Blogs for Chapman's BUS-475-05 Capstone Course

Blog #14

This could quite possibly be my last blog unless Nintendo has some new news in the next couple of days. The article I found this week is a good article to end on because it gives a preview of the upcoming console war. The article,, talks about what each console plans on doing in the future. With the PS4 and the new Xbox coming out shortly, the Wii U team and the rest of Nintendo has a lot to worry about.

According to the author of the article, Sony seems to be planning a game-focused approach. It sounds stupid because of course all video game consoles are going to focus on games, but I believe they plan on having the “best” games. Their business level strategy is differentiation. They want to be the go-to console for games. Their approach isn’t cost leadership. I fact, out of the 3 consoles from the last generation, they were by far the most expensive. I wouldn’t be surprised if they continue that trend. They are definitely continuing to target hard-core gamers rather than casual ones.

Microsoft seems to be differentiating by making their new Xbox “a must-have living room…object, that everyone, gamer or not, will want”. It will not only play games, but stream channels and search the web among other unannounced features. They are targeting not only hard-core gamers, but many different people. This worries me, but at the same time it could be a great idea. It worries me because the Wii U used to target hard-core gamers, then moved into games that even older, less die-hard gamers would play. For example, Wii Fit was a popular workout game for some time that all could enjoy, but it seems that most casual gamers have moved on to free games on mobile devices. If Microsoft’s casual gamers catch onto their new system, is it a matter of time before they switch back to mobile games and apps again? I think not. Having new features on their consoles like cable channels has nothing to do with new styles of games that attract an older crowd, like Wii Fit. Casual gamers lost interest in Wii games. It will be harder for a casual gamer to lose interest in a game if the feature that is attracting them isn’t a game at all. Of course, Microsoft is banking on the fact that these features they are implementing into their new Xbox will attract people in the first place.

So, with these two consoles breaking apart and differentiating into their own niches, rather than mirror images of themselves, where does this leave Nintendo? First, the president wanted to point out what they were doing wrong so far. “Satoru Iwata believes they need to focus on the sorts of first party titles which draw people to Nintendo, and also acknowledges that the marketing for the Wii U has been abysmal”. The first party titles and other games that are the backbone for Nintendo simply have not been present so far. If they fix this, they are fixing a lot. I’ve talked about this topic in many previous posts. Their marketing has been horrible. Many people, including me, didn’t realize that the Wii U was a different console from the Wii until it was very close to release. Most people thought it was an add-on to the Wii because they still used the original Wii-mote in most commercials. Also, they were advertising many games that were already being offered for the other two game systems, rather than their own Nintendo-only titles. The Wii U looked pretty much identical to the Wii, so the confusion was even greater. Other than the tablet controller, and better graphics, there was no major difference between their old console and their new one. These two features were also very flawed. The tablet controller only works for the first player. The other players on the console have to use the same old Wii controllers. The better graphics got Nintendo caught up with PS3 and Xbox 360, but will soon be old news once the new graphics for the PS4 and Xbox Infinity are seen.

What Nintendo needs to do in preparation of the new console war is “to convince the public that it is indeed a next generation system”. This convincing is not only for the gamers themselves. 3rd party developers don’t want to bother with the Wii U because they have to modify their games and scale down the graphics to run it on the Wii U. They are essentially kicking Nintendo to the side because the console itself doesn’t have enough power or consumer base to make their time worth while. They know their games will sell much better on the other platforms. This is why Nintendo has to make its die-hard Nintendo fan games again. They need to make their Nintendo fans love them again rather than trying to get new people to love them. That will come in time. Making these Nintendo-only titles is the main ingredient to their strategy. Similar to Sony, Nintendo focuses on its games rather than the whole nine yards, like the new Xbox is attempting. This is fine as long as you can get your games to sell. Also, it just so happens that they are the cost leaders in this industry, although I’m certain that isn’t their main intention. Their console is the cheapest, but they are really focusing on game differentiation.

