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 This blog post is in response to Nathan’s post on Nintendo’s continuous decline in profit, the potential reasons why, and how Nintendo can attempt to recapture some of its lost customers.

As Nathan and the original article mentioned, Nintendo should take advantage of the growing mobile gaming industry and perhaps shift its focus out of handheld gaming devices. For instance, Nathan suggested that “Nintendo could potentially capture the young mobile market using their iconic characters (Mario) as their marketing strategy.” The mobile gaming industry is very profitable and is growing rapidly; however, I believe we must also consider the high degree of competition and rivalry within the market. Specifically using criteria from Porter’s Five Forces, we can see that the mobile gaming industry is a market with high level of competition — just take a look at the sheer number of free and paid games offered in Google Play and the App Store. Because the market is growing, it is also going to attract new competitors. Furthermore, not only is the customer’s cost of switching low, it is also difficult to differentiate itself from the thousands of varieties of games that already exist. There are also plenty of substitutes, for instance games that are not tied to electronic devices.

Though the use of its iconic characters may be a differentiation strategy, I believe Nintendo should conduct primary research on the potential of success and profitability of this direction before they immediately start developing game apps. The firm should especially focus on whether the customers will purchase Nintendo’s mobile games, given that there are already so many existing options. Nintendo may use the time and resources that would be spent on developing a gaming app to researching and developing an innovative product or service that is disruptive or novel to the industry.

https://blogs.ubc.ca/nathanlo/2014/09/30/nintendos-innovational-decline/