Nintendo's Revolution (CIA)
Nintendo's Revolution (CIA)
Nintendo's Revolution (CIA)
NINTENDO’S REVOLUTION
Meriel Lalrinhlui, Milan Tom Joby, Mohammad Abuturab Zaidi, Sayanee Mitra, Shimansh
Jain
INTRODUCTION
Since the early 1960s, video games have been around. Three MIT students, Steve Russell,
Martin Graetz, and Wayne Witaenem, created the first video game, Spacewars, which
marked the beginning of such an era. It rose to interest pretty soon among young hackers and
tech geeks. Alan Kay created the Dynabook, an early personal computer aimed towards
youngsters, in the late 1960s. In the 1970s, the Dynabook concept paved the way for the PC
and computer game revolutions. The first game console was the Magnavox Odyssey,
developed by engineer Ralph Baer in 1972. The following year, U.S.-based Atari launched a
simple table tennis game called Pong in the United States, which could be hooked up to a TV
in Kyoto, Japan, arose amid all of this. Originally known as Nintendo Karuta, the
company was started on 23rd September, 1889 by craftsman Fusajiro Yamauchi and
produced handmade hanafuda playing cards. With the increase of the cards' popularity,
Yamauchi hired assistants to mass-produce to satisfy the demand. Even with a favorable
start, the company faced financial struggle due to operating in a niche market, the slow
and expensive manufacturing process, alongside long durability of the cards, high product
research and development department run by Hiroshi Imanishi, a business veteran with
experience in various divisions. Meanwhile, Nintendo established the Nippon Game label and
began selling classic tabletop games such as go, chess, mahjong, and shogi, as well as other
foreign games, outside of Kyoto's Uji City. A few areas specialised in hanafuda card
production were kept as part of the company's restructuring. Nintendo created history in the
early 1970s when it debuted the Nintendo Beam Gun, an optoelectronic handgun designed by
Masayuki Uemura, as Japan's first electronic toy. In 1971, Nintendo teamed up with
Magnavox to build a light gun controller for Magnavox's new home video game console, the
Odyssey, based on the Beam Gun design. In late 2004, Nintendo Corporation engineers were
Sony and Microsoft leading the assault in the video console industry, the question was
whether and how the "Revolution" could help Nintendo get back on its feet.
Nintendo's Revolution was a one-handed video game controller that was not a variant of the
joystick, but rather a stubby rod. It was thought that it could help open up video games to a
vastly different audience than the boys and young men who traditionally bought video game
consoles. It not only enabled the creation of games that mimicked real-world movements like
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throwing, hitting, or aiming, but it could also help open up video games to a vastly different
audience than the boys and young men who traditionally bought video game consoles.
“Revolution.” The goal was to attract tens of millions of new customers to the gaming
industry, including individuals who had never played video games before or thought of
them as toys. It was believed to have a new take on gaming that might even attract
By 2003, the team had identified several basic concepts for the console:
Revolution wasn't merely a kid's toy. The console needs to be simple enough for
It had to be created in such a way that it would appeal to women, who, in most
houses, had authority over the living room. This necessitated a compact, well-polished
design.
In comparison to other devices such as Sony's PlayStation and Microsoft's Xbox, the
console should be affordable. The pricing should ideally be less than 10,000 yen
(about $100).
Software should be simple enough to play so each member of the family, even if only
The console would have to be able to run for 24 hours, consume very little power, and
Revolution had to be backwards compatible with existing GameCube games and even games
from prior Nintendo platforms, such as the Nintendo 64, in addition to being acceptable to
mothers. This aided the Revolution's launch by providing a back catalogue, as well as
In this case study we shall analyse the Nintendo's Revolution and the market effect in detail
using PESTLE analysis, SWOT analysis and Porter’s five forces mechanism.
PESTLE analysis is a business tool that a company uses for the launch of a new product or
In other words, it gives a bird-eye view for the company for researching the market suitable
for its product. It is similar to SWOT analysis but much more comprehensive.
P – It defines the Political factors that affect the company. It focuses on how much the
government influences the economy or the industry such as a new tax policy, trade barriers
etc.
E – It defines the Economic factors that directly affect the functioning of a business. For
example, the inflation rate of an economy, demand and supply for a good, interest rates, etc.
S – It defines the social factors that affect the company such as the social trends, culture,
L – These are the factors that affect the legal side of the business. The business has to take
care of the laws both inside and outside the business. There is legal provision under the court
of law that every business in the country has to follow and there’s the laws that work inside
the company.
E – These factors include the factors determined by the surrounding environment for example
By analyzing these factors, a company can make better decisions and plan ahead for the
Just as important PESTLE analysis is to other companies, the same applies to Nintendo.
clout. It does not endorse or support any political presence in its home country, Japan.
