Despite Nintendo Co. launching their new console, Nintendo is projecting a $240 million annual loss; their biggest fall in over twelve years. It’s evident that Nintendo is beginning to lose its appeal over their competitors like Xbox and PlayStation who have also launched their newest models. It seems that Nintendo’s customer segment is evolving whilst Nintendo’s business model has remained static. With casual players moving to mobile devices, and hardcore gamers moving to competitors, it’s essential for Nintendo to keep up with this market shift.
Nintendo console evolution
“We are thinking about a new business plan structure…Given the expansion [of] smart devices, we are naturally studying how smart devices can be used to grow the game-player business” Iwata said at a press conference. I believe in order for Nintendo to prevail from this dip, it is imperative for the management team to create a differentiation strategy. When the Wii was first launched, it was the first gaming console to feature a movement aspect in the gaming experience; Nintendo must continually innovate in order to keep up with the growing and changing market. The potential that streams from the smart device industry is substantial as no other competitor has seriously attempted to take it. Additionally, mobile games are the fastest-growing segment, with revenue set to reach $22 billion by 2015, a large leap from $13.2 billion this year. Nintendo could potentially capture the young mobile market using their iconic characters (Mario) as their marketing strategy. If Nintendo was able to devise an innovative application within a mobile device that maintained low costs, they could restore their profit. To recapture the edge of the gaming market shares, Nintendo must continually innovate the gaming space in order to remain competitive.
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“Nintendo Mulls New Business Model After Forecasting Loss.” Bloomberg.com. Bloomberg, n.d. Web. 30 Sept. 2014. <http://www.bloomberg.com/news/2014-01-17/nintendo-forecasts-net-loss-on-stagnating-sales-of-wii-u-games.html>.