A critical analysis of the strategy and performance of Nintendo (University Assignment)

This piece was originally produced for a Strategic Management module assessment for The University of Derby, in 2020. All references remain as it was submitted, and were correct as of May 2020. This is a piece I am extremely proud of, as it received a grade of 100%, and ultimately helped me get my final degree of a First Class Honours. I immensely enjoyed the researching process for this piece as it ties in with a hobby of mine for the past ten years or so - gaming, and the research surrounding it. All rights to this work belong to myself, Hannah Charlesworth, and the University of Derby. For citations, please enquire.

I. Executive summary

The following report outlines the key corporate, business, and functional level strategies undertaken by Nintendo. Theories of strategic management are discussed throughout the report, including Porter’s five forces, and Mintzberg & Waters levels of strategy. SWOT and PESTLE analyses support Nintendo’s choice of strategy as well as allow for recommendations to be made. It is hypothesised Nintendo utilise a ‘realised strategy’, as shown through the decision to cease production of unpopular consoles in line with consumer reaction. All levels of strategy suggest more mobile gaming opportunities could benefit Nintendo.

1.0 Introduction

Strategic management is important for the success of a business, as without a strategy a business cannot have a direction (Dermaz & Düşün, 2016). Businesses’ have needed to adopt strategic management in light of economic globalisation (Deephouse, et al. 2019), and by development of an effective strategy businesses can begin to create market differentiation among themselves as a means of becoming successful. The following report analyses three levels of strategy within business, before applying to a case study and providing recommendations as to how their strategic management could be improved. Improvements suggested will have the external environment, resource analysis, and competition taken into consideration. SWOT and PESTLE analyses’ will further support suggestions by allowing for an overview of the businesses’ strategy.

1.1 Introduction to Case Study

The following report will analyse the strategic decisions undertaken by Nintendo, based in Kyoto, Japan, with their European office in Germany. Having its origins as a playing cards company in 1889, Nintendo developed itself over the years into Nintendo Co. Ltd in 1963 (Nintendo[a], 2020). In the 1970’s, Nintendo began producing electronic games to the market, making them the first company to introduce electronic technology into the Japanese toy industry (Nintendo[a], 2020). After developing a series of arcade games throughout the 1970’s, funded by their huge success globally, in 1983 Nintendo unveiled their first at-home video game console, the Nintendo Entertainment System (NES), which sold over 60 million units (Diskin, 2004). Priced at $199.99 at it’s time for release, this earnt Nintendo just under $12 billion for the console alone (Moriarty, 2013).

Since then, Nintendo have released eight consoles, both hand-held and at-home. This does not include additional consoles which were redesigns of previous models, such as the Game Boy which received three upgrades, and the Nintendo Dual Screen (Nintendo DS), which has ten variations since the original model was launched in 2004 (Nintendo[b], 2020). At the turn of the millennia, Nintendo held 35% of the United States’ video game market, coming second only to Sony who owned 50%, however they targeted a completely different demographic to Nintendo, aiming themselves at those in their 20’s, as opposed to families (Power, 2020). Today, Nintendo are currently worth $95 billion (Muriuki, 2020) and at the end of the 2018 fiscal year were the third highest video game earners globally (Mitic, 2019). This report will allocate recommendations for each level of strategy analysis which could benefit the businesses’ operations. This will include their corporate, business, and functional level strategies.

2.0 Corporate Level Strategy Definition

Corporate level strategy can be defined as how a company chooses to create value through the configuration of multimarket activities (Furrer, 2016). The configuration process of corporate level strategy takes into account product and geographic boundaries which could limit a company in some aspect (Furrer, 2016), and is used as a way of outlining the general strategy implemented by a business (Katsioloudes & Abouhanain, 2017). “The ability to change rapidly, to produce creative and innovative solutions, as well as participate in the global market and with global competitors… are all the aspects that are taken for corporate level strategy” (Slavinski & Todorović, 2019, p. 246). Data collected by a company, for example through sales figures, can also aid in their ability to improve their corporate strategy by means of creating greater organisational success (Mazzei & Noble, 2017). In support of this research, data from Awino, et al, (2017), also suggests that the organisational performance of a company is significantly affected by the overall corporate strategy.