The author gives some advice for Nintendo on their future and its the same advice that I’ve been harping about throughout these blogs. “The only way forward for Nintendo is to create some truly astonishing games that make the Wii U a must buy. And a price cut wouldn’t hurt either”. If they cut their price, but more importantly make the Nintendo games that die-hard Nintendo fans know and love, I don’t think they will have a problem restoring their reputation. That is Nintendo’s future; doing what they’ve always done and make games like the ones that made them famous. Best of luck to Nintendo. Let’s hope they find a way back to their bread and butter.


Blog #13

I have a shorter blog this week, based on the following article from Forbes:

Apparently, Nintendo is making some significant changes to their board of directors, pending approval of its shareholders. Three members on the board, including the Senior Managing Director will be retiring, so there are a lot of moves that are being made. The most important change in all of this is that Nintendo’s president, Satoru Iwata, will take over as CEO of Nintendo of America (NOA). He is replacing the current CEO of NOA, who is being promoted to Managing Director of Nintendo Co. Ltd. Nintendo says that Iwata’s move to CEO of NOA “will support the company’s unified global strategy, allow streamlined decision making and enhance Nintendo’s organizational agility in the current competitive environment”. Seeing that he is the Global President, it makes sense that he would head an international branch of Nintendo. The Global President probably knows the global strategy the best. Decisions will be made faster, which is good as long as they are not made too hastily. Iwata seems like a good fit and I think this can help Nintendo. Among many others things, I think Nintendo really needs to switch it up and get some kind of a psychological edge going on. I think of it as a comparison to a sports team that is struggling. If your hockey team isn’t scoring goals, you might want to try to pair up different defensemen and switch up the forwards on your lines. I know this can sound stupid, but, obviously, they aren’t doing much right at the moment. The downside is that it will take a little time for people to adjust to their new positions, possibly slowing productivity at first. However, seeing that they have all been with the company for so long and have a lot of experience within high-level positions in Nintendo, I doubt it will take them very long to adjust.

Seeing that I’m on the topic of global strategy, I figured I would give a brief analysis of their global strategy as a whole. I’m on the fence about the fact that Nintendo’s global strategy is a localization strategy or an international one. I feel like they could be considered to be using an international strategy since all of their products are pretty similar. However, they do have some slight variations between their games and consoles between America and Japan, so if I had to pick a strategy and stick with it, I would say they are using more of a localization strategy. Nintendo has been known to make Japan-only video games. Also, they obviously have to change the language in their games based off of who they are selling them too. Also, their systems are set up to not play games from other countries. For example, an American Wii U console cannot play a game in Japanese. Since Nintendo is so adamant about not dropping their price, they are not going for one of the other two strategies that focuses on low costs. Nintendo’s entry mode is wholly-owned subsidiaries. From my understanding, NOA is a wholly-owned subsidiary. This is the best strategy for Nintendo since it gives them complete control, especially now that Iwata is taking over. They will have their Japanese president implementing Nintendo’s  ideas directly into their American branch, making their ideas consistent throughout the countries.

Blog #12

I have a few reports on Nintendo this week and I’ll be referencing quite a few articles and video links. First off, as I mentioned on Tuesday in class, Nintendo announced its second straight annual loss on Wednesday.  According to the average of 15 estimates compiled by Bloomberg, Nintendo was projected to be losing 18.7 billion yen in the 12 months ended March 31 ( It turns out this prediction was surprisingly underestimated (surprising that Bloomberg estimates are this far off, but not surprising Nintendo is suffering heavy losses). According to the article here: ( “Nintendo posted its second straight annual operating loss, reporting 36 billion yen ($364 million) of red ink for the fiscal year ended March”. That’s about double what the estimates were! Are they that far off because they are counting these losses in a different way? I don’t think their losses need much analysis since I’ve already talked about it quite a lot. It is merely an update on ongoing unfortunate results for Nintendo. 

On a slightly better note, bringing up one of my first blogs about the weak Yen, because of this weak Japanese Yen, Nintendo actually recorded an “annual profit of 7.1 billion yen ($72 million), a reversal from a 43 billion yen loss the previous year” according to the previous article ( Nintendo still being profitable with such a heavy loss can be explained by the exchange rate. “Nintendo gained 39.5 billion yen ($399 million) from a favorable exchange rate for the year”. It’s truly amazing how much currency rates can do! This profit certainly isn’t something Nintendo should celebrate over, however. The favorable exchange rate won’t be there forever. They have to capitalize on it A.S.A.P. 

