. An obsolete business model
3
Nintendo carries very harmful beliefs that don't allow to make a quick shift to wealth.
They still think their competitors are only Microsoft and Sony.
They still think that innovation is only about graphics and game controllers.
They still bet on a new generation of console to bring innovation and new incomes.
They rely on old and dusty cash-cow games (Mario, Zelda…) but don’t create new licenses.
They think their customers are the same while these grow up and new ones come.
They still think that video games are stored on CDs and bough in physical shops.
They still apply the same methods of the past because it worked like that and not otherwise.

5. Gaming is now universal
4
Gaming is part of our society. People play at any age, everywhere, any time, on any device.
«Computer and video games have reached
a critical mass. Today, nearly every device with
a screen plays games, providing online and
offline interactive entertainment experiences
for a wide and diverse population Michael D. gallagher, President
Entertainment Software Association»
The average of US household
owns at least one
dedicated game console, PC or Smartphone
Gender
of game players
30is the average gamer age
Entertainment Software Association - 2012 Report

6. The future is already here
5
The industry's disruption has already started in different parts of the value chain.
The development process
It is more opened to new entrants.
The game consumption
From one physical product only to digital on-demand downloads.
The gaming experience
It now interacts with your body’s reaction.

7. The development process
6
Creating a game has never been as accessible as today. Open source and crowdsourced platforms allow you to
create your own game or your own gaming device.
Funder
Kickstarter
A service to raise
funds for creative
projects that has
already pledged
100$ million for
games.
System
Android
An opened ope-
rating system al-
lowing you to
create games for
portable devices.
Device
Ouya
An opened video
game console for
Indie developers
running with An-
droid operating
system.
Controller
Makey Makey
An invention kit
that transforms
any object into a
touchpad.

8. The game consumption
7
We don't buy games the same way as 10 years ago. Today more purshases happen
online and broadband internet helps to increase new ways consumption.
Freemium consumption:
Those games in the cloud allow people to
have forfeited consumption. Gamers try for
free and pay if they want to discover more.
Streaming distribution:
Games are stored in the cloud and people
order them through online streaming plat-
forms. So do we still need to buy a console ?
Entertainment Software Association - 2011 Report

9. Gaming experience
8
Video games aren't anymore about a controller and a box.
The interaction they offer with people become closer to real-life movements and allow a unique experience
You are part of the story:
Via augmented reality,
You are now directly in-
tegrated in the story and
the reproduction of your
movements on the screen
makes it even more real.
It is more than a game:
Thanks to the accuracy of
the gaming devices, edi-
tors now use them also to
improve the way we inte-
ract with our entire world.
(click on the video)

10. Move or die: Worst scenario
9
So if it doesn’t embrace the change
Nintendo will disappear soon
A disruptive example that will make Nintendo’s devices obsolete:
Imagine that fiber
connection and 5G
become mainstream
thanks to Google.
The Samsung Smart
Tv replaces our old
LED screens.
In order to play,
gamers will connect
their Android phone
to the TV
Theywillstreamagameonthe
screen that will be controlled
thanks to the touch screen of
their Smartphone and their
body moves on the camera.

11. A case for change is needed
10
Nintendo needs to focus its strategy on their customer experience in order provide them a unique added value.
From...
“We sell
consoles/games”
(product focused)
To...
“We enable
an infinite amount
of interactive experiences”
(Customer experience focused)
To fullfill this new strategy, some parts of the Nintendo’s value chain need to be redefined.
Development Consumption Interaction

12. Redefine the developing process
11
Waste:
Game console are closed to indie developers and risk-takers. Introduce a complete game development kit opened
for every creative mind and let the customers create their games.
Recommendation #1:
Open Your World
What:
- Nintendo opens its doors to indie developers with an
open-source console.
How:
- By partnering with Android and let everyone
develop games using Nintendo’s characters or others.
Goals:
- Make Nintendo the most indie-friendly platform for de-
velopers and allow game editors to come up with new
innovation and take fewer risks.
- Increase gaming innovation and let people create inte-
grated gaming experiences thanks to Google products.
(maps, youtube, music...)
Recommendation #2:
Everyone is creative
What:
Make it easy for everyone to come up with a nice ga-
ming concept and develop it quickly.
How:
- Create a simple programming platform that doesn’t re-
quire to be a coding expert to come up with a nice result.
- People can also modify existing games.
Goal:
Don’t restrain the creativity to an elite and let the world
express their creativity. (from 0 to 99 years old.)

13. Redefine the consumption
12
Waste:
Paying 50£ for a game today is ridiculous. Don’t let people make long-term investments in your games but instead
let them pay as they play.
Recommendation #3:
Snack gaming
What:
Nintendo allows customers to play all of their games through a monthly paid suscription. Then, it lets them dig into the
ones they prefer with free or paying upgrades. The game is graduated according to your involvement into it.
How:
Nintendo introduce an online streaming platform where all of their games are available with a light version. Extended
content is dowloaded for free or through micro-transactions. It lets developers decide where the free barrier stops.
Goal:
Games become like snacks that you pick as you prefer. It lets the choice for customers to determine what’s the best
experience they want to live.

14. Redefine the interactive exp.
13
Waste:
The way we play and interact with gaming devices hasn’t changed since 30 years. Go beyond this system of
gamepad and console and open the gaming kingdom to the world.
Recommendation #4:
Your environment is your controller
What:
Nintendo partners with Samsung to create connected sensors/objects that Interact with your environment and make
it more connected.
How:
Introduce some Nintendo controllers that can be connected everywhere to any device. (smartphone, TV...)
Example: A foldable controller/sensors that can be stuck to any object (clothes, lamp, ball, Sword...) or person.
Goal:
Your environment becomes the controller. People will start not only interacting with these controllers for games but
they will start using them for other purpose. (Education, Medicine)

15. A Redefined value model
14
The experience will be redesigned to get customers closer to Nintendo's new desired outcome.
Customer
experience
Development :
Customers can create their
own gaming experience
and share it to the world.
Consumption:
Customers try and select
which games are most
suited for them.
Interaction:
Customers interact with
their environment thanks to
connected sensors/objects.

16. A Redefined business model
Development :
Customers can create their
own gaming experience
and share it to the world.
Consumption:
Customers try and select
which games are most
suited for them.
Interaction:
Customers interact with
their environment thanks to
connected sensors/objects.
15
Nintendo will take a
percentage to editors
on every paid upgrade
bought by customers.
Nintendo will collect
money though the mon-
thly paid subscription.
Nintendo will sell de-
vices that will be used
by general public for
multiple purposes.
With new customers added value, Nintendo will drag more profit from their new services.

17. Mathieu Lacaze:
@Mathieulcz
Mathieu.Lacaze@hyperisland.se Thank You

18. References:
Entertainment Software Association - 2012 Sales and demographic and usage data:
http://www.theesa.com/facts/pdfs/ESA_EF_2012.pdf
Entertainment Software Association - 2011 Sales and demographic and usage data:
http://www.theesa.com/facts/pdfs/ESA_EF_2011.pdf
Flurry Analytics and estimates, The NPD Group:
http://news.cnet.com/8301-13506_3-57322190-17/nintendo-sony-down-to-their-last-lives-
in-portable-gaming/