Nintendo blaming price promotions
(http://www.marketingweek.co.uk/news/nintendo-blames-price-promotions-for-profit-slump/4001363.article)
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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