Nintendo Numbers: An overview of the company's recent success
Despite the pandemic making a big impact in economies around the world, Nintendo managed to close in March it’s most successful fiscal year in history. Their growth has reached 81.8% in the fiscal year of 2021 compared to 2020.
It's not about the power
Nintendo has been known for their conservative approach when it comes to developing a video game console or handheld. Competitors like Microsoft and Sony always bring the most powerful console in terms of graphics and processing, and finding a balance between high end technologies and cost.
Nintendo on the other hand, focuses more on experiences the user can live, rather than just getting the latest and most powerful chipsets off the shelf. Their consoles have always been innovative and fun. The Wii surprised the industry with their motion controllers or “Wii-motes”. It gave the user a feeling of immersion like nothing seen before. Sure the Wii’s graphics were not mesmerizing but, playing Wii Sports was heaps of fun, an unforgettable experience.
Of course competitors tried to implement these technologies into their systems like Sony did with the “Move” and Microsoft with the motion capture feature of the Kinect sensor. Even though the tech was improved by them, the lack of substantial games that make proper use of it just deemed their motion controllers like a novelty.
Innovation is key to Nintendo when developing a video game console. We have seen it with the Wii’s motion controllers, the DS and 3DS dual screen experience, and recently with the Switch. Their latest console is an evolution of all of these technologies.
Software sells
Another key aspect that has benefited Nintendo over the last few years is the fact that they invest a lot of resources into developing software. Nintendo has an enviable amount of intellectual properties and franchises like Mario, Zelda, Donkey Kong, Metroid, and many more. But it is not just about owning them, it is about making fun, innovative video games with them. Bringing something different to the table for the consumers.
Animal Crossing has brought a lot of success to Nintendo lately, it has been a key factor to the more than 85 million Switch sold worldwide. This game has sold over 20 million units around the world (March 2021). To put it in perspective, the most sold PS4 game is Grand Theft Auto with around the same amount, however this is a 3rd party game available on other platforms as well. Sony’s most sold 1st party game is Uncharted 4 with 16 million units sold.
Without a doubt, software is a catalyst for hardware sales, and it should be the main focus for video game companies. Software is clearly the reason why hardware sells. Consumers want to play games on their consoles. Companies like Sony or Microsoft assume losses for every hardware unit sold, hoping to compensate for this by software sale profits. Nintendo does not seem to seek this approach due to the substantially lower price their hardware has.
Diversification
Nintendo has recently expanded their realm with a deep dive into mobile gaming. They partnered with a company called Niantic, and also DeNA to help them develop one of the most successful apps in mobile history, Pokémon GO. They have also ventured into the themed park industry by creating the Super Nintendo World in Japan, and soon in Universal Studios Hollywood in the United States.
With these two strategies, Nintendo has diversified their IPs and extended their reach to younger generations. This means that they don’t rely on nostalgia alone to keep their franchises alive. Nintendo seeks strategies that will earn them potential consumers and is familiarizing a younger audience to their most iconic characters like Mario, Bowser, Pikachu, and more.
Understanding the market
Nintendo’s biggest market is the Americas. They represent 41.6% of their market share worldwide. Europe, with 25.1% is the second biggest. Understandably, these territories are huge for companies like Sony and Microsoft. This is where their consoles sell. Sony might have a more global reach than Microsoft in places like Japan and parts of Europe, but the American company is huge in the United States and Mexico.
Nintendo has found its place with their approach for selling hardware and software. They do not compete directly with Sony and Microsoft. Nintendo’s console life cycle does not fall on the same year as PlayStation or Xbox. The Japanese company cannot force itself in an already saturated market, so their approach is through innovation and a fun experience to consumers. They have surely found their place, and even allow themselves to coexist with Sony and Microsoft. This is due to the price of their hardware, and the uniqueness of their games.
It is clear that Nintendo’s strategies have solidified them in a speculative economy, and in a way, they are prepared to face new challenges that will arise. They tend to the needs and demands of a solid consumer base, and pave the way for a new generation of gamers by familiarizing them to their icons.
What are your thoughts on Nintendo’s successful 2021? Do you own a switch? What games do you play the most?
Let me know in the comments down below.
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