Nintendo Case Study

Running head: NINTENDO

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Nintendo: A Case Analysis Ryan Richardson Pacific Union College

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2 Nintendo: A Case Analysis

Nintendo has become a household name in the last three and a half decades since their first Nintendo Entertainment system was released. They are a solid force in the video game industry as a developer of both the consoles and the video games themselves. Despite recent troubles and an ever-changing industry, Nintendo has always been a constant, solid, driving force forward; unwavering and the largest player in the industry (Gaming Company Top 25). Nintendo was not always this way. It was only in the 1980’s that they broke into this newly created video game market. Their legacy extends far beyond that. Nintendo’s History The Founding Nintendo was founded in Kyoto, Japan, in 1889 under the name of Nintendo Koppai by Fusajiro Yamauchi (Nintendo History). They made decks of playing cards, known as Hanafuda, in Japan. The cards were made by hand originally and became very popular. As demand soared, Yamauchi hired assistants to mass-produce his cards and he opened up a second shop in Osaka. Nintendo took off as one of the largest card makers in the world and maintained that status until the 1950’s. Expansion and Early Ventures In 1963, Nintendo Playing Card Co. became, simply, Nintendo Co. Hiroshi Yamauchi, unimpressed with the limitations of the playing card industry, began to seek out other ventures. Their line of Disney themed cards had given the company a large cash injection, and risks could be taken. In the short period between 1963 and 1968, Nintendo opened and shut down unsuccessful ventures ranging from love hotels to taxi services to a TV network. They attempted to enter into the toy market in 1966, but lacked the ability to keep up with the quick turnover

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required and were outmatched by already established companies such as Bandai (Nintendo History). Finally, in the early 1970’s Nintendo saw some success with family entertainment. They created a line of arcade games with the new light gun technology. While their larger arcade ventures had to be shut down due to the global oil crisis and recession of the early 70’s, Nintendo saw promise in the emerging arcade and home entertainment market. Starting with the rights to distribute the Magnavox Odyssey in 1974, Nintendo broke into the video game industry, slowly. Three years later, the first Nintendo system was developed and produced, the Color TV Game. Each version of the console featured a different subset of games and was mildly successful at the time. It was at this time that Shigeru Miyamoto was hired by Nintendo as a product designer (Famous Names in Gaming). Though they didn’t know it from the start, Miyamoto would be the designer and developer for some of the most iconic and popular video game characters that exist today. The Video Game Market Early Success. The 1980’s finally came around, and the era of Nintendo began. The first handheld system released by Nintendo, called the Game & Watch, was released in 1980. It was a worldwide success. A few years later, in 1983, the Famicom was released in Japan. Two years later it was released in North America under a new name, the Nintendo Entertainment System, or NES. Coupled with the original NES was the instant hit, Super Mario Bros, which is still one of the bestselling video games of all time (Nagata, 2009). The success of the NES is what laid the foundation for Nintendo to become what we see it as today. After the NES’s release, Nintendo developed and launched the Game Boy. The Game Boy is still the best selling handheld console known to date; its closest rivals are other Nintendo

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handhelds as well. The Super Famicom, or Super Nintendo outside of Japan, was released as Nintendo’s third generation console featuring all new 16-bit graphics (Nintendo History). More success followed with the release of the Nintendo 64, incremental updates to their Game Boy line, and eventually a major update to their Game Boy line with the Game Boy Advance. Challenges Realized. Nintendo, known to take risks, attempted to break into the realm of virtual reality with their Virtual Boy. It was wildly unsuccessful and a huge flop for the company. The failure of the Virtual Boy marked the end of Yokoi’s reign as head of Nintendo. Despite his success with the NES, Game Boy, and SNES, the failure of the Virtual Boy mixed amid other internal distresses caused Yokoi to resign (Snow, 2004). Nintendo’s market share began to decline. Their new competitor Sony, along with old rival Sega, had released their new video game consoles, and it seemed Nintendo was going to have to either share the spotlight or step down. Fortunately, they didn’t. The Nintendo 64 rolled off the lines along with a huge marketing campaign encouraging players to ‘Play it Loud’ (Miller, 1994). Mixed with the introduction of an analog control stick, 4-player co-operative play, 3D-Graphic capability, and a host of other improvements that would become industry standards, Nintendo reclaimed its position at the top. They let the industry know that they would not be beat by any obstacle as trivial as a failed product. The Modern State. Nintendo saw mild success as they rolled into the new millennium. Their Game Cube was profitable, although quickly shadowed by the Playstation 2. Improvements to the Game Boy Advance line came around this time, and Nintendo remained at the head of the handheld market. They came out with the Nintendo DS handheld which sported two screens along with a touch screen the eventually replaced the Game Boy altogether. From 2004 until 2012, Nintendo released incremental updates to their DS line, eventually moving to a

