2006 The Nintendo Wii on “The Best Next-G enerati System ?” th W i the rel ease ofthe N i i s ayStati 3,the realbattl f ntendo W i and Sony’ Pl on e or the best next-generation system begins. Sony has held the largest market share in the i ve nm nce nteracti entertai ent m arket si 1995,w ilM i t’ l crosof s XBO X360 or Ni s i ntendo’ W i be able to topple Sony off its peak? Ryan Ploetz, Dan Toutan, Jessica Downey, & Dan Rautiola BA3800 12/11/2006 I. Introduction of the Nintendo Wii ntendo W i,pronounced “w e”,w as released in North America on November 19, 2006. The The N i i ntendo W i i not i the m arket to com pete on graphi capabii w i Sony’ Pl Ni is n cs lty th on s ayStati 3 and crosof s XBO X360,but to give consumers a new ability to interact with their video games. Mi t’ The Wii Remote is the primary feature of this next generation system. This device can detect motion and rotation in three dimensions. This controller features a built-in speaker and rumble pack. For games that need added capabilities, such as a joystick for character movement, Nintendo created the Nunchuk. The Nunchuk also has a motion sensor, and is provided power by connecting directly to the Wii Remote. This controller also features two more buttons for more complicated interactive entertainment. The Nintendo Wii features WiiConnect24, in which the system is able to receive data from the internet even though the system is powered off. This feature is used for operating system updates, sending and receiving messages from friends, and sharing game data when the owner is not playing the game. The Wii menu has virtual channels, such as the Mii Channel, Photo Channel, Weather Forecast Channel, News Channel, Wii Shop Channel, Internet Channel, and the Wii Message Board. These are just a few of the initial release channels that are initially supported. On the Wii Shop Channel, consumers are able to purchase their favorite, classic video games from the NES, SNES, N64, Genesis, Turbografx-16, and MXS. The cost of the system is $249.99 at retail and this price includes the game Wii Sports bundled with the system. II. Environmental Analysis In a recent report from the U.S. Department of Commerce they have stated that consumer spending is heading upwards. This is great news for the entertainment industry for the holidays. Nintendo has already released that they are expecting a greater return on profits then previously reported because of the strong selling of the Wii. This is also affected by the increase in personal income by 0.4% in October. In very recent news, US Senators Hillary Clinton and Joe Lieberman are supporting a new advertising campaign by the ESRB to release television, radio, and print ads throughout the holiday season. This campaign is to educate parents on what ratings of video games are appropriate for children. This is good news for Nintendo because most of their games are for teens and children. With the release of Novembers NPD on the interactive entertainment industry, games sales are up 15% to $804 million from year-to-year and hardware sales are up 69% to $771 million. For a whole for the entire industry, this is very good news. More shipments of the Wii are scheduled before the end of 2007, so sales should continue to rise. Sales in interactive entertainment does not only increase profits in this market but stimulate markets in other areas as well. Some of these complementary products include high definition televisions, broadband internet access, and specialized gaming computers. Interactive entertainment sales do not only stimulate these products, but increases the rate at which they would be consumed. It has been stated that $16.4 billion is the direct contribution to the GDP, but this also leaves out some other major contributions. III. Consumer Analysis ti ng ntendo W i i “fun. N i The m arket posi oni ofthe N i is opm ent com pany ” ntendo w as a card gam e devel n nue s n s i the 1800s and they conti to focus on w hat i fun to do i one’ free-time. Consumers realize that the Wii is not about the graphics, but about the game-play and it is not about the complexity, but about simplicity. When consumers purchase the Wii, they understand that they are receiving a system that is for playing games and nothing else. This is the exact opposite of the market positioning strategies of both Sony and Microsoft. s l ve ysi ntendo’ m arketi m i N i The four P’ w ilgi us a good anal s ofN i s s lng ng x. ntendo i seli consum ers a next-generation game console with the ability to interact with interactive entertainment in a new way. Some of the very unique features on this system are its controllers, the Wii Remote and Nunchuck, and the ability for the processor to be on 24 hours a day, 365 days a year. The price of the system is affordable to the demographics that Nintendo is marketing towards. The Wii is the cheapest next-generation console on the market at $249.99 and this includes a game packaged with the system. However, since the product is very rare to find and obtain, consumers may have to spend upwards of $500 to purchase them off e-Bay for the holidays. The system can be purchased at any tech retailers such as Best-Buy, EB Games, FuncoLand, and many others. Even non tech-specific retailers are carrying the Nintendo Wii such as Wal-Mart, Target, and K-Mart. However, some of the most popular places to purchase the system is online, at websites such s ub. as Amazon.com, e-Bay,and Sam ’ Cl s ease consol that hasn’ been seen si the rel Nintendo offered a special promotion for thi rel e t nce ease of the Super Nintendo Entertainment System (SNES). Nintendo bundled a game with the system at launch, Wii Sports. This game displayed what the Wii Remote was capable of and gave non-hardcore gamers the ability to have fun and become interested in the product. Online, specific retailers are selling the scounted pri i consum ers purchase “x” num ber ofgam es al w i the system . But, system at a di ce f ong th these promotions are being handled