Corporate level strategy can also be seen through employee and consumer wellbeing services such as corporate social responsibility, which is often overlapped with other related concepts such as corporate citizenship, corporate accountability, and business ethics (Rasche, et al. 2017). The two must coincide with one another as sometimes corporate strategic decisions can often impact on the corporate social responsibility of a business – i.e. making the decision to outsource production to a country with low labour costs may affect the consumer’s perception of their social responsibility (Rasche, et al., 2017). In a global climate where there is more of a shift towards preventing acts such as this, with more businesses now promoting health and safety for employees, environmental protection, and respecting human rights in the communities where they operate, corporate strategy must be ensured to not infringe on these values (Mohamed, et al. 2014). Whilst research suggests more focus towards product design and quality for purchase on industrial levels, corporate social responsibility still remains an integral factor to the running of an organisation (Youssef, et al., 2016).

Within corporate level strategy, there are several ways a business can analyse the effectiveness of their chosen strategy. The Ansoff Matrix, created in 1957, is a form of analysis which can be used to highlight four factors a business could achieve through targeting different markets (Miller, 2018). These are market penetration, market development, diversification, and product development. These factors demonstrate how a company appeals to new, and existing, consumers and markets. The Boston Consulting Group Matrix (BCG Matrix) can also be used alongside the Ansoff Matrix to work out which products were the best sellers, which are a drain on resources, and which are innovative. The categories for this BCG Matrix are Cash Cow, Dog, Star, and Question Mark.

2.1 Nintendo’s Corporate Level Strategy

By using the Ansoff Matrix, it can be demonstrated the ways in which Nintendo have utilised multimarket activities through their corporate strategy.

Figure 1.0

– Ansoff Matrix for Nintendo

From figure 1.0, it is evident the many market activities Nintendo have taken part in over the decades in order to sustain themselves in a changing environment. From its earlier origins as a playing card company, Nintendo’s strategy was one to create competitive advantage. Printing playing cards adorned with Disney characters in 1959, this opened up Nintendo’s market to a generation of children that previously were not target consumers (Nintendo[a], 2020). This diversification has continued since 1959, and lead to innovative creations such as the Nintendo DS in 2004 (Wright, 2020). Mobile gaming developments by way of market penetration are also able to appear to both a new clientele and existing consumers. Those who perhaps had not previously owned their own Nintendo console titles, but have some variation of a smart phone, would be able to access some Nintendo titles for free or a very small price (Google[a], 2020; Google[b], 2020). Games such as ‘Layton Brothers: Mystery Room’ being made mobile exclusives, but still canon to the main titles released on consoles, would also appeal to existing consumers who had owned all or some of the previous games on console.

Additionally, the BCG Matrix can highlight how Nintendo have altered their strategy to ensure resources are not being drained by products that do not have a high return on investment (ROI). This subsequently allows for more resources to be allocated to products that do well. The following figure represents Nintendo from a 2020 perspective, and it must be considered that some consoles which did well at the time of release are now no longer in production, and so may not appear within the matrix. Key examples of each category are instead discussed below.

Figure 2.0 - Boston Consulting Group Matrix for Nintendo

High Market Growth, but low market share

"Star" - Nintendo DS and subsequent redesigns

High Market Growth, and high market share

"Question Mark" - Virtual Boy

Low Market Growth, and low market share

"Cash cow" - Nintendo character franchises such as Mario, Zelda, and Pokémon

Low Market Growth, but high market share

"Dog" - the Wii U

As seen in figure 2.0, Nintendo have altered their sales promotions to maximise potential revenue. In an interview with TIME magazine Nintendo stated that ending their hardware production would cripple the company (Peckham, 2015). Whilst they intended to continue producing new consoles and hardware, later releasing the Nintendo Switch in 2017, the failure of the Wii U subsequently resulted in production of new hardware and software for the console ceasing in late 2016 (Hruska, 2016).

