Nintendo report

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A Market Analysis for
Nintendo Co., Ltd.
Igor Francisco Aguiar Ferreira
Full Sail University
Project & Portfolio II: Business and Marketing
08/26/2022

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EXECUTIVE SUMMARY
This report concerns itself with the current position of Nintendo Co., Ltd. in the
competitive video games industry, in particular with regards to the performance of their flagship
Nintendo Switch console and that of their published software titles, as well as the popularity of
their intellectual property. Financial data was analyzed, as were sales numbers, and park
attendance. The research will demonstrate Nintendo’s success in this console generation, and the
vast difference between their current flagship console and the previous two. It will also
demonstrate the continuing popularity of Nintendo’s franchises, with information dating back as
far as 1993, and their ongoing ability to create popular IPs. Lastly, Nintendo’s aim of having
theme parks is touched upon, and comparisons to other parks are made. Recommendations will
focus on ways of maintaining and expanding the emotional connection of customers to
Nintendo’s IPs, including directions of hardware and software development, and the locations of
theme parks.

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OBJECTIVE
The intention of this report is to elucidate how Nintendo can solidify the software attach
rate for the Nintendo Switch and future consoles, taking advantage of the existing high userbase
and the popularity of their franchises, by capitalizing on the emotional connection of consumers.
RESEARCH METHODOLOGY
Most of the information contained herein was obtained externally, through news articles
and business-oriented publications, and some of it was obtained internally from Nintendo’s own
Annual Report. In both cases, the information gathered and expanded upon was of both a
qualitative and quantitative nature. The STEEPLE and SWOT methods of analysis were also
used. It was compiled in August 2022, and most sources are quite recent, with one significant
exception being a key news article from 1993.
RESEARCH AND KEY FINDINGS
Nintendo is one of the world’s leading players in the video games industry. Having a
company history dating as far back as 1947 as a manufacturer and distributor of playing cards
(Nintendo, 2022), they have grown exponentially in the entertainment industry through beloved
franchises such as Mario, Zelda, and Pokémon. Their storied history features plenty of successes
as well as missteps, both of which are relevant in what follows.

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Nintendo’s current flagship
video game console is the Nintendo
Switch. Having sold over 111 million
units (Nintendo, 2022), the console
currently leads in sales over Sony’s
PlayStation 5 and Microsoft’s Xbox
Series X|S. (VGChartz, 2022). Having
already surpassed the company’s own
Wii, another success story in and of
itself, comparisons are inevitable.
Despite having sold over 101 million units (VGChartz, 2022), the Wii suffered from one
crucial problem, a problem which would later prove to be one reason why Nintendo struggled
finding third-party developer support with their subsequent console, Wii U: software attach rate.
Peckham (2008) provides the numbers: a rate of 3.1 for Nintendo’s Wii, the lowest among the
competition. What the number means, in layman’s terms, is that there were essentially only
slightly over 3 titles sold per system owner. Not a crucial issue for Nintendo, who will thrive on
selling their hardware regardless, but a problem for other developers wishing to publish their
titles on that console. As Tassi (2014) explained, developers had “(…) the feeling that third party
games weren't all that valuable to Nintendo” (para. 5) and, when paraphrasing a developer, that
“whatever publisher he worked for, the consensus was that they would never make another Wii
U game after their experience with their initial title” (para. 6).
Kohler (2016) aptly observed that “In trying to please too many groups, Wii U ended up
as a machine for nobody, and that's who it sold to: at less than 14 million units, Wii U is the
company's lowest-selling game console” (para. 8). The silver lining, however, is that it managed
Figure 1: Hardware Unit Sales. Source: VGChartz.

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to give birth to a fan-favorite property in the form of Splatoon, a novel idea of an outside-the-box
shooter game featuring squids and ink rather than people and firearms. No relation to any of
Nintendo’s established IPs. The success of the title, as Kohler put it, “could have happened on
any platform; it didn't need the Wii U's weirdness to be fun” (para. 9). Late CEO Satoru Iwata
had inklings of this matter: “With a game console, it’s not only about what the thing can do, but
the various conditions under which the gameplay will occur.” (Iwata, 2019, p. 95). This shift to
conditions, rather than gimmicks, is a key feature of the company’s current console.
The Nintendo Switch is in a wholly different position to its predecessor. Nintendo (2019)
had already demonstrated in their March 2019 briefing that the Switch’s attach rate (or tie ratio)
had surpassed the Wii’s (p. 6), though the metric is changed somewhat in order to accommodate
the price points of smaller titles by independent developers, and sales of downloadable content.
Figure 2: Sales Per Hardware Unit (Cumulative). Source: Nintendo