through 3rd parties and through Nintendo directly. IV. Competitor Analysis on crosoft’ XBO X360. Even The Nintendo Wii has two main competitors, the Sony PlayStati 3 and M i s ntendo’ m arketi strategi are m uch di though N i s ng es fferent than either Sony or Microsoft, they are the primary competition for either the success or failure of this next-generation system. The Sony PlayStation 3 main features are a Blu-Ray Player, the Cell Broadband Engine, and the SIXAXIS ayStati 3 i f l i the “M ore for M ore” m arketi posi oni Thi system has Controller. The Pl on s olow ng ng ti ng. s the most horsepower and produces the best graphics than any of its competitors. The Blu-Ray Player inside a PlayStation 3 is the only Blu-Ray Player on the market that is currently sold under $1000. Because of the price, early adopters of the new Blu-Ray format will be purchasing a PlayStation 3. The Cell Broadband Engine is capable of producing characters and scenery that is more life-like then previous consoles. This is a communicable difference that is easily seen by its competitors and consumers. Sony believes that graphics are superior in current interactive entertainment and they can l s s provide realism in their games that their competition cannot. The SIXAXIS controler i Sony’ answ er to ntendo’ W i Rem ote. The SI Ni s i S y XAXI does exactl w hat the nam e implies; it can detect motion side-to- y ex ntendo’ controler,but side, up-and-down, and in-and-out. This controller is not nearl as com pl as N i s l s ng s fferent than it does add a new innovative spin for developers. Sony’ m arketi strategy i m uch di ntendo’ The dem ographi that Sony w ants to target are m al adults that have a high income. Ni s. cs e These consumers are the hard-core gamers, not your average player who plays a few games here and ayStati 3 are the w orl s true technol i there. Buyers ofthe Pl on d’ on ogy nnovators ofthe product adopti process. There is an extreme product shortage of the PlayStation 3 and these people are spending thousands of dollars on e-Bay or standing in-line for days to purchase one of these systems. The Microsoft XBOX360 features a Tri-core PowerPC and their infamous XBOX Live service. The ng crosoft i folow i i “The Sam e f Less”. The XBO X360 i si fi m arketi strategy that M i s l ng s or y s gni cantl faster and more powerful than the Nintendo Wii, but only about half the power of a Sony PlayStation 3. Consumers must also remember that the XBOX360 released a full year ahead of both systems. Microsoft is also marketing towards the demographics of adult males who have a high income. These consumers enjoy seeing the communicable difference that is easily noticeable among consumers. The crosoft’ bi graphics that this system displays are much more detailed than the Nintendo Wii. M i s ggest marketing strategy is the XBOX Live service. XBOX Live is an online gamer community in which players from around the world interact with each other. Microsoft has also released their XNA development kit for consumers to create their own games and share them online with the world. No other system currently has this is place. V. Evaluation of Current Marketing Strategies ntendo beleves they can offer “M ore f Less” i thei positioning strategy. The Nintendo Wii is the Ni i or n r least expensive next-generation system at $249 and they believe that the revolutionary Wii remote will ntendo’ m arketi bring consumers an experience that they cannot receive on any other system. N i s ng es ncl ngi ng ca. n strategi i ude bri ng the Japanese “craze” for casualgam i to N orth Am eri I Japan, ntendo’ handhel system ,the N i Ni s d y ntendo D S,w as purchased by m ostl consum ers betw een the ages of 40 and 60. In North America, Nintendo is starting off casually, and marketing towards the y, ntendo’ tel si demographics of casual gamers between the ages of 25 and 39. Currentl 80% ofN i s evi on si l ng ng th adverti ng w ilbe duri show s such as “D anci w i the Stars” on ABC. Unlike Sony and Microsoft, ntendo’ controler i easy to use and w as devel Ni s l s aly or l oped speci l f gam ers w ho found past controlers too complex. Consumers no longer have to memorize a combination of buttons to make the character do want they want on screen. If they want to play tennis on the Wii, swing the controller like a tennis racket and the player is ready to go. The video game console production market has competition from only from Sony, Nintendo, and Microsoft, resembling an oligopoly with a few monopolistic characteristics. The market resembles a monopoly in that the firms have some control over price but are more likely to compete in other non- ce th i ng f pri w ays. W i the W i bei hal the pri ofthe Pl ce on t ntendo’ obj ve i aystati 3,i seem s that N i s ecti s to improve their video game console market share. This type of pricing strategy is called penetration pricing. They are introducing a new product at a low price in order to attract a large amount of buyers and gain market share. Nintendo is trying to have a new generation of gamers purchase and play the Wii. Nintendo has put together a fall marketing blitz to showcase the Wii at malls across the country. They want gaming to become fun again and for the whole family to enjoy, not just the children. To bring in the non-gaming demographics of women and men over the age of 35, Nintendo invited editors from magazines such as Good Housekeeping and Vanity Fair to attend the launch event of the Nintendo Wii in Los Angeles and ntendo beleves that the W i i “approachabl and custom i e for everyone” and New York City. N i i is e zabl l de ety ons vate “gam ers and non-gamers to turn on the W i” daiy. there w ilbe a w i vari ofopti to m oti i l ” VI. Alternative Strategies The Nintendo Wii was marketed in a very new method this year, with the editorials written by Good Housekeeping and Vanity Fair. Nintendo expanded their marketing strategies to include new demographics that neither Microsoft nor Sony are even trying to appeal