Birac Analysis Paper

Birac Analysis Paper

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Nintendo’s Wii gaming console was launched to the public late 2006. As of today, the Wii has become the best-selling latest generation console system in the world (Nintendo, 2007). Although, the Nintendo Wii is a successful product, heavy competition and future gaming trends threaten Nintendo and Wii’s future success. Since the rise of Sony’s PlayStation and Microsoft’s Xbox, Nintendo has seen declining sales with their video game and consol systems almost resulting in Nintendo’s demise. By using the BIRAC method, recommendations will be made to continue the Wii’s success benefiting Nintendo.
Predicting the future can be a difficult task for a business. So, how are Companies able to predict the future successes or failures of their products or services? There are several answers to that question. Many companies analyze factors like the economy, misunderstood sales pipeline, customer budget cuts, competition, market shifts, product inadequacies, supply shortages, and historical stats to anticipate sales (, 2008). The key to analyzing the Wii’s future success will have to come from Nintendo’s past. Analyzing Nintendo’s and Wii’s history is the “background” portion of the BIRAC method.
Nintendo Company Ltd., is a limited company, headquartered in Kyoto, and is a Japan-based company engaged in the leisure equipment business. The Company has two business segments. The Leisure Equipment segment is engaged in the development, manufacturing and sale of portable and home use game machines as well as game software. The Others segment is engaged in the manufacture and sale of poker cards and karuta (Japanese-style playing cards), the sale of Pokemon (A Japanese animation character) goods, the management of intellectual property rights, the provision of electronic registration services of domestic machines, and others. The Company has 23 subsidiaries and five associated companies (Google, 2008).
In 2007, Nintendo had about 3,400 employees generating 2.5 million each (Cable News Network, 2008). As mentioned before Sony’s Playstation and Microsoft’s Xbox are the Wii’s greatest competitors. Sony has approximately 180,500 employees with 3.1% of them in the video game business segment (Sony, 2008). Microsoft has approximately 89,900 employees with an unknown amount working for their Microsoft Game Studios division. The Wii, Playstation, and Xbox are aimed at the individual consumer.
By the 1950’s, with the company still under the Yamauchi family control, it became known as Nintendo Playing Card co, perfecting the process of producing plastic coated playing cards and, by 1959, was using Disney characters on the back of its merchandise.

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As the company looked to consolidate its position in the market, it became Nintendo Co. Ltd. in 1963 and began to experiment with several products, of which only manufacturing games as well as cards was of any great success. In 1970, Nintendo began to focus on electronics in its toys, developing a successful beam gun using opto-electronics, and making a firm move into video games when it secured the distribution rights to Magnavox Odyssey in Japan. By 1983 Nintendo had decided that they should produce their own home console rather than just the games and arcade machines, so they set about producing the Famicon, with Donkey Kong, its sequel Donkey Kong Jr and Popeye bundled with it. Nintendo then turned their attention to the North American market, where, after abortive attempts to co-brand with giants Atari, they finally unveiled the Nintendo Entertainment System (NES). In 1986 Nintendo had attempted a team-up with electronics giant Sony, who were looking to get into the gaming market, and tried to produce a disk system for its Famicon. It became clear that this was a non-starter but Nintendo continued their relationship and agreed to produce a SNES CD player add-on. However, contractual disagreements saw company president Hiroshi Yamauchi pull out of that deal on the eve of its expected announcement in 1989, where a new team-up with Philips was announced. Sony’s response was to develop their own console – something which would be a major problem for Nintendo in the future (Microsoft, 2008).
Competition is a major issue the Wii is currently facing. “Many of the people predicting that only two systems would survive had Nintendo penciled in as the soon-to-be-deceased competitor” (Union-Tribune Publishing Co.). Sony’s Playstation had officially hit the market in 1991, fighting off an injunction into using the name from Nintendo, but after only 200 or so units were made, production was focused on a fresh incarnation that was finally unleashed in late 1994 arriving in the US and Europe in September 1995. With the console using discs not cartridges, and also usable as a CD player, Sony hit the ground running and Nintendo found themselves with a massive competitor. With the Xbox also capturing a percentage of the market, the GameCube did not enjoy the success that was expected of Nintendo, but their handheld market was growing ever stronger with the DS (Dual screen) released in 2004 to massive market acclaim. Although the GameCube continued to be produced, its sales (still a noteworthy 21 million units) many believed that the impact of the DS and the crowded market in household consoles would lead Nintendo to concentrate on their portable success. Indeed the DS was upgraded to a DS Lite, and the combination of the two had sold 37 million, despite competition from old enemy Sony – who released their first portable gaming machine, the PSP (Playstation Portable), in 2004. (Microsoft, 2008)
Gaming trends is another issue the Wii is facing. The Wii is a simple game console that was not made for high definition graphics and does not come close to the specs of the Playstation 3 and Xbox 360. This can hurt Wii’s market share if gamers want to play more advance games and take advantage of today’s technology like sophisticated online gaming. An example of one of the technological issues that the Wii is currently facing is their hard drive capacity. More advance games need a greater capacity that the Wii does not have. To keep up with their competitors that come with large hard drive space, Wii will need to resolve this issue. "We have said publicly that we’re looking hard at the storage situation, that we're working on a range of solutions," Nintendo of America President Reggie Fils-Aime told MTV Multiplayer. "We have nothing to announce now. But certainly it’s an issue we are aware of and we're working to find a solution and we will." (Ars Technica, 2008)
The two main issues that the Wii is facing are heavy competition and gaming trends. Focusing on “customer value” is an important key factor for the Wii to mitigate competition.