Whilst the Virtual Boy (1994) was an overall failure for the company (Boyer, 2009; Kushner, 2014), under the BCG Matrix this console is better suited in the ‘Question Mark’ category, not ‘Dog’. With its tripod design, attempting to emulate what we now know as virtual reality, the Virtual Boy was an innovating idea for the time. Although success was not reflected in sales figures, its design and concept were more of ‘Question Mark’ for Nintendo as to how the consumer would react, rather than a drain on resources like the Wii U has since proved to be. It had the opportunity for a high market share had it succeeded due to the unique concept of the product, and therefore could have seen a high market growth.

The failure of both the Virtual Boy and the Wii U highlight Nintendo’s possible strategy. Whilst Nintendo inherently do not reveal their specific strategy, suggestions by Mintzberg & Waters (1985) can lead to assumptions about their strategy. Even though some console and software launches are undoubtedly intended, Nintendo have to react to consumer attitudes towards their products. The alteration of production for the Wii U and Virtual Boy demonstrate Nintendo’s awareness of consumer perceptions, and so suggest that a ‘realised strategy’, the combination of both intended and emergent strategy (Thomas, 2017), could be the most suitable strategy for Nintendo.

Nintendo franchises, such as Mario and Zelda, have been categorised as the ‘Cash Cows’. Whilst consoles such as the Nintendo DS, and it’s subsequent redesigns, dominate Nintendo’s hardware market, very few consoles could be considered to be the cash cows of the company. Whilst the Nintendo Wii is one of their best-selling consoles (Vrtana, et al. 2019), its release in 2006 and decline in overall sales up until the release of the Nintendo Switch in 2017 (see figure 6.0 below), suggests it can no longer be a contender as the company’s cash cow. Subsequently, the franchises of Nintendo were found to be better suited under this category, as each new piece of hardware released has seen releases of games with these characters.

Nintendo have created a positive brand image by focusing on corporate social responsibility, being transparent about their stance on modern slavery, and consequently creating their own Nintendo Human Rights Policy (Furukawa, 2019). This works in line with other organisational bodies’ policies surrounding the principles and standards of human rights, and ensures that the human rights of everybody working at Nintendo or in their supply chain is respected, and that modern slavery is prevented within the entire businesses’ operations. Additionally, Nintendo state that they are “always researching new ways to make our products, operations and corporate offices as environmentally friendly as possible”, and currently have a “take back” programme for old hardware, software, batteries, and other accessories (Nintendo of America, 2020). This accountability and ethical value from Nintendo has provided the company with a positive image. Research indicates that being able to identify a brand was a significant predictor as to how positive a consumer’s relationship with a brand would be (Kumar and Kaushik, 2020), and so by being such a well established company Nintendo have the benefit of being able to create a wider awareness for their positive brand image created through corporate strategy techniques.

This brand image, aided by elements of corporate level strategy discussed above (Rasche, et al. 2017) has meant the brand can recover better from poor sales. Shay and Palomba (2018) suggest that “positive brand equity can act as a defence mechanism for underperforming products”. This was beneficial in the case of Wii U sales, with data suggesting only 14.1 million units were sold between the financial years 2013-2017. When compared to its predecessor the Nintendo Wii, which sold over 100 million units from 2007 – 2016 (see appendix 1.0), this demonstrates poor sales figures, as even towards the end of the Nintendo Wii’s lifespan, it still sold more than the Wii U (Statista Research Department, 2020). Despite this, Nintendo’s overall reputation was not greatly damaged, as their “first-party software does have a positive relationship with the perceived quality… this relationship did not lead to a higher degree of customer utility for the Wii U console” (Shay and Palomba, 2018, p. 1).

