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In an attempt to compete Wii, Microsoft put together all the features from its Xbox 360 gaming platform and offered the result in the shape of a bundle of two games at the price of $279.99 in which the following were included: five family-friendly games, a wireless controller, a high-definition multimedia interface (HDMI) connection enabling high-definition output (if desired) and 256 MB of memory, useful for storing games and entertainment content. These five games included: "PAC-MAN Championship Edition," "Uno," "Luxor 2," "Boom Rocket" and "Feeding Frenzy."
Microsoft's attempt was the only one that came close to being a good competing product for Wii. Nintendo, however, is struggling with production issues for Wii product as despite U.S. economy meltdown, the company can't keep us with the increasing demand - 45% from 2007 to 2008. Thus, consumers might have to switch to one of the more expensive, but with similar specifications products if Nintendo is not able to satisfy this demand.
Position/Distribution. According to Iwata, the company's CEO, Nintendo's original distribution plan for the Wii had been to sell the console through a network of retail outlets alongside videogame stores in order to reach a greater market penetration. That plan is currently off the table, he said, because "[we] have to supply enough to meet the demands from our existing customers before we try to expand to new outlets" (CNET News, May 2007). Nintendo is currently facing a production bottleneck for Wii, not being able to forecast demand with precision and thus fall behind with the supply. On the hardware distribution side, Nintendo has a healthy network of distributors, over 50 in the Americas and plenty more abroad. Additionally, the company set up a new channel for games distribution -- WiiWare. Games are downloaded over the internet by using WiiPoints, available to be purchased at the Wii Shop Channel or at retail outlet. This system's advantage is that kids can now buy the points over the counter with cash, rather than rely on an adult with a credit card (although there are parental controls).
Promotion. Wii's promotion strategy includes: mass selling, middleman (Wal-Mart, Best Buy and Game Shop) and push and pull techniques. Push techniques refer to advertising through commercials, ads, circulars, magazines, and internet, while pull techniques refer to keeping on-hand inventory low leaving customers returning to check availability.
A people standing side by side, representing players gathering together.
One specific promotional activity adopted by Wii is the mall experience. It consists in getting the people out to a nearby mall to show off their skills in public. The method draws attention to the game console and increases product awareness among new comers to play and get involved.
In terms of behavior, Wii competes with Xbox 360 and Playstation 3, which are similar game systems. The Nintendo brand is familiar to gamers through older products such as: Nintendo, Super Nintendo and Gamecube, which made Wii backwards compatible.
In terms of demographics, Wii is aiming for a generous age target. Recently, the company launched a $200 million ad campaign targeting the adults. Thus, the company is trying to get rid of the perception that Nintendo games are for children and teens. Nintendo is communicating to all potential buyers that Wii is a game for the entire family and therefore any member of the family can play regardless of their age.
In geographic terms, Nintendo Wii is distributed worldwide. The Wii is a big hit in Japan and the United States, which account for 7.7 million of the 10.57 million Wii products that have been sold worldwide.
Many Wii ads are trying to convince consumers that the Wii is fun for the whole family.
Our message is that everyone's a gamer, Whether it's bringing joy and happiness to mothers and fathers as they experience Wii for the first time playing Wii Bowling or Wii Tennis, or whether it's bringing a game like Nintendogs to a fifteen or sixteen-year-old girl who has a puppy that responds only to her voice. That passion is what's driving us, and that passion to be part of shaping the future is really why we're here," stated Reggie Fils-Aime, President and COO of Nintendo of America (Gamasutra, 2007).
Financial-wise, Wii is positioned as an affordable game. Casual gamers (Nintendo's target market segment in this case) don't buy games at $100, let alone $110 or $120. They buy them when they're $30-50, as the success of the Sony "party starters" has shown.
Today is dominated by seventh generation video games. The major players are fighting for the top spot in a market where overall revenue is expected to increase by 42% in 2009. Total sales of current top three - the Nintendo Wii, Sony PlayStation 3 and Microsoft Xbox 360 - are expected to reach 210m by 2012, when the companies are likely to move to the eighth generation of machines.