This has prompted many successful U.S. firms to focus on “customer value.” That firms gain loyal customers by providing unique value is the essence of successful marketing. What is new, however, is a more careful attempt at understanding how a firm’s customers perceive value. For our purposes, customer value is the unique combination of benefits received by targeted buyers that includes quality, price, convenience, on-time delivery, and both before-sale and after-sale service. Firms now actually try to place a dollar value on a loyal, satisfied customer. As pointed out in Chapter 5, loyal Kleenex customers average 6.7 boxes a year, about $994 over 60 years in today’s dollars (question 3, Figure 1–2).

Listening to consumers to stay ahead of the trends is a vital key factor for the Wii to stay on top of gaming trends.

Consumer tastes change— and quickly. This is the reason for Rollerblade’s concerns that it stay ahead of trends in the marketplace. Competition is coming from directions never anticipated even two or three years earlier. Rollerblade has always had to compete with skateboards and mountain bikes. But now it even competes with other active sports, as well as scooters and Heelys, a sneaker with an embedded, detachable wheel in the heel.17 Today, Rollerblade uses careful marketing research to listen to what various segments of Rollerblade customers want. For example, its website ( enables its marketing executives to not only obtain detailed information about what skate features customers want but also link these wants to their individual characteristics like age, sex, and lifestyle (like hobbies and purchasing behaviors). Rollerblade’s “Skate Selector” on its website not only helps consumers select the skate that’s right for them but also provides timely data on consumer wants.

It is clear that Nintendo knows where it wants to go, and it is making family-friendly games for the casual market. The company may pay lip-service to the idea of the core or hardcore gamer, but at this press event, actions speak louder than words. For the holiday season and in the forseeable future, the hardcore gamers will have very little to play on Nintendo's machine (Ars Technica, 2008). If the Wii becomes more sophisticated with their technology, they may want to capture the hardcore gamers market that their competitors already have. Deploying hardcore online games like Halo or Call of Duty would greatly expand Wii’s gaming market.
It is essential for Nintendo’s Wii to analyze and adjust to the consumer’s new trend; whether it is online gaming, social networking party, or fitness games. Nintendo was on the brink of extension but the innovation and creativity of Nintendo’s Wii changed that. Nintendo should focus on what has brought them success, which is the Wii, but more importantly, the fundamentals of creative design and simplicity of innovation.
So what's next for this company, so full of surprises? The Wii gives Nintendo a few options. It could stick with the current Wii for a few years until today's top-end technology falls to Kmart prices. At that point it could introduce a Wii 2.0 with technology similar to today's PS3, but on the cheap. It could cut $50 off the sticker to compete with the price cuts that are undoubtedly coming from Sony and Microsoft. (Cable News Network, 2008)
Focusing on the Wii’s current customer market base should be Nintendo’s optimal solution. As an alternative optimal solution, to ensure the Wii’s continued success, Nintendo should also focus on expanding their competitor’s market base. To do this, Nintendo will need to advance their technological hardware to their competitor’s standards. Obtaining the Playstation’s and Xbox’s gaming market combined with innovated marketing and technological advances should spell the recipe for success.
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