Game company research and industry analysis

Computer Game Research: Nintendo

Nintendo is a global leader in the development, distribution and sales of gaming technologies. Their latest fiscal quarterly results were ¥188M yen, with an Operating Income of ¥23.3M yen. The company ended its latest fiscal quarter with a net loss of ¥25M yen. The factors involved in the loss included price protection and costs of new product introductions for the Nintendo DS and new, advanced concept Wii game library (Nintendo Investor Relations, 2010). Nintendo lost ¥70M yen on foreign currency fluctuations, mostly the devaluation of the dollar over the year. Otherwise, the company would have made a profit consistent with 2009 quarterly levels of the same period (Nintendo Investor Relations, 2010). At present, the company employs 4,706 people across the regions of Japan, the U.S. And North America and Europe. The company has its global headquarters and R&D division in Kyoto, Japan, with satellite R&D centers in the technology centers of the Silicon Valley including Menlo Park, California and Seattle, Washington. Nintendo concentrates on creating a youthful, healthy brand for gaming, stressing collaboration and communication over pure competition, making their brand preferred by families and close friends (Aaker, 2009). Figure 1 is taken from an analysis of their financial statements and financial reports showing the distribution of sales by product area.

Figure 1: Analysis of Nintendo Games, Console and Accessory Sales

Product/Services

Share

Games/Software

67.6%

Consoles

18.0%

Accessories

7.8%

Online Subscriptions

6.6%

Source: Nintendo Investor Relations (2010)

Clearly the platform-based strategies of Nintendo, concentrating on the Wii and the DS Series, has led to exceptional customer loyalty and adoption of games on each of these platforms (Ewalt, 2006). The Nintendo development structure is organized by platform, so that the employees of each division can concentrate on creating the best games and delivering the best user experiences possible.

The product divisions are virtual in Nintendo, with developers and engineers in Kyoto, San Francisco and its surrounding areas including Menlo Park, and Seattle (Nintendo Investor Relations, 2010). Nintendo's senior management believes in creating highly collaborative teams where everyone has an equal voice in the product development and completed products, whether they be games or consoles. The Japanese management philosophy is to seek consensus and share knowledge extensively to ensure a greater level of success than would otherwise be the case (Ewalt, 2006). The game Super Smash Brothers Mario, the most successful product introduction Nintendo had in the last year according to their financial statements (Nintendo Investor Relations, 2010) was produced using the virtual team model that seeks to create high levels of collaboration. Figure 1 is a screen copy of the game.

Figure 1: Images from Super Smash Brothers Brawl (Wii Platform)