Nintendo has survived 126 years by controlling both hardware and game IP. The Wii broke the mold by reaching casual players, but now mobile gaming and streaming threaten that model. The company is fighting back with a new console, mobile partnerships, and a Universal Studios theme park.
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Nabila Marci (content team at Strategizer).
Mr. Iwata (referred to in transcript).
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Hi, my name is Nabila Marci and I work with the content team at Strategizer. I create videos where I take a business case and I dissect it to tell the business model story behind it and to illustrate strategy lessons. Now sit back, relax and enjoy this episode. Today's video is on Nintendo, one of the most famous makers of consoles, video games and characters like the iconic Mario. The recent death of Nintendo's CEO affected all gamers.
Because Mr. Iwata was a gamer at.
Heart, he pushed Nintendo's strong growth in the 2000s. But more importantly, he built a culture of creativity and made innovation part of Nintendo's DNA. Recently he was working on a substantial overhaul of Nintendo's business model. The tumultuous environment in the gaming industry has threatened Nintendo's growth and his future now remains uncertain. This 126-year-old business has went through many transformations. The business model has been very dependent on video game consoles in the past 40 years. First with home consoles and then with head handheld ones. Nintendo's second value proposition is the video games it creates for the consoles and on which it owns intellectual property. These value propositions go hand in hand. Once you buy the console, you'll purchase.
A few games for it.
Publishers that are interested in creating games for the audience of Nintendo console owners must pay royalties to Nintendo anyway. Success in this business model starts with the sales of consoles. But Nintendo wasn't alone on this competitive market. It was fighting against Microsoft and Sony to create the best consoles, specifically high end ones. Nintendo was in a red ocean where.
Growth in revenues were extremely hard to generate.
So they challenged the status quo by getting rid of the less valuable and yet very expensive features of its consoles like the hard drive and the dvd. And then they added a motion control stick to their new console, the Wii. The games were really attractive to gamers, regular gamers, but also to a population that was previously excluded, like parents and even grandpar. When it created a new market for fun and motion controlled gaming, Nintendo created.
A blue ocean of growth.
This move was pretty revolutionary because the Wii wasn't as technologically advanced as other consoles. It was kind of like trying to.
Get a tiny smart car to compete.
Against massive Hummer cars. But people loved it and that's what mattered. At the end of the day, it was Nintendo's creativity and its ability to imagine something new that beat the technical aptitudes of its competitors. But that's not the end of the the battle for Nintendo. Online gaming and mobile gaming have attracted more and more people in the past years and are threatening Nintendo's business model. Gaming without consoles has been eating up Nintendo's market and revenues have gone down the past few years. But while it's facing a decline in its industry, here's what Nintendo is doing to reignite growth. On one hand, it's improving its business model by working on a much awaited video game console. On the other hand, Nintendo is experimenting.
And inventing new business models to diversify its revenues. Although it did not want to cannibalize its console sales, Nintendo realized that mobile gaming was inevitable. It simply has such a huge market. It's currently working with a partner to bring its famous video games on mobile.
But it still isn't clear yet how it will monetize this offer.
According to the press, Nintendo is also working on a subscription offer that would enable gamers to play across multiple devices. This would generate recurring revenues for Nintendo. Finally, Nintendo is picking up on low hanging fruits by partnering with Universal Studios to create a theme park on its video game characters. This is a really great way to earn licensing fees. Only the future will tell us if Nintendo will preserve its position as the king of gaming. One thing we know for sure is that Nintendo inherited a legacy of innovation from its former CEO. His passion for gaming will live on in Nintendo's future consoles, characters and games. Thanks for watching and if you enjoyed this video, share it around and sign up to watch more business model stories from Strategizer.