It even attempts to prohibit games with any political content, just as it prohibits
people and brands from incorporating political content into the game Animal
Crossing. When purchasing the console, they clearly state in the user manual that it is
only for personal use, which aided the company to some extent. However, the
company must exercise extreme caution because the console is used not only in Japan
but also around the world, and the political presence in other countries should be
around the world and dealing with multiple currency units. Many young people are
said to seek personal loans in order to purchase a Nintendo. And if interest rates rise,
they may seek out other options, as for the same or slightly more than the price of the
Nintendo console, they could purchase a PS4 or XBOX, both of which have far more
games and storage than the Nintendo console. This competition can have a significant
impact on their sales. During the pandemic, while other companies were on the verge
of shutting down, Nintendo had one of the best sales growths because everyone was
stuck at home and video game consoles were popular because people couldn't go out.
3. SOCIAL FACTORS – People's rising incomes had them yearning for more luxuries.
And Nintendos were one of those things that every child wished they had in their
homes. As Nintendo's began to gain market share, the child who does not have a
Nintendo feels very lonely while watching his friends play on it, forcing parents to
purchase one for their child. The company should also take care not to offend many
communities with the themes provided in their gaming consoles, as their products are
constantly evolving. Cloud gaming, portable gaming sets, and other new technologies
have emerged. All of this has been beautifully crafted in the form of Nintendo's Wii
and their newest addition Switch, which is a powerful and portable gaming console
that can be played anywhere. They see a bright future ahead of them, but they will
need to keep coming up with new innovations to keep up with their competitors.
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5. LEGAL FACTORS – The gaming industry is one of the most affected by copyright
issues. Nintendo also has a long legal history. They have a strong legal side that looks
into the legal aspects of the company and assists in patenting and protecting new
innovations that the company brings up, and if not done properly, the company will
have to deal with a lot of problems. Nintendo has been sued numerous times for
have an impact on the Nintendo company. The laws that govern the gaming industry
have become more stringent, and sustainability is now a goal. The parts used in the
company must take special care of them. According to a Greenpeace report, Nintendo
this is due to the company's anonymity, as well as the correct instructions for disposal
and making the environment a better place being provided on their official website.
SWOT analysis is a type of analysis in which managers try to identify the organization's and
its operations' strengths, weaknesses, opportunities, and threats. Its purpose is to specify the
business venture as well as the internal and external elements that are favourable and
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unfavourable to achieving those goals. SWOT analysis has been praised as a faultless tool for
strategic analysis, but it has also been criticised for its flaws.
Strengths, Weaknesses, Opportunities, and Threats (SWOT) are acronyms for strengths,
weaknesses, opportunities, and threats. Internal aspects such as the company's strengths and
shortcomings exist, whereas external factors such as opportunities and threats exist.
Managers can affect strengths and weaknesses, but they are powerless in the face of
opportunities and threats. When it comes to external factors, top executives are completely
For a reason, Nintendo's name, brand, logo, and goods are well-known in the gaming
business. With gaming in its DNA, Nintendo never looked back, instead focusing on creating
each game as if it were the first and last. As a result, the firm became well-known. Here is
STRENGTHS -
1. A century of experience - Nintendo was founded in the year 1889 and has 132 years
of experience in games. Initially they produced cards and now are producing high tech
gaming consoles. Nintendo is identified with gaming, and it has the expertise to meet
2. Vast distribution network - Nintendo gained global recognition only because of its
wide reaching and large scale distribution network. Nintendo established a global
Richmond.
3. Competitive pricing- Even if Nintendo's products are initially costly, once more
gamers are attracted to them, the costs are quickly reduced. This is Nintendo’s
Nintendo's annual revenue, totaling $9.9 billion. If Switch suddenly falls out of
favour, Nintendo will face financial difficulties until it can find another top game to
rely on.
2. Product failure - The failure of the Wii U shattered trust and tarnished Nintendo's
image. It was a low quality product sold at a really high price. The Wii U console
3. Slow response to demand - With schools closed and billions of people remaining at
home and practising social isolation, demand for Switch skyrocketed, but Nintendo's
OPPORTUNITIES -
capabilities.
building its industry and stores in China, India, and other emerging regions in Asia,
Africa, and Latin America now that it has a major market share in the United States,
3. Invest in mobile games- In order to reduce its dependence on Switch it can enter the
market of mobile games as mobile game companies are constantly growing, with a
market value of $95.4 billion predicted by 2022. Nintendo may take advantage of this
THREATS -
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1. Stronger substituting- Nowadays people are moving towards online and mobile
games. The demand for handheld and console games is consistently decreasing, so in
order to survive in the market they also have to introduce online and mobile games.
well as industry heavyweights such as Google and Amazon; one of these companies
may obtain a technological advantage and take over the sector, as well as a substantial
Rovio, BenQ, SEGA, Ubisoft, Electronic Arts, Activision Blizzard, CCP Games,
King, and a slew of other companies are making bold and deliberate steps to gain
market share.
company. A company's profitability is influenced by the number and power of its competitive
rivals, possible new market entrants, suppliers, buyers, and substitute products.
