SWOT Analysis of Nintendo

Introduction 

Swot analysis of Nintendo. Nintendo Co. Ltd is a video game and consumer electronics Japanese multinational company. Fusajiro Yamauchi was the founder of Nintendo, and he laid the foundation of the company on September 23, 1889. The headquarter of the company is in Minami-Ku, Kyoto, Japan.

Nintendo’s main products and services are; E-shop, hardware, mobile devices, handhelds, Wii, Nintendo switches, Home Console, Arcade, Toys and Cars, and Game Console.

According to an estimate, the annual revenue of Nintendo in 2020 was 12.12 billion dollars. Out of which, the net income of the video game/consumer electronic company was 2.4 billion dollars. However, the company has employed more than 6,200 employees to manage its operations.

Nintendo’s top competitors are; Disney Interactive, Zynga, Samsung, Crescent Moon Games, Panasonic, Rockstar, Activision, SEGA, Ubisoft, Activision Blizzard, Electronic Art, LegoAmazonMicrosoftGoogle, and Sony.

Today, we’ll discuss the swot analysis of Nintendo. It’s going to analyze the internal and external factors impacting the world’s leading consumer electronics and Video Game companies. Here’s the swot analysis of Nintendo as follows;

Strengths of Nintendo 

Alliance & Partnership

Nintendo has recently made an alliance with Disney for the mutual benefit and growth and development of the gaming products. Both companies are well reputed; the partnership would serve them both.

Marketing

Nintendo has learned a lesson and realized the significance of effective marketing strategies after the failure of the U console. The company used the slogan “play great content, anywhere, anytime with anyone” for the marketing of switch, and they became successful and widely popular.

Mixed Sales

Nintendo uses both channels; online and retail store for the sale of its product. However, the company makes sure that the customers would buy the product easily. According to an estimate, the company sold more than 50% of its products online during the pandemic year of covid-19 in 2020.

Pricing Strategy

Nintendo charges premium prices from its customers when it launches the product in the market, then gradually decreases the prices once it attracts enough customers. This pricing strategy allows the company to cover the initial research and development cost.

Diversified Market

Nintendo has diversified its geographical market into different regions and those regions work independently, and it’s to lower the risk factor. For instance, Nintendo has divided its operation into 3 categories; Richmond, Frankfurt, and Kyoto. It helps the company to earn profit from the most lucrative market.

Experience

Nintendo has been in the gaming industry for more than 130 years. The company has the experience and expertise to handle different types of gaming challenges and offer the best gaming product to the customers.

Product Portfolio

Nintendo has launched various types of games in the market over the years ranging from educational, sports, races, role-playing, simulation, gaming strategy, and puzzles to adventure. It’s to target different types of gamers relevant to their interests and moods. However, the Animal Crossing game attracted more than 11 million people to play the virtual reality game on the island during the lockdown in 2020.

Distribution System

Nintendo has established an efficient distribution system and it delivers gaming consoles all over the world from Frankfurt to Richmond and Kyoto to Melbourne. It helped the company to increase the sale and market share by delivering the products timely in the markets.

Brand Value

According to an estimate by Interbrand, the brand value of Nintendo in 2020 was 7,296 million dollars, and it has increased by 31%. The gaming brand ranked at the 76th position of the Best Global Brands in 2020. However, the market capitalization of Nintendo in 2020 was 49.7 billion dollars and is ranked at the 87th position of the World’s Most Valuable Brands according to Forbes.

Weaknesses of Nintendo 

Defective Product

Nintendo’s Wii U console model was defective and it had a cheaper quality and high price. Therefore, it flopped miserably in the market and a bad reputation for the company. Most importantly, it jeopardized the brand name.

Slow Response

The pandemic of covid-19 has amplified the usage of video games because people are at home due to the lockdown and shutdown of businesses. Nintendo couldn’t meet the high demand for Switch and the company couldn’t meet the shortage.

Depending on Western Markets

The developed countries like Europe, North America, South Korea, Australia, and Japan are the major markets of Nintendo. They’ve become saturated due to the higher competition. Overdependence on these markets would be highly risky.  

Relying on Switch

The switch is the prominent selling product of Nintendo and they contribute 85% of the company’s total revenue. If its sale drops somehow, then it would have a huge negative impact on the sale.

Opportunities available to Nintendo 

Diversifying Portfolio

It’s no doubt Nintendo has a vast product portfolio, but the company could further diversify its portfolio by adding more software as service and video games to retain customers.

Virtual Reality

Augmented reality and virtual reality games are the growing trends in the gaming industry. Nintendo should improve the quality of its virtual reality games so that the customers would have a better experience of playing games.

Mobile Games

The trend of mobile and online games is growing among teenagers and youngsters, and it would reach approximately 95.4 billion dollars by the end of 2022. It presents a great opportunity for Nintendo to launch more interesting and speedy mobile games to target mobile gamers.

Developing Markets

Developed countries Japan, Europe, CanadaUK, and the USA are the major markets of Nintendo. Now, the gaming company should shift its focus to emerging markets like IndiaChina, Latin America, Africa, and the Middle East.

Threats Nintendo has t face 

Tech Revolution

Tech giant companies like Facebook, Google, Amazon, Apple, and many other startup companies have entered the gaming industry. They all are working on the development of innovative ideas and that would give them a competitive advantage in terms of market share and sales. It puts the whole business of Nintendo in great jeopardy.

Demographic Change

Europe is the major market of Nintendo and the increasing aging population is a severe issue in some of the European countries. It means a lower younger population and the youngsters are the targets demographic of Nintendo’s games. Therefore, the shift in demographics is impacting the company’s business.

Substitutes

Online mobile games have become a great substitute for Nintendo’s gaming console. They have significantly declined the sale of consoles.

Healthy Trends

Many millennial parents consider playing video games addition and injurious to health. They prefer their kids to be involved in outdoor healthy activities. The healthier trends have reduced the demand for video games in the market.

Piracy

Piracy websites like torrent and imitation games are a great threat to the business of Nintendo. The piracy attempts have increased with the growth and development in technology.

Competitors

King, SEGA, CCP Games, Zynga, Activision Blizzard, Rovio, electronic art, Facebook, Ubisoft, BenQ, LG Electronics, Pioneer, AmazonGoogle, Xbox, Apple, and Play Station are some of the main competitors of Nintendo. Their presence in the gaming industry makes it difficult for the company to compete.

Conclusion: Nintendo Swot Analysis 

After a careful study of the swot analysis of Nintendo, we’ve concluded that Nintendo is indeed the world’s leading video gaming company. Piracy, health and exercise trends, substitute products, and defective switch are some of the main challenges. Nintendo should utilize its resources to expand its portfolio by adding VR/AR games in order to address these issues.