2.2 Nintendo’s Corporate Level Strategy Recommendations

Recommendations for Nintendo’s corporate level strategy come through analysis using both the Boston Consulting Group, and Ansoff, Matrixes. Based on the conclusions drawn from these analyses as to Nintendo’s current strategy, combining findings from the two may benefit the company. By capitalising on the existing products in an existing market, Nintendo could achieve market penetration by implementing their ‘cash cows’ into a mobile gaming market. The growing mobile gaming market cannot be ignored, as 1.55 billion smartphones were reportedly sold in 2018 (O’Dea, 2020). By increasing their target demographic to reach those with smartphones Nintendo could vastly increase their revenue in a market that has been shown to be successful. Nintendo could also continue to produce consoles, considered vital for their revenue (Peckham, 2015) by upgrading and expanding on previous consoles shown to achieve high sales. Being both the ‘stars’ of Nintendo’s products, and an example of product diversification, continuing new software updates, game releases, and even hardware updates to the original Nintendo DS, could increase revenue from a console found to be successful.

A strategy whereby continued environmental protection awareness is created will continue to create a positive brand image for Nintendo, and increase their overall corporate accountability. Outlined in a Corporate Social Responsibility Report (Nintendo, 2019), Nintendo are committed to ensuring that their products are as energy efficient as possible, that as much of their produce is recyclable as possible, and that environmental control standards are adhered to. By remaining transparent about their procedures and strategy concerning their workforce, supply chain, and environmental measures, Nintendo can expect a continued positive response from the consumer.

3.0 Business Level Strategy Definition

Whilst corporate strategy is the overall plan to create a diversified company, business level strategy helps to achieve it (Porter, 1989). Business level strategy is “concerned with questions of how to compete within a particular business” (Beard & Dess, 1981). It is the steps a business takes in order to gain a competitive advantage. Strategic choices of a company need to be evaluated and altered on a regular basis due to the “increasingly complex business environment” of the 21st century (Weissenberger-Eibl, et al., 2019, p. 1). PESTLE analyses can aid a business in determining which factors may have an impact on their business and its subsequent strategy (Perera, 2017).

Research by Porter resulted in influential theories of business level strategy which are widely accepted (Weng, 2020) and dictate businesses should achieve competitiveness through their position (Bosch & Man, 1997). This in practice means a business should position themselves in the market where they are able to adapt, as environmental factors are more likely to influence a business than vice versa. Porter’s theory of five forces for competitive advantage can also provide businesses with the knowledge to understand the best strategy. Focusing on determining competitive intensity and attractiveness of a market, the five forces cover competitive rivalry, threat of a new entry, supplier power, buyer power, and threat of substitution (Arshed, et al, 2016).

3.1 Nintendo’s Business level strategy

By use of a PESTLE analysis for Nintendo, the author can deduce which factors Nintendo would have to consider for the long-term success of the business when competing against others.

Figure 3.0 - PESTLE analysis of Nintendo

Political

Nintendo’s major markets all in politically stable climates (Japan, Europe, and the Americas) which allows for opportunity to expand. Government orders for the public to stay indoors as a result of Covid-19 has increased the amount of people playing online video games (Abent, 2020).

Economic

Nintendo is exposed to exchange rate fluctuations which can impact the cost of producing hardware and software (Wagner, 2019).

Social

Increase in smartphones can allow for market penetration (O’Dea, 2020). Also a trend among gamers of playing retro titles again (France-Presse, 2019).

Technological

Augmented reality is now a trend in gaming, led by Pokémon GO in 2016 (although not published by Nintendo, their licensing of all characters was obtained to do so) (Clark, 2019).

Legal

Counterfeited goods impact on Nintendo’s global revenue, both due to the sales fake games can make and the cost of getting them taken down. As a result they have developed anti-piracy policies in forty countries (Nintendo[c], 2020)

Environmental

Focused on creating environmentally friendly products, with cartridges, games cases, and packaging for hardware becoming smaller. Also have a ‘take back’ scheme for old hardware (Nintendo of America, 2020).

