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OPERATIONS

Sony still relies heavily on Japanese production

Nintendo supplies the Japanese market with game consoles and software manufactured in its three major manufacturing plants located in Uji, Okubo and Ogura.

Utilising subsidiary companies based in North America, Latin America, Western Europe and Australasia, Nintendo is the global leader in the video games market. In North America, Nintendo North Bend in

Washington is the company’s main North American production facility. Products are distributed via mixed retailers as well as through Nintendo's speciality stores. Product titles are often generated through licensing agreements.

Nintendo commissions a number of third party manufacturers to produce key components and to assemble finished products.

For nearly two decades, Nintendo has been a market leader for innovation. It is not concerned only with the launch of new game titles but it also seeks to develop games that make a significant contribution to advancing technology in the overall market. To date, the company has pioneered Touch! Generations, WiFi Connection and the latest motion sensor technology through Wii.

Nintendo's production strategy is based on the development and launch of new game titles for its hardware consoles. New game titles will continue to be developed for both Nintendo DS and Wii.

© Euromonitor International

TOYS AND GAMES: NINTENDO CO LTD

PASSPORT 21

STRATEGIC EVALUATION

COMPETITIVE POSITIONING

MARKET ASSESSMENT

GEOGRAPHIC AND CATEGORY OPPORTUNITIES

OPERATIONS

RECOMMENDATIONS

RECOMMENDATIONS

Winning family room again with the Wii U

Wii U headed for a price cut?

Wii U is currently priced at US$299 for a basic model due for release in November 2012. The price may look reasonable in historical context, given that Wii launched at US$250 in 2006, and the new console will include a GamePad, making it more expensive to produce. However, it fails to take into account new competition from free to play and the economic environment in 2012, especially in Western Europe, Nintendo’s largest regional market.

Marketing the “second screen” function of Wii U

The Wii U will need to make the most of its oneyear lead over Microsoft and Sony to position itself as a preferred family room console in 2013. With consoles taking the route towards multi-functionality, streaming music and videos is becoming more important, where Nintendo’s GamePad controller is well positioned. Nintendo will need to advertise the

“second screen” function heavily, the way Microsoft did with Kinect, although it maybe too late when Microsoft releases next-gen Xbox.

Japan - main market for handheld games

Japan has increased in importance for Nintendo, as it is the main market where dedicated handheld consoles still enjoy strong sales. However, Japan’s child population is in decline, and there are more offerings from social media, suggesting dedicated console games will need to be very competitively priced. In terms of Nintendo’s handheld business,

Japan may determine whether Nintendo will produce another handheld.

Keep pace with digital downloads

Nintendo remains weak in terms of its digital downloads, or multiplayer gaming possibilities. As sales of video games software move to the internet from physical media, Nintendo will need to expand its digital marketplace, and make it more customer friendly. Free to play browser games will become a main challenge to Nintendo, and it may need to move to a lower price/higher volume model, which is best suited for digital marketplaces.

© Euromonitor International

TOYS AND GAMES: NINTENDO CO LTD

PASSPORT 23

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© Euromonitor International

TOYS AND GAMES: NINTENDO CO LTD

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PASSPORT 24