Nintendo Case Summary:
Nintendo Co., Ltd. is a globally known electronic video game company that was
originally founded in 1889 by Fusajiro Yamauchi as a Japanese playing card company. Nintendo
shifted into the electronic gaming console industry in the 1980’s, and has since released some
iconic devices and video games. In 1989, Nintendo emerged as the paramount electronic gaming
company after releasing the Game-Boy which sold 188 million units, still holding the record for
the bestselling videogame system.
Nintendo’s domination of the gaming industry was first seriously challenged in 1994
when Sony released the PlayStation. The PlayStation sold “over 102 million units during its
lifespan” and its success was greatly attributed to its technically advancements that increased the
graphic and sound quality. Because of PlayStations advanced features it sold at a price point of
$300 per unit, which was significantly higher than any of Nintendo’s console price points.
Nintendo strategically wanted to undercut PlayStations price point and released the Nintendo 64,
which was a simple console that sold for $200 per unit. The Nintendo 64 sold 33 million units
and even though the PlayStation sold more units, the Nintendo 64 satisfied customers looking for
a simple, fun, and family friendly console.
Microsoft entered the electronic gaming console industry in 2001 with the release of the
Xbox. The Xbox challenged the PlayStation with realistic graphics and sound, resulting in 10
million Xbox units sold. Around the same time the Xbox was released, Nintendo released the
GameCube, which was not received well by Nintendo customers resulting in a product failure.
Shortly after the Xbox and GameCube were released, Sony proved their dominance with the
release of PlayStation 2. The PlayStation 2 elevated the graphics and sound quality to an even
higher level and added a DVD player. PlayStation 2 sold 155 million units in ten years.
Analyzing the failure of GameCube showcases mistakes in Nintendo’s business strategy.
GameCube attempted to compete with PlayStation 2 and Xbox. PlayStation 2 and Xbox used
realistic graphics and vivid sounds to bring violence and seductive behaviors into video games.
While Sony and Microsoft had success with launching devices that supported provocative
gaming, Nintendo did not have success in that category. Sony and Microsoft’s demographic
market was adolescent boys to adult men looking to play complicated games. Nintendo’s
demographic market was families, children, and elderly looking to play simple and appropriate
video games. When Nintendo launched GameCube they subsequently launched a violent game
called Eternal Darkness: Sanity’s Requiem (Editors, E.). Both GameCube and the violent video
game were a flop because Nintendo’s customers rejected those products. Ultimately, Nintendo’s
divergence from the interest of their macro environment lead to failure of GameCube.
In 2002, Satoru Iwata took over as Nintendo’s CEO determined to take the company back
towards a blue ocean, meaning they would go back to delivering in the new market they created
as opposed to competing with Sony and Microsoft in the red ocean. This lead to the launch of the
Nintendo DS, a simple handheld system aimed towards recreational gamers seeking fun video
games. The simplicity of the device allowed it to have a lower cost, making it accessible to more
people. The Nintendo DS also offered the device in pink for girls. Targeting girls expanded
Nintendo’s market.
Nintendo did primary non-experimental qualitative market research by observing how
elders spend their time in nursing homes. The elders played card games, but what Nintendo was
captivated by is that the elders liked games that could be as easy or as complex as players
wanted. Nintendo also discovered complicated controllers with many buttons discourage non-