Nintendo have ensured that they hold a competitive advantage over competition by paying close attention to their best-selling releases. Subsequent sequels for many of Nintendo’s franchises can be seen across the many game libraries for the consoles in the roster, and often repeats of popular games are seen to reappear on new consoles. One such example of this is the recent launch of Animal Crossing: New Horizons, for the Nintendo Switch. Originally released for the GameCube in 2001, the Animal Crossing series has had a new instalment for each major console Nintendo has released since, and the Switch was no exception. As a result of the Covid-19 breakout, and the increasing number of gamers looking to play online (Abent, 2020; Whistler, 2020), Animal Crossing has been suggested to be an ideal escape from the current global situation, as voted by The Independent (2020) and CNN (Vincent, 2020). The game has been reported by Metro (2020) to have exceeded game launches for previous popular Mario and Zelda games, and is an example of how Nintendo can capitalise on current affairs to attract the consumer market.

When compared to competitors such as SEGA, Nintendo has managed to remain successful and competitive with other companies by continuing to produce their own video games and consoles. Even though much of this is outsourced abroad, parts are sent and assembled to Nintendo Japan before global distribution. This can impact on the supply chain if there are delays, and can also result in extra costs due to exchange rate fluctuations if there is a delay in global shipping (Wagner, 2019). Despite this, whilst SEGA’s mascot Sonic the Hedgehog was a fit rival for Nintendo’s Mario in the 1990’s, SEGA’s empire has for a long time consisted of producing video games for third party systems (Power, 2020). This is an example of Nintendo fulfilling one of Porter’s five forces, by ensuring competitive rivalry throughout production. SEGA have since produced Sonic games for the newly released Nintendo Switch, a trend which began when SEGA allowed Nintendo to use their characters in games that were released for the GameCube since 2002 (Shea, 2016). Later, in 2012 for Japan, 2014 for Europe, Nintendo similarly released another game using characters from another company. Nintendo this time worked in collaboration with CapCom, to use their Phoenix Wright: Ace Attorney franchise in an already successful franchise of their own, the Professor Layton series (Nintendo, 2019). Although not solely Nintendo’s, the Professor Layton series developers at Level-5 have produced a significant amount of games for just Nintendo, forty at the time of this report, despite also producing games for Sony.

In both these instances, the collaborations gave both CapCom and SEGA a chance to gain fans from an other wise Nintendo-loyal fan base. Sales statistics show that CapCom’s Phoenix Wright has sold six million copies globally from 2001 to 2013 (Partridge, 2016) and after the Layton spin-off, CapCom went on to release more solely Phoenix games in 2013 and 2016. Of the sales figures available, they show the latter two games have sold 700,000 copies since 2013 (D’Angelo, 2020), however not all data was available to analyse, and so this figure is likely higher. It is plausible that these figures are a result of the Nintendo collaboration, however it can only be considered correlational. It is more likely, especially in SEGA’s case who have not had a console released globally since the Dream Cast in 1998 (Gifford, 2013; Stuart, 2018), that consumers would turn to Nintendo to experience a new way to play with franchises on more up to date hardware (Shea, 2016).

3.2 Nintendo’s Business Level Strategy Recommendations

It is recommended that Nintendo integrate more component manufacturing to domestic factories to ensure the possibility of delays is reduced. This could also benefit Nintendo from a cost perspective, as exchange rates fluctuating mean Nintendo may sometimes have to pay more for goods to be shipped to their factories for assembly (Wagner, 2019). Producing more products domestically would eliminate this uncontrolled variable.

Additionally, Nintendo could utilise retro gaming being a current trend by making access to their retro titles easier. Whilst Nintendo did release updated, and more compact, versions of both the NES and SNES in 2017 (Jones, 2018), re-releases of old titles has since depleted. With the exception of the Nintendo Switch’s online gaming section, which has some select NES and SNES titles available for a yearly subscription, Nintendo have not remastered any old titles for other consoles. Re-releasing some retro games could also benefit Nintendo from a third-party game perspective, as not all well-known arcade games were Nintendo’s (instead there was Atari, Namco, and Taito). An improved third-party gaming library stands to positively impact the company, with third party support considered vital for the success of any console (Lee, et al, 2017).