And Nintendo plans on doing just that. According to another article, Nintendo’s President said “net income will rise to 55 billion yen ($553 million) in the 12 months ending March 31 from 7.1 billion yen a year earlier…” ( He says that they will be so profitable for two reasons. The first is that the weak Yen will continue to make them a profit through currency exchange rates. The second reason, which I have discussed in previous blogs, is the fact that Nintendo has a lot of new games on the horizon that are projected to sell quite well and increase the sales of consoles along with the game sales. As I discussed previously, I feel that the consoles are not selling because die hard Nintendo fans are not getting the games that they grew up to know and love. Since Nintendo is projected to release tons of these new installments based on classic Nintendo games, if they are in fact released, Nintendo can certainly make a push for profit with the help of the currency exchange rate. On the topic of the current lack of quality games for Nintendo, I like that Iwata, the President admitted their flaws. “We seem to always end up with a lack of software in the beginning when we introduce a new platform,” Iwata said. “That’s a big regret.” I like his honesty, but how many systems are they going to release with a lack of good games. You’d think they would have learned by now that you shouldn’t be releasing new consoles if you don’t have games for them. This certainly isn’t the first time they’ve had a bad start to a console. With that being said, I feel confident that if they release the games that these die-hards are expecting, Nintendo can be quite profitable this year. If they released these games last fiscal year however they could have made a lot more money. They are coming out with these “good” games too late. They had the first mover advantage last year on the new generation console market, but now that the new Xbox and PlayStation systems are going to be released, those consoles will be taking sales away from the Wii U. Wii U can better compete with the competitors’ upcoming consoles with new games, but they should have started out stronger before the major competition made their push. 

On the topic of new consoles for competitors, Microsoft announced that it plans to unveil the new Xbox console on May 21 in Redmond, Washington ( More importantly, Microsoft announced that “It’s also adding features to the Xbox designed to help it withstand the shift to games downloaded to computers and mobile devices from packaged products”. They didn’t say what these features are, but the fact that Microsoft is realizing the changes in the game industry is good news for them. It also gives me a reason to harp on Nintendo. Nintendo is very set in their ways, not showing many signs of the adaptation to mobile devices. They’ve released a MiiVerse application onto phones, but that’s it. When the topic of phones comes up, Iwata seems to have very negative views on the topic. When presented with a new problem, it is best to complain for a second, and then realize you have to solve it and in this case, adapt to it. You can’t hold a grudge over mobile devices taking your sales away, be stubborn and not take action. Nintendo may have a good strategic reason for being so stubborn that I’m not aware of, though. They did have a reason for being so stubborn on the price of their Wii U consoles that for some reason, I had not thought of. I may have been too quick to judge. 

On CNNmoney, there is a video ( that takes the Wii U apart and breaks down the price of all of its components. In the end, it costs $228 to make a Wii U. They are selling it at $299, so $70 more than what it is costing them. They are taking losses on the console due to R&D expenses not factored into the production cost. If they sold the Wii U at a lower price, say $250, their profit on each console would be $20 and at the rate they are selling them it would take a long time for $20 profits to cover the huge hit they took in R&D costs. I now see why they don’t want to lower their price. 

In my defense though, consoles are generally not what makes the gaming companies their money. Most companies take a hit on the consoles and make the expenses back along with a profit through software/game sales. I think we might see a cycle coming up in the near future here. If the “good” games that they plan on releasing this year increase profitability, Nintendo may have room to play with a price drop, increasing sales of consoles, further increasing game sales. The cycle should continue after that, if console price cuts are even necessary after the new games are released. This all goes back to the fact that they haven’t been releasing games that die-hards want to purchase. If they want to make this cycle a reality, they need two parts. One is the console, the other is the games. They only have the console right now, but once these games are released, Nintendo should be doing much better. Of course, as I said before, they should have thought of this earlier because the new PlayStation and Xbox will make it harder for Nintendo’s profits to reach their full potential. 


