Introduction: The gambling industry had been through changes recently credited to various factors including external environment, introduction of new competitors, the energy of rival products, changes in technology, demographics and so on. This case tries to investigate Nintendos position in the gambling industry in 2009 2009 after the introduction of Microsoft and Sony as strong opponents. The following paper presents a concrete evaluation of the case regarding macro environment, porters 5 factor model, proper mapping and key success factors of the industry.
Macro Environment: The video gaming industry underwent several changes in the exterior environment during 2009. These can be summarized the following:
- Economic Changes: International tough economy which started in 2007 emerged as a threat to the industry by impacting the buying behaviours and buying practices of the folks. Until the mid-2009, the sales of gaming consoles was not influenced. However, in the next half of 2009, the sales greatly declined. After 2000, this was the year where the gambling industry made least amount of profits despite of a multitude of products having diverse costs.
- Technological Factors: Before 2009, the video game industry had widened greatly because of technical developments. In 2008, profits come to at a highest make of more than 23 billion. More technology such as internet games, video discs and home games accessories started out to emerge.
- Emergence of Competition Forces: The industry, at that time, was also greatly influenced by admittance of new opponents in the market. This led to ongoing development and development of newer products that targeted to capture large helpings of market show. These factors continue to expand the games industry until a down flip occurred due to economic recession.
- Demographic Factors: The progress in social developments also impacted the video games industry after 2009 because more customers became interested in the product offerings. Therefore, it became easier for the firms to do market segmentation and market concentrating on to capture potential market show. As the give attention to social movements grew, the competition tried to build up new ways to attract customers and build their market position.
In the light of previously listed external factors, following is an research of Nintendos initiatives to survive on the market and compete with the rival forces by expanding its distinctive advantage.
Porters 5 Pushes Model
The 5 factors defined by Porter are: risk of new entrants, threat of substitute products, competitive rivalry, bargaining power of clients and the bargaining electricity of suppliers. Nintendo taken care of its position and brand by successfully dealing with all these forces.
- Threat of Entrance: Nintendo possessed to face the risk of new entrants such as Microsoft and Sony who helped bring Xbox and PlayStation 3 3 (PS3) to get over Nintendo. So, the industrys 3 major players were Nintendo, Sony and Microsoft who possessed to compete in conditions of prices, technology as well as better ways of attract goal customers.
- Threat of Rivalry: Nintendo maintained superiority above the rival products by delivering extra advantages to game seekers. It introduced Nintendo Wii which was a perfect mixture of technology, research, invention and function. The company entirely changed the experience of gambling by providing excellent controllers.
During 2009, the threat of rivalry had all of the sudden become very high for Nintendo while it was suprisingly low for Microsoft and Sony. The prices are almost static and the firms beat this rivalry only through differentiating their software systems from others.
- Threat of substitutes: The industry encountered threat of substitutes between the products of three major players in the game. This risk is from two types of gambling users: informal and hardcore. The latter do not alter their brand easily as the former may substitute one product for another. This threat was less for Nintendo after it launched NINTENDO WII GAMING CONSOLE because this product enabled it to grab large portion of market sales.
- Threat of Powerful Suppliers: This factor was not powerful for the gambling industry because most of the resources had a need to manufacture consoles very easy available such as circuit planks, processors, memory chips, capacitors, DVDs etc.
- Threat of Powerful Potential buyers: From a casino game console standpoint, the risk of buyers was relatively low because the industry offered a huge amount of products are the goal customers were ready to pay the price demanded by the firms. Moreover, the probability of any retailer creation and developing his own consoles was quite low credited to unnecessary cost and price obstacles.
So, in the video games industry threat of new entrants, substitutes and competitor rivalry were more powerful factors whereas the bargaining electric power of clients and suppliers didn't affect the industry much.
Driving Pushes of the Industry
The various factors driving a vehicle changes in the gaming industry were market size, competition, marketing technology, technological changes, and globalization and so on.
- Technology: First of all, the technology brought changes by causing the companies better in making and distribution. For instance: Microsofts online games community, Xbox live and lightweight and wireless controllers were credited to technology. It resulted in producing efficient hardware and reduced amount of costs.
- Innovation and Creativity: The next driving pressure was technology and imagination that continually brought growth of video games industry by development of better software applications.
- Consumer attitudes and purchasing procedures: Another generating force that helped bring changes were changes in the client needs and wants with the duration of time. The consumers demanded highly energy efficient products that are portable and offer online services. Furthermore, the traditional video gaming industry had focused mainly on adolescent guys, but with the duration of time, the industry widened to young adults and women sector too. In the case, it has been described that NINTENDO WII GAMING CONSOLE aimed to appeal to those market sections that do not usually play video gaming. This section included women who were generally untapped by this industry. By attracting such sections, Nintendo made huge earnings.
So, changes in a single domain can bring about changes in the function of development of overall video gaming industry.
Strategic Group Mapping
A strategic group identifies a cluster of companies within the industry that act as rivals to build up their own status by grapping market share. According to the case, Nintendos rivals in the industry were Microsoft and Sony; all fighting to increase their sales and market show. In 2009 2009, Nintendo acquired sold approximately 51. 6 million consoles. At exactly the same time, the sales of XBOX 360 360 were roughly 31 million and the ones of PS3 were 23 million. So, Nintendo was growing considerably ahead of the other two rivals by successful use of its distinctive edge. Moreover, the marketplace talk about of Nintendo was dual as compared to Xbox and 4 times as compared to PS3. This suggested that Microsoft and Sony were functioning at a loss while Nintendo experienced amended its strategy so that could generate maximum profits in the industry.
By plotting the marketplace share of companies on X-Axis and their relevant sales on Y-Axis, s tactical map can be shaped which ultimately shows the strong and poor companies according to their positioning on the market (as shown in Appendix B).
Key Success Factors
The first main factor that expanded the video games industry was the power of companies to reduce the materials costs found in production. Second of all, the games industry has the capacity to improve the development process according to the needs and needs of the clients. For example: consumers need 8-bit, energy efficient portable and online flash games and the industry has had the opportunity to provide most of them. Moreover, product innovation features are another success factor anticipated to which video games industry witnessed new product lines within short spans of their time such as DS, SNES, and Nintendos Duck Hunt etc.
The industry also acquired success factors related to physical circulation of its products. Immediate marketing and sales through the internet community forums enabled companies to gain huge profits. And lastly, clear marketing and advertising strategies developed by Microsoft, Nintendo and Sony were so powerful that they enticed customers from all demographic industries.
Industry Profile and Attractiveness
Thus, the exterior environment, changes in technology, a strong sense of competition and rivalry among the firms, impressive products as well as cost and marketing strategies permits a huge expansion of the gambling industry. Although some factors such as international downturn and changing social trends afflicted the sales in the short term in 2009 2009 however the industry soon recovered out of this down turn and relocated in a confident direction. Primarily, the introduction of Microsoft and Sony were serious dangers for Nintendo but the company soon taken care of its brand placement by providing distinctive benefits and a variety of product lines that differentiated its NINTENDO WII GAMING CONSOLE from other replacement products. Currently, the gambling industry is highly attractive to a particular section of the world especially the children who will be the way to obtain much revenue technology for the industry.
APPENDIX A (Porters 5 pushes Model)
APPENDIX B (Strategic Map)
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