The Nintendo Wii

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					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.

				
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