Blog #11

This is another week with typical Nintendo news (bad news with some occasional hope), but with more bad news for the whole industry as well. I’ll start with Nintendo. I have two articles on them for this week. This first one, (, is an update on Wii U sales. Last week I announced that February sales actually increased and that Nintendo has hope as long as their sales continue to increase. Well, unfortunately, March sales could not continue this short lived trend. The March results are not official yet, but the article that I read has an analyst’s recent estimates. If these estimates turn out to be accurate, Nintendo will be in trouble (as if they weren’t already). Michael Patcher estimated that Nintendo sold 55,000 Wii Us, compared to 85,000 Wiis. Apparently Nintendo’s successor to the Wii isn’t having much success. Nintendo simply can’t get people to switch to their new system. They are trying desperately with really bad advertisements that are essentially bashing their original Wii system to make the Wii U look better. I won’t describe the whole ad; rather I’ll post it here ( for your viewing pleasure. It’s basically a comparison chart and the author of the article points out all of the hilarious mistakes. To make matters worse, the analyst predicts 290,000 Xbox 360 sales and 260,000 PS3 sales for the month of March. If Nintendo’s new system can’t compete with it’s old system, how is it supposed to compete with the sales of competitor’s consoles, who are going to be releasing new consoles and increase their sales even more?

My next article, (, may answer this question to some extent. It is very brief, but it basically states that Nintendo is making games for the 3DS based on very popular franchises, including Legend of Zelda, Super Mario Bros. and Donkey Kong. These new installments are planned to be released this holiday season. I’m guessing since their Wii U system is doing so poorly, they are trying to keep their name alive by making popular games for a system of theirs that is doing surprisingly well. These games won’t compete with full on consoles that Microsoft and Sony will be releasing, but at least during the holidays Nintendo won’t be completely under the radar. The thing I don’t understand is why they aren’t releasing the same games for the Wii U. It can’t be that hard to vary the programming of a game slightly in order for it to work on multiple consoles. Wii U sales are low because they don’t have games that die-hard fans want to play. Zelda, Mario and Donkey Kong are certainly games that diehards would be itching to play. I get that they are trying to get the most out of the system that is doing well and they might be trying to avoid cannibalism  but they can’t simply give up on the Wii U. They are too invested in it at this point.

As for industry news, video game sales as a whole dropped 10% in March. The article, (, states that this decline is due to gamers shifting to mobile gadgets, which in part is true, but I’m more optimistic than the author is here. While some consumers are switching to mobile devices, I believe the drop in video game sales is caused by the fact that new games and consoles are on the horizon. What leads me to this theory is the fact that hardware sales have declined the most. I believe that people aren’t buying these old consoles because they know the new versions of these consoles are being released very soon and people want to save their money for the new versions of these consoles. I remember when I was little, I had to save up a long time to buy the latest and greatest consoles. Since many video gamers are children, I can see why consumers would be waiting for a new system before they empty their wallets. The software declines are caused by this same saving mentality. Why buy a game for a system that will soon be obsolete when you can save that money to buy games for the new system? Children are battling with opportunity costs without even realizing it.

Since my recent blogs can’t involve a whole lot of analysis, as Nintendo news is increasingly similar, I figured I’d throw in a couple of terms from class to describe the Nintendo situation. From lecture 10, I learned that Nintendo is using related diversification. They have mobile consoles (3DS) as well as in-home consoles (Wii U). They started in the in-home game industry with the NES and diversified into the mobile game industry. The method they used was an internal new venture, seeing that they didn’t work with or buy a different company to create their mobile system. From lecture 11, I can produce part of a stakeholder analysis for Nintendo. One of their stakeholders is their consumers, who are external stakeholders. More specifically, I would say the die-hard Nintendo consumers are essential stakeholders. I would strategize in making sure these stakeholders are happy because they are the primary source of sales for Nintendo. Nintendo needs to make games like those discussed earlier that will please their die-hard consumers stakeholders.