to. With the addition to columns written in women magazines and television commercials during prime-time, Nintendo should place internet advertisements on websites such as myspace.com, espn.com, and yahoo.com. People who visit these websites on a daily basis are the demographics that Nintendo is attempting to persuade to purchase the Wii. Nintendo has developed a kiosk that is brought around the United States to display the abilities of the Wii. Instead of having kiosks that are only available during the system launch, N intend should expand their already current Nintendo stores and make them more widely available across the country. The stores are very limited across the country and increasing the number of stores should increase the Wii awareness and its overall success. Since the Nintendo Wii has the game Wii Sports bundled with the system, Nintendo should market their product at sporting events such as baseball, tennis, and bowling. Besides having kiosks at major league and college sporting events, Nintendo should promote the Wii at small-town sporting events. Great examples of local sporting events are youth basketball and little league baseball. Events such as these will increase the quickness consumers proceed through the stages in the adoption process. With the Nintendo Wii being available to test, consumers will be able to become aware of the product, they will become interested in the product, they can evaluate the product, and they can see the Wii in a trial run all in one place. Nintendo should make the Wii and supporting products available at new retail establishments around the world. Currently, interactive entertainment systems are sold in consumer electronic stores like Best Buy, Wal-Mart, and EB Games. Stores that should sell the system could include small-local retailers, arge departm ent stores lke M acy’ and sport-clothing retailers like Champs and Footlocker. l i s, VII. Conclusion The Nintendo Wii is only twice as powerful as their previous system, the Gamecube. The system basically runs on the system hardware as the Gamecube, only with more horsepower. It takes developers at least a year or two to create tools and understand the functions of a next-generation system. Developing games for the PlayStation 2 in the initial years was difficult and cumbersome. It is y l y onl unti recentl that devel opers w ere abl to take f ladvantage ofthe Pl e ul on s lti ayStati 2’ capabii es. Developers are currently trying to understand and develop tools to aid in the creation of interactive entertainment for the PlayStation 3 and XBOX360, while they can use the same tools and same knowledge to develop games on the Nintendo Wii. Developers have mentioned in interviews that creating interactive entertainment for the Nintendo Wii is easier and more innovative with the Wii Remote. Instead of next-generation systems having just more horsepower, the Nintendo Wii brought a new way for consumers to interact with their entertainment. Developers for the North American market have a hard time creating games for the masses, unlike the developers in Japan. Interactive entertainment such as the Big Brain Academy series in Japan is a huge success, and the main people who play this game are older adults of both sexes. The Japanese market is a whole different story to the American market; these two countries find different entertainment appealing and this affects the overall success of the system. Microsoft is having a hard time selling sn i an opers,unlke both Sony and N i XBOX360’ i Japan because they do not have qualty Asi devel i ntendo. Nintendo and Sony both have Square Enix, a successful Asian development firm, developing games for their next-generation systems, the developers of the Final Fantasy series, the Dragon Quest series, and f t ready ow n i Ipersonaly m any others. These gam es m ake gam ers purchase a system i they don’ al t. l know many people who will be purchasing a PlayStation 3 when Final Fantasy XIII is released. If the t i company doesn’ have qualty devel opers creati i ng nteracti entertai ent f thei system ,then the ve nm or r system will not sell. Nintendo has been working hard to bring as many developers they can onboard to create existing IP and create new IP. In conclusion, consumers who purchase console system, purchase them because they enjoy the interactive entertainment that they can buy for the system. The XBOX360, the Wii, and the PlayStation 3 are nothing without quality software created by developers. The Nintendo has its Virtual Console, Zelda, Mario, Smash Bros, and Metriod. Nintendo is going to have a hard time proving that they have more games than just these smash hits before they can reclaim the market as “the best next-generation system.” The XBOX360 has Halo 3, their only major franchise on this system. Consumers have spent a total of 184,137,245 hours playing Halo 2 on XBOX Live. Halo 3 will be a system seller when this game eases. H ow ever,besi thi gam e,they’ l ng i qualty i rel des s re acki n ve nment software. i nteracti entertai s Sony ‘ PlayStation and PlayStation 2 have lead the industry in sales since 1995. They have the best line- up of quality software than its competition. They have had games such as: Final Fantasy, Resistant Evil, Metal Gear Solid, Gran Turismo, and Dance Dance Revolution (DDR). These games or series have sold numerous copies and are the main seller behind the systems. Consumers can look forward to these same types of games in the future that will be only available on the PlayStation 3. The Nintendo Wii will not fail as a system, sales have been up since its launch date, and will continue to rise as systems reach stores for this holiday season. Nonetheless, I do predict that Sony will continue to dominate the market share with the PlayStation 3. The Nintendo Wii will not gain more of the market share than they previously had with the Gamecube, unless they can prove to the American people that they have more entertaining software than its competition.