4.0 Functional Level Strategy definition

Functional level strategy is implemented as a way to organise business strategy to create a competitive advantage (Vasu, 2018). This level of strategy formulates a plan to aid business level strategies, and includes departments such as finance, marketing, manufacturing, and human resources (Ike, 2017); (Samson, et al. 2018). It asks the question of how the functional level of the organisation is going to support the business and corporate levels of strategy (Miles and Snow, 2003).

4.1 Nintendo’s Functional Level Strategy

As functional level strategy is concerned with the manufacturing, marketing, and finance aspects of a business, a SWOT analysis will cover these aspects of business for the running of Nintendo.

Figure 4.0 - SWOT analysis of Nintendo (Nintendo Co. Ltd., 2019)

Strengths;

Economic risk reduced due to having a global market – with over 70% of operations coming from outside of Japan in the 2018 financial year, Nintendo has the ability to increase revenue by utilising their global presence.

Financial stability – with year on year increases of 36.1% from the financial years 2017 to 2018, Nintendo is in a position where they can allocate this finance into expansion initiatives for long term stability.

Weaknesses;

The reliance on outside manufacturers could impact operations – as Nintendo rely on outside manufacturers to assemble their products, this can cause potential disruption to the operations of the company. Shortages of key components if an external business is either late or has disagreements with Nintendo could result in higher overall cost incurred due to delays. This could put the company at an overall competitive disadvantage.

Opportunities;

Global gaming market set to boost growth – Nintendo could benefit from growth seen in the global gaming market across different platforms. The market is set to increase by 5% overall from the 2017 value of $46 million to $58 million in 2022. The growth is being put down to the demand for consoles such as the PS4, the Nintendo Switch, and Xbox, including the increasing capacity for more interactive gaming applications.

Smartphone market in Asia to increase demand from Nintendo – deploying 4G technology, which now is available on a range of devices, making the technology affordable to most now, Nintendo could look to invest in mobile gaming, riding off the success they had with their Mario Kart app.

Threats;

Piracy and unauthorised content – security breaches could impact on expected release dates of games and consoles, as it would allow piracy to begin and knock offs to be created. Additionally, the internet has become a useful tool for those pirating video games to allow others to use them online for free, therefore damaging Nintendo’s available revenue. It’s often very difficult to prevent piracy, even though there are legal implications in place for those who do and are caught. Sites such as EmuParadise have ceased operations due to the risk of lawsuits posed by Nintendo (Masnick, 2018).

Labour shortage in Japan could impact on productivity – due to an aging population, there is an overall workforce deficiency in Japan, with suggestions by 2050 there will be seven retired people per every ten in the workforce aged 15-64.

As outlined in Figure 4.0, Nintendo’s financial sustainability demonstrates one area of functional strategy that could support business or corporate strategy. Statistics suggest that, year on year, mobile gaming is increasing in revenue value, and is predicted to achieve a revenue of $58.8 billion in 2020. Whilst console gaming has remained on average around $33.75 billion each financial year since 2016, and is expected to achieve a similar amount in 2020, Nintendo would be wise to recognise that mobile gaming has overtaken console gaming over the last four financial years, and is predicted to the same in its fifth year (Statista, 2020). Figure 5.0 outlines these statistics.

Figure 5.0 - Revenue Statistics and Estimations for Video Games Sales (Gough, 2018)

4.2 Nintendo’s Functional Level Strategy Recommendations

As a way of ensuring the trend of financial stability continues for the company, the following recommendations can be made about Nintendo’s functional level strategy to aid overall business strategy. Whilst console gaming is still a hugely popular market (Gough, 2018; Miranda, 2020), Nintendo would be wise to utilise collaborations with Android and Apple to reach a wider audience of consumers through mobile gaming. Additional data from Gough, (2019), see figure 6.0, show that Nintendo’s overall net sales from 2008-2019 were at their lowest in 2017, and have since started to increase again with the release of the Nintendo Switch. As a result of this decline in overall revenue, collaborations with smartphone companies makes sense as a means of increasing revenue, and also creating a competitive advantage. Revenue increases have already been seen through mobile gaming, where there is a console counterpart. After the release of Animal Crossing’s new title on the Nintendo Switch, the mobile version of the game, Pocket Camp, saw a revenue of $253,000 on the day of release (Sharp, 2020). Compared to 520,000 downloads in January and February, March 2020 saw 1.3 million downloads of the game, demonstrating how hype around a certain franchise can have profitability affect multiple avenues of a business.