Blog #10

This week’s Nintendo news comes in two parts, both relating to recent Wii U sales. I have an update for Wii U sales in February, but I can’t find an article breaking down March sales. I guess they haven’t been released yet, or I’m not a very good researcher. According to this article (, Nintendo’s Wii U sales have improved, but they are still far from redeeming themselves. Wii U shipments rose over 40% in February. This sounds like great news, but there’s one problem. Wii U shipment amounts in the improved month of February are a little over 60,000 total consoles shipped. On the other hand, Microsoft is shipped 302,000 Xbox consoles in February. So, even with a vast improvement over shipping quantities,  Nintendo is shipping one fifth the amount of their consoles than Microsoft is, and the Xbox is almost 8 years old! This might be because Xbox’s break constantly (I’m on my 5th; thank God for warranties), but regardless, the statistics are pretty staggering. All we can hope for is that the shipments increase by 40% every month so Nintendo can at least catch up to sales of old consoles before the new consoles are released.

The other part of my news this week is about one week of March sales in the United Kingdom. Here’s the whole article: “Troubled UK retailer HMV has decided to take action against declining Wii U sales in the United Kingdom and has slashed the pricing of the Wii U 32GB Premium Console with Nintendo Land and ZombiU to £199.99. That’s a £140 saving on the recommended retail price. Nintendo said earlier this week that it plans to meet with UK retailers to help boost sales of the console”. I figured it wasn’t worth it to reword such a small piece of news. This complimentary article (, says that because of these price cuts that Wii U sales rose about 125% in the UK. It looks like a lesson can be learned here. Nintendo needs to realize that if you slash Wii U prices, you might actually sell enough to succeed! They are so adamant about sticking with their original price that they are missing out on a proven increase of sales. I don’t know how much of a profit HMV can make slashing the price as much as they did, but it does prove that it will help sales. I’m pleased to read that Nintendo is planning to meet with the UK retailers. I hope that the meeting is productive and that the retailers can influence Nintendo to slash their prices everywhere. In conclusion, Nintendo still isn’t doing that great, but they may be digging themselves out of the hole they are in little by little. I would like to think of this as good news seeing that they’ve had so much bad news for a while. It seems like this news must be good seeing that the stock prices have increased for Nintendo in the month of March.

This next bit really has nothing to do with the regular blog, but I thought this “news” was interesting. It was news to me anyway. My brother, who is obsessed with video games (especially Nintendo games), recently told me that a while back Sony inquired about teaming up with Nintendo, but Nintendo denied them the opportunity. I don’t know who was going to acquire who or if it was a joint venture of some sort, but regardless, it didn’t work out. I can’t find an official source of this but there is a forum ( that backs it up. Apparently, Sony’s Playstation was originally supposed to be an attachment to the Super Nintendo! Now the Playstation’s newest model the PS3 is doing much better in sales than Nintendo’s newest console the Wii U. It’s funny how these things work out. I would suggest a partnership between the two now, if it weren’t such a bad idea. Apparently, Nintendo is still bitter towards Sony because of the contract from the first proposed partnership. Also, I think the companies have views that are too different from one another for them to be able to work together.

Blog #9

This week’s article is continuing on the theme that the video game industry is slowly but surely changing. The article I found, (, states that “more than half of the attendees at this week’s Game Developers Conference in San Francisco identify themselves as indie developers and their next creations will be for smartphones and tablets”. The article talks about the fact that the independent developers used to have their own conference and now their conference, the Independent Games Festival, is being blurred with the Game Developer’s Conference (GDC). 58% of developers at the GDC claimed they would be releasing their games strictly for phones and tablets. Out of the 53% of “indie developers”, 46% of them have companies with 10 employees or less. Clearly, the barriers to entry in the game development industry are rapidly declining. A single person can make a game and sell it on a phone or better. Minecraft is widely popular and was made by some random guy. Games only take a great idea and a computer savvy person to make it big. It doesn’t require that much money to get into the industry. Also, many game development engines are free to download and use. I took a game development class here at Chapman and we used the Unreal engine which was free to download and used to make extremely successful games like Gears of War and Bioshock.