Currently, Nintendo is the uncontested market leader. In FY 2007, the company reported an 89% increase in sales and a 77% increase in net income, its market cap rising to ¥8.4 trillion. In the same year, it became the second most valuable Japanese company after Toyota. In the UK, the Wii has become the fastest selling console ever, selling over 1 million units in the 38 weeks since its launch. And this success has been perpetuated worldwide. Thus, the Wii has sold 9 million units worldwide compared to Microsoft's Xbox with 8.9 million for, despite the latter being launched over a year earlier. Wii is also far more profitable than both its competitors - Sony and Microsoft, who lose money on consoles, in the hope to make some profits from game royalties.
Nintendo's success story is very simple. Its star product, Wii, is cheap because it is comparatively unsophisticated. Despite hardcore gamers having labeled the product as inferior for its below-par graphics and lack of feature-length games, the firm managed gain success by leaving this market behind. Nintendo has targeted the Wii at a new kind of consumer: the casual gamer. This is the kind of buyer that has neither the time nor the talent to spend hours mastering complex games, instead preferring to spend five or 10 minutes a day playing a simple, challenge-based game. The Wii is easy to play and extremely tactile, thanks to the Wiimote, a remote control sensor which mirrors the player's actions.
2008 and 2009 are marked by economic crisis at global level. Markets worldwide are affected by this and implicitly the demand and supply. Nintendo's Wii seems to behave completely opposite than expected, its supply being outpaced by the market demand, forcing the company to face a production bottleneck.
Wii is sold globally. Nintendo has distribution centers around the world, each of them distributing the regional versions of the game. In the U.S., there are two main distribution centers, one in Redmond, Washington and one in Atlanta, Georgia. Retailers get their inventory directly from Nintendo.
Nintendo still manages to be the top seller by practicing prices below its competition, Microsoft and Sony. The price level is intentionally low to keep the demand above the supply, or better said generate more demand than supply. The company manages to keep the prices at this level by offering various accessories to generate extra revenue.
Nintendo's hardest task was to change the image of gaming. Until the Wii, video consoles were the bought by coach potatoes and teenage geeks, who most of the times happened to be male. The Wii was targeted at three groups who, under the traditional perspective, were seen as outside the gaming world: families, females and the elderly. Remarkably, the console has been a big hit with residents in care homes for the elderly. The company's strategy started in 2004, to target the casual games worked. Starting with 2006, the DS purchases by female consumers rose 42%, with sales to the over-30s up 127% and over-35s by 212%, increase generated by the development of choose wine and skincare software aiming for this particular market. One other example is Dr. Kawashima's Brain Training Game, which has been a massive hit just for being a software developed to appeal to a broad market.
Annual Report 2008, www.nintendo.com
CNET News, May 2007, http://news.cnet.com/Nintendo-Wii-have-a-supply-problem/2100-1043_3-6181842.html
Gamasutra, April 2006, http://www.gamasutra.com/php-bin/news_index.php?story=9075
Gamasutra, November 2007, http://www.gamasutra.com/php-bin/news_index.php?story=16108
Wikipedia (a), Accessed February 2009, http://en.wikipedia.org/wiki/Nintendo
Wikipedia (b), Accessed February 2009, http://en.wikipedia.org/wiki/Wii
NINTENDO CO. LTD - NINTENDO WII - MARKET RESEARCH
Japan is the company's largest market with over 50% of the sales and operating income. The second largest market is the Americas, followed by Europe.
Wii is a seventh-generation console, which primarily competes with Microsoft's Xbox 360 and Sony's PlayStation 3. One specific feature for this console is its wireless controller, called Wii Remote, usually used as a handheld pointing device, being able to detect movement in three dimensions. One other distinctive feature is WiiConnect24, which enables the console to receive messages…[continue]
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