Figure 6.0 - Nintendo's NET sales 2008-2019 (Gough, 2019)

As outlined in the SWOT analysis, Nintendo may face manufacturing issues, another component of functional level strategy which could impact other levels. Potential labour shortages over the coming decades could impact productivity (Nintendo Co. Ltd., 2019). Whilst it would be beneficial for the company to produce more goods domestically, as a way of reducing potential delays within the supply chain, this aspect of functional level strategy will have to go under constant review. Should the predictions have an impact on Nintendo’s domestic staff population, there are two options for the company. They may choose to return to the current strategy of having supply chains globally, and risk potential delays in shipments. Alternatively, Nintendo could look into internship or scholarship programmes for students both domestically and internationally to encourage a new workforce to enter Japan for the benefit of their company.

5.0 Conclusion

Nintendo’s functional level strategy predominantly aids their business level strategy financially, and outlines how mobile gaming could increase both their revenue, and their competitive advantage over other companies that may be too reliant on consoles. However, not only functional level strategy demonstrated the benefits of doing so. All three levels of strategy concluded the market opportunity available to Nintendo to make more mobile games, and so the recommendations made are a product of all three levels of strategy.

Nintendo could allow for market penetration to occur by increasing the amount of popular games available on mobile devices. Mobile games have been seen to have a surge in revenue when console game counterparts are also released (Sharp, 2020), and so upcoming console games could also be formulated into a mobile version. This would reach a wider audience by default, and also have a positive environmental impact. For those who only want a console for one game, it may be more environmentally sound for consumers to have the choice to download the single game directly to their smartphone. This would reduce the amount of units of hardware that would need to be produced, as much more downloadable software can be created with minimal waste, and so positively impacts the environment. By introducing the concept of their most popular games onto mobiles, Nintendo would be acting in line with their own Corporate Social Responsibility Report in regards to the environmental impact that their production has (Nintendo, 2019).

Mobile games would also allow for more third-party relationships to be formed, either with the mobile company or with partners such as SEGA and CapCom. With third-party support found to be beneficial in a consoles’ success (Lee, et al, 2017), the same principle could be applied to mobile releases.

The console gaming market is still popular (Gough, 2018; Miranda, 2020) despite the surge in mobile gaming popularity. As a result, Nintendo could still produce consoles which are considered vital to them to maintain revenue (Peckham, 2015). After proving successful in sales, being an example of Nintendo’s ‘Star’ products, and showing diversification, Nintendo could continue to increase their revenue from consoles by building on the success of the Nintendo DS. With retro-gaming being a huge trend (France-Presse, 2019), an updated model of the original Nintendo DS with downloadable DS and Game Boy titles could boost console revenue. Capitalising on this current trend would also allow Nintendo to adhere to another of Porter’s five forces by understanding the importance buyer power has on a companies’ competitive advantage (Arshed, 2016).

Any games launched on a remastered Nintendo DS could again allow for more positive third-party relationships to be formed, with companies such as Atari, Namco, and Taito holding copyright to some of these earlier games. For the production of future consoles, hardware, and software, Nintendo could also cut costs by ensuring they produce as much as possible domestically. Nintendo will have to ensure their current functional strategy for employment is monitored regularly to assess if predictions about a depleting workforce could impact the manufacturing process at Nintendo. If this were found to be the case, Nintendo could either continue outsourcing work to international partners within a supply chain, or work together with their marketing and HR department to come up with new strategies to encourage an increased domestic workforce. Whilst fluctuating exchange rates cannot be controlled (Wagner, 2019), the overall cost of products could be reduced if the majority of the supply chain was located in Japan. If that were the case, the only time exchange rate fluctuation would impact on Nintendo’s finances would be when they ship their hardware or software internationally, and this is something which cannot be prevented.

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