Nintendo is actually taking advantage of this. “Nintendo will also be on hand with a Wednesday session outlining easier ways for developers to make apps for the Wii U…”. Nintendo is communicating with indie developers and will possibly be working with them in the future for small apps on the Wii U, however, I wouldn’t be surprised if these indie developers make larger games that Nintendo will want on their consoles. On that note, indie developers can actually help consoles rather than hurt them. “The most impressive indication of indie dominance, the artsy PS3 platform game “Journey” is up for the most awards at Wednesday’s Game Developers Choice Awards”. Indie game developers are making great games for consoles. I don’t think the fact that indie developers are independent is the problem for consoles. Console developers buy games from developers, the suppliers. The bargaining power of suppliers may be decreasing if more and more indie developers make games and compete with themselves for the right to be showcased on a console. The consoles are just going to pick the best games.

The downside to indie developers is that most don’t have the budget or skill to produce large-scale games. They have to make more simple games and phones and tablets will play those. The indie developers are just a bi-product of the real threat to the console segment of the video game industry, the casual gamers. With them, phone and tablet games are looked forward to, rather than hardcore, high quality games that only consoles have the computing power to handle. Speaking of computing power, I think as long as people want to play more complex games that require a high computing console, the consoles won’t die. I think over time though, as phones and tablets continue to become mini computers, eventually you’ll be able to play console quality games on mobile devices. Of course if computing power of consoles rises as well, then the two spectrums will continue to divide the casual and hardcore gamer.

Blog #8

Well, this blog is a little late. I suppose this is due to my laziness over Spring Break caused by my case of Senioritis. I already had all of the information and talked about it in class, but I didn’t translate the news into blog form for some reason. This blog is meant to be my blog for week 8 and I will not let the Senioritis strike again. The article I read ( basically stated that Nintendo was sued for infringing on a patent. Apparently, Nintendo’s technology in their 3DS handheld gaming system wasn’t originally their idea. Tomita Technologies had a patent for 3D display and were awarded $30.2 million from Nintendo. The technology is described as “displaying stereoscopic images on-screen for viewing with the naked eye, i.e., without utilizing glasses or other devices”.

Tomita had originally asked for over $292 million from Nintendo according to this article ( I would say Nintendo made out like a bandit considering how much money they’ve made off of their 3DS sales. The Wii U sales have been poor, but the 3DS is certainly making up for it. According to Wikipedia (couldn’t find another source), Nintendo has sold 30 million 3DS’s as of 12/31/12 and still counting. Each one was sold at $200, now at $179, but now they have the 3DS XL which is again selling at $200. 30 million devices at $200 a piece is $6 billion! Tomita got about half of 1 percent of this revenue. I’d say Nintendo is laughing their way to the bank. Money wise, this incident doesn’t affect Nintendo very much, but from a social standpoint it may do a little more damage. This may give Nintendo a bad reputation and sales may go down which they cannot afford seeing that the Wii U isn’t getting them very far. However, I feel that most consumers won’t know about Nintendo being sued and frankly may not even care. I only found out they were sued due to research. How many kids are researching Nintendo news other than game release dates?  Either way, I think the reputation factor is of more concern than the loss of money.

I found another article ( to complement this news. Apparently, HP is implementing the same glasses-free 3D technology into their mobile devices. I’m curious to see if Tomita will receive money from HP as they did from Nintendo. I’m assuming HP won’t go down the path of Nintendo and use this technology without Tomita’s permission. If HP didn’t pay Tomita Technologies some sort of royalties, would they be sued by Tomita? I’m not really sure how patents work in that sense. If a patent is infringed upon by one company and they pay the inventor damages, is the patent disregarded when other companies use  the technology? I would assume not. Maybe HP can prove that their mobile devices are different enough from Tomita’s technology that they will avoid Tomita altogether. As a side note, I researched Tomita Technologies and there really isn’t much on them at all. I found one website entirely in Japanese and I have no other information on them. I think this is even better for Nintendo, because since Tomita is so unknown (at least I think it is), many will believe that the technology is really Nintendo’s.