Sunday, 29 April 2012

Nintendo: Catching up with the Digital Revolution in Gaming

Nintendo blaming price promotions ( for a profit slump is nonsensical; discounting is only ever a symptom of an underlying business problem rather than a cause. Strong brands and product manufacturers do not need to reduce their prices to shift volumes. Judging by Thursday’s announcement Nintendo’s recent focus has been to desperately cling onto market share, even at the cost of profitability.
The underlying reason for such ailing fortunes is the expansion of their competitive set. The digital revolution that is underway in gaming (as well as most other industries) is fundamentally altering consumer behaviour in a way that is squeezing Nintendo’s devices out of the market – who wants to buy a hand-held console if they can download the games onto their iPhone for a lower price? Portability and convenience used to be Nintendo DS’ great selling point, but carrying one device is infinitely more convenient than carrying two.

This is part of a wider trend in technology that is leading the consolidation of devices into a fewer number of formats, each of which acts as a multi-purpose platform. The result is that Nintendo’s strategic focus going forward should be on software rather than hardware, both from the point of view of the market trends and the core strengths of their brand in the eyes of the consumer.

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