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The Sales Per Hardware Unit (Cumulative) chart featured in the report illustrates this, covering
sales in Japan, the Americas and Europe, Nintendo’s key markets.
Nintendo (2022) themselves, when speaking of their profits, admit that “(…) the field of
entertainment is wide in scope, and any non-gaming propositions which gain popularity that
provide consumers with more entertainment value and surprises may also have an impact” (p.
15). It was Coates (1993) who initially reported, decades ago, that Nintendo’s own Mario was
more recognizable to American children than even Mickey Mouse. With this in mind, it is
unsurprising to witness Nintendo’s own efforts to follow suit behind Disney and open theme
parks. The comparison to Disney is also useful, however, in that it allows for a closer look at
numbers. Disneyland, in California, attracted 18.67 million visitors in 2019. Disney’s Magic
Kingdom, in Florida, attracted 20.963 million (Smith, 2022). It is also worth remembering, if that
number does not say enough, that the Magic Kingdom is only one of multiple Disney parks in
Florida. In parallel, the Statista Research Department (2021) reported the number of visitors to
Universal Studios Orlando and Hollywood in 2019: 10.92 million and 9.15 million, respectively.
CONCLUSIONS
Nintendo find themselves in a position they have not been in for a very long time. Their
console leads in sales, the experience they offer both from a hardware standpoint as from the
angle of their exclusive titles is so different from the competition that claims of a Blue Ocean are
not far-fetched, and differently from the Wii and Wii U, the Switch is not failing to push
software to those who purchase consoles.
They have had evidence that players will embrace new properties with enthusiasm, even
if such properties are released in unpopular pieces of hardware, and consequently that their fame
for lateral thinking can be maintained, with less risk to their profit, by devoting that method of

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thinking to games, rather than machines. This echoes the 1993 findings previously mentioned,
that Nintendo, like Disney, were successful in capturing the minds of people with their stories
and characters and continue to do so today.
With that in mind, Nintendo’s efforts toward creating theme parks are correct and
appropriate, though their initial efforts seem to have been misplaced; they currently entirely miss
the massive volume of tourists to Orlando, Florida, location of the largest Disney and Universal
parks.
RECOMMENDATIONS
Nintendo have much more to gain from focusing their creative talent on innovating in
software rather than hardware. Rather than develop confused, jack-of-all-trades machines that
end up having no target market at all (and sour their relationships with third-party developers), a
focus on quality-of-life improvements and convenient features for users will allow the hardware
side to, rather, get out of the way, and allow Nintendo’s already beloved franchises and
characters shine, along with the new additions to their decades-old mythos, such as the recent
Splatoon.
Furthermore, and in parallel to this effort, Nintendo’s goals of opening theme parks in the
United States should be praised. Their choice of initial location, however, is less than ideal; a
swift correction should be made in the form of opening a location in Orlando, Florida, by 2028,
in order to have a presence among the world’s most visited Disney and Universal theme parks.
Such an effort would serve to further their goals on the software side, increasing the emotional
connection of visitors to their franchises, and consequently driving software sales, establishing a
certain symbiotic, cyclical relationship between their software titles, their merchandise, and their

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attractions, in the vein of Disney. This would allow them to pursue their Blue Ocean dreams
even further, by distancing themselves even further from the hardware races of their competitors.

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REFERENCES
Coates, J. (May 18, 1993). How Super Mario conquered America. Baltimore Sun. Retrieved
from https://www.baltimoresun.com/news/bs-xpm-1993-05-18-1993138174-story.html
Iwata, S. (2019). Ask Iwata. Viz Media. Retrieved from Full Sail University Library. Call
number: GV 1469.32 .I9313 2021
Kohler, Chris. (December 22, 2016). A Farewell to Wii U, the Game System for Nobody. Wired.
Retrieved from https://www.wired.com/2016/12/goodbye-wii-u/
Nintendo. (2022). Annual Report 2022. Retrieved from
https://www.nintendo.co.jp/ir/pdf/2022/annual2203e.pdf
Nintendo. (2019). Financial Results Briefing for Fiscal Year Ended March 2019. Retrieved from
https://www.nintendo.co.jp/ir/pdf/2019/190426_3e.pdf
Peckham, M. (November 6, 2008). Software Attach Rates for Xbox 360, PS3, Wii Calculated.
ABCNews. Retrieved from
https://abcnews.go.com/Technology/PCWorld/story?id=6197578
Smith, C. (August 7, 2022). Annual Disney Park Attendance Statistics and Charts | Disney Parks
Resources. Disney News. Retrieved from https://disneynews.us/disney-parks-attendance/
Statista. (November 4, 2021). Attendance at the Universal Studios Hollywood theme park from
2009 to 2020. Retrieved from https://www.statista.com/statistics/236190/attendance-at-
the-universal-studios-hollywood-theme-park/
Statista. (November 4, 2021). Attendance at the Universal Studios Orlando theme park from
2009 to 2020. Retrieved from https://www.statista.com/statistics/236182/attendance-at-
the-universal-studios-orlando-theme-park/

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Tassi, P. (January 11, 2014). An Inside Explanation Of Why Third Parties Have Left The Wii U.
Forbes. Retrieved from https://www.forbes.com/sites/insertcoin/2014/01/11/an-inside-
explanation-of-why-third-parties-have-left-the-wii-u/?sh=73fd945d1ea8
VGChartz. (2022). Platform Totals. Retrieved from
https://www.vgchartz.com/charts/platform_totals/Hardware.php/
IMAGES
Nintendo logo. (n.d.). Retrieved on August 23, 2022 from https://logos-download.com/7890-
nintendo-logo-download.html
VGChartz. (n.d.). Figure 1: Hardware Unit Sales. Retrieved on August 23, 2022 from
https://www.vgchartz.com
Nintendo. (March 2019). Figure 2: Sales Per Hardware Unit (Cumulative). Retrieved on August
26, 2022 from https://www.nintendo.co.jp/ir/pdf/2019/190426_3e.pdf