1. Rivalry among existing competitors - The rivalry among competitors is quite high due to
a. Number of competitors- There are a large number of competitors for the Nintendos.
Sony’s sub brand play station, Microsoft’s sub brand Xbox and other brands like
and Xbox are the ones producing only console games. Whereas Nintendo has a
variety of products varying from mobile phones to consoles. Like in the 1990s when
the race between Nintendo and Sega started to heat up as they kept producing
2. Bargaining power of buyers - The bargaining power of buyers is comparatively low as:
a. Number Of customers- The bargain power is not in the hands of the individuals.
There are a good amount of customers in the gaming industry which doesn’t really
b. Differences between competitors- It is the types of products and the prices and the
quality it brings that creates difference between them. Products of Nintendo are
always about being innovative and unique. Nintendo Switch is one of the highest
3. Threat of substitute products - Nintendo has faced a huge competition in the market. But
Nintendo products are different from their competitors in terms of the types of products it
produces. Nintendo switches are a great example of it. Therefore the threat to substitute
products is low.
4. Threat of new entrants- The threat of new entrants is high due to these factors:
investment to enter into the market. Because of the hardware component it requires,
b. Brand loyalty- Nintendo entered very early in the market when there was no
competition in the market and was easily able to expand its business which made
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them gain customer loyalty. The brands like Sony and Microsoft have brand loyalty
which allows its sub brands playstation and Xbox to have an easier gain of customer
5. Bargaining power of suppliers - The bargaining power of suppliers is moderate since the
number of suppliers of hardware are good in number. It doesn’t really affect Nintendo in
terms of suppliers of hardware. Nintendo runs Nintendo Software Technology which was
made to create first party developers for games. Nintendo tries to gain their loyalties as they
CONCLUSION
To conclude everything that has been presented so far, we can see that there were many
factors which hindered the progress and success of Nintendo. Not only the fierce competitors
but also the consumers’ demand affected the advancement of Nintendo. From the above
analysis conducted, it is clear to see that the advancements and achievements Nintendo has
made originally in 1889 with their first ‘Hanafuda’, a playing card game to their latest 2019
Nintendo Switch Lite, a hand-held portable play, has not been a smooth road.
Nintendo was able to expand their game consoles mainly because of the effective
distribution system, attractive advertising and marketing and the overall management of
the company in the video game market (Gallagher, Scott and Seung Ho Park, 2002). The
wide variety of games available in their consoles also attracted new gamers and attained
loyal customers.
As mentioned before, Nintendo faced stiff competition from companies like Sony and
Microsoft who launched their own CD-ROM based game consoles like Playstation and Xbox
respectively. The success of these video game consoles quickly put Nintendo at a
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disadvantage in the market and the future of Nintendo became unsteady. In 2001, Nintendo
launched GameCube but could not compete with the updated Playstation 2 for its low-quality
graphics. Avid gamers criticised GameCube but Nintendo dismissed such criticism saying
that the simple design would instead attract new players who were not familiar with fast
In terms of technology and innovation, Nintendo could not compete with Sony and
Microsoft with their games being aimed at more hardcore players. Sony was ultimately
considered better in each aspect and was preferred more by consumers in comparison to
Nintendo. Nintendo was then at a huge loss. Under the management and leadership of
Iwata, things started to change for the better. Iwata was already an experienced game
developer and a former president of the game studio Hal Laboratory so his strategies and
work culture proved beneficial for future projects (Kim Sangbeom, Ian Lamont, Hiroshi
Ogasawara, 2011).
Also seeing that many third-party developers did not want the two prominent companies
namely Sony and Microsoft to dominate the gaming market, as it greatly reduced their
bargaining power in the profit-sharing negotiations ( Kim Sangbeom, Ian Lamont, Hiroshi
Ogasawara, 2011). They wanted to work with Nintendo for its next game console project.
This was an additional positive network effect for Nintendo. The Revolution was undertaken
with the idea of approaching a more family-friendly game which could be played by each and
every family member, designed in a standard design which would be easily acceptable for
mothers, inexpensive, etc. The Revolution was then later renamed as “Wii”. Nintendo has
definitely paved their own path to see the success they have attained today.
References
David Teather, “Nintendo in Sales,” The Guardian, March 8, 2003. Accessed from
Philip Likens, “Ralph Baer: The Magnavox Odyssey.” Accessed from http://deptof.com/?p=185 in May 2011.
“The Big Ideas Behind Nintendo’s Wii,” BusinessWeek, November 16, 2006. Accessed from
2021.