Case Analysis Part 1 Introduction Case 7 of the textbook titled Essentials of Strategic Management looked at the video game pioneer Nintendo. The title of the case is Nintendo’s Strategy in 2009: The Ongoing Battle with Microsoft and Sony and was written by Lou Marino and Sally Sarrett. The case begins by describing how Nintendo faced serious competition from Sony and Microsoft in the video game market. As Sony had created the Playstation and Microsoft came out with the Xbox, Nintendo had taken a backseat in terms of new video game consoles.
Through the years however, Nintendo had created many popular devices used for gaming such as the Nintendo 64 and numerous versions of the DS. As Nintendo prepared to release the Wii game system, many said that it lacked the graphics and user experience that their rivals had and it appeared as though it would be a market flop. To the surprise of many critics and competing companies, the Wii was a huge success setting records for total sales.
Currently Nintendo is seeing reduced demand and reduced sales due to the recession but they continue to release new features and games and analysts say that “the only limitations of the system were the limitations of the designer and the user-leading most to believer they considered the possibilities endless” ( ). Nintendo’s Strategy In it’s early years, Nintendo’s strategy was to bring video game experience most commonly found in public venues such as the Donkey Kong arcade game into the users home.
This differentiation strategy proved highly successful for Nintendo as they were the first to give the user an affordable gaming console with many different games available for the Nintendo Entertainment System or NES. This continued with the release of numerous versions of the Game Boy and Nintendo DS as users could take their games with them anywhere they went which was unheard of from rivals such as Sony and Microsoft at the time. As competition grew with Sony, Sega, and Microsoft, Nintendo’s strategy seemed to move towards a cost strategy. They began creating onsoles such as the GameCube to compete with disk operated consoles by their competitors but at a cheaper price. This move turned out to be unsuccessful for a number of reasons, the main one being their lack of graphic capabilities. From here Nintendo began differentiating themselves again. Nintendo set out to design a console that would revolutionize the way people played games and the Wii was born. People that had never played video games before such as women and the elderly could now find games suited for them that were easy to understand and fun to play.
Users could play games that got them up and moving to promote a healthier lifestyle as well as interact with others. For Nintendo to be successful in the future, this differentiation strategy appears to be the best route to follow. Strategic Leadership The strategic leadership surrounding the Nintendo organization appears to be ahead of their time in some aspects. Although they are not coming out with consoles directly aimed at competing with that of Sony and Microsoft, they are however releasing cutting edge technologies into their products.
From the dual screen on the DS which allows users to sync up with others to play head to head to the Wii with a Bluetooth activated controller, Nintendo is constantly changing the video game industry. The marketers at Nintendo understood that “too many powerful consoles can’t coexist” because they would eventually lead to their own collapse ( 375 ). By creating something completely new for users that rivals aren’t reaching, Nintendo was able to gain control of a relatively untouched market segment. Nintendo is known for its differentiation from the normal gaming systems and this attracts a completely different crowd than Sony and Microsoft.
Stakeholders in the Nintendo company know this and this is what ultimately attracts them to their organization just as the stakeholders for Sony or Microsoft are attracted to the strategies of competing to be the best in terms of graphics and realistic gaming experience. If Nintendo was to change and try to compete on the same levels as Sony and Microsoft, they would more than likely lose many of their investors because this differentiation is what keeps Nintendo ranking among the top gaming companies.