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new technology with the 3DS, which offered a 3D experience without the need for glasses. The handhelds were profitable, but again, not a huge success. In 2006, the newest generation of Nintendo consoles came out. The Wii. It was instantly a hit and sported a new motion sensor technology, online connectivity, and other such innovations that eventually became industry standards. In 2012, the Nintendo Wii U was released, which offered a touchscreen controller and updated hardware. Their latest consoles have been less successful than those of the past, but Nintendo is still the largest video game company in the world. Declining sales, income, and revenue across all sectors have posed new challenges for the century old company. If the past is proof of anything, it’s that Nintendo will not be removed from its place easily, and it will continue to hold onto its spot as not just the largest video game company in the world but one of the three largest companies in Japan as well. Corporate Organization and Goals Organization

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Nintendo’s organizational structure is a mixture of a hierarchy and a functional matrix. Starting from the bottom; each task has a development team working on it. These teams may be working on many tasks at once. Each of these development teams has a leader that reports to a manager over that sector of development. Those managers then report horizontally to the managers of other sectors or departments. The hardware and software development heads must meet together to discuss specifications and limitations of the new hardware, and marketing needs to meet with software development to know which games to advertise (Rashed, 2010). These department heads then report up the chain to general managers over that area of development. The information from there continues to flow uphill. Goals Nintendo’s overarching goal is to maximize long-term corporate value while trying to benefit everyone and everything impacted by their company. They strive to be transparent and to continually educate their employees and shareholders (Corporate Governance). Employees. Nintendo cares for and values its employees. It employs only about 3000 individuals, and each of those is worth something to the company. They are committed to giving their employees an opportunity for a healthy lifestyle. Their efforts have earned Nintendo the label as one of the American Heart Association’s ‘Start! Fit-Friendly Companies’ (Corporate Social Responsibility Report). Employees are subsidized to meet higher safety standards within the company and Nintendo also offers subsidies to employees for transportation. Nintendo is very transparent and generous with the opportunities and services that they provide to their employees. Their employees mean something, and Nintendo is not afraid to proudly broadcast that.

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Customer Safety. Nintendo’s customers are their primary focus. They seek to produce high-quality products while maintaining a level of safety for their consumers. They have strict safety standards to allow even the youngest child the chance to play a Nintendo video game (CSR Report, 2012). They have a separate dedicated development stage to make sure their products meet and even surpass the legal safety requirements, along with a myriad of other standards set forth by Nintendo. Once the safety standards are met, the product is packaged and shipped to the living room of an anxious child where they can dive into a world of imagination and excitement. Once their customer is happy and safe with the product provided, Nintendo knows they have done their job correctly. Environment. While not their main focus, Nintendo is very concerned with the environment. They have taken steps to reduce their ecological impact and promote recycling of old products with their Take Back Program. Their products contain organic and sustainable variations of common production items that may be over looked by others; things such as vegetable based inks or recycled cardboard. They have even reduced the plastic required in the production of their goods by 23% (Corporate Social Responsibility Report). Additionally, they ban the use of conflict minerals in their production. Conflict minerals are those that are mined at the expense of human lives or freedoms, generally in the Democratic Republic of the Congo and surrounding countries. Corporate Governance Nintendo’s corporate governance is broken up into various subsections as can be seen in Fig. 2. They believe that having an optimal structure will allow those involved in their business to actively contribute and make changes as needed in order to maintain efficiency and quality (Corporate Governance). They have two internal and three external auditors to examine

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Nintendo’s efficiency and accounting practices to make sure they are up to the standards set before them. They ensure that Nintendo is acting legally and ethically in the effort to remain profitable in the video game industry. To be able to handle all of these tasks they established an Internal Control System Committee. Not only does this committee oversee the auditing of the company’s main headquarters in Japan, but also its worldwide operations and other operations. They hold global conferences as needed, and strive to share information and reach a consensus between their global operations (Corporate Governance).

External and Internal Environments Internal Nintendo breaks up their internal activities into two sections: primary and secondary. Because of the nature of Nintendo, their primary strategy involves maintaining their technological advantage. They spend more money on research and development in order to sustain innovation in the industry. This gives them a competitive advantage not only in the technological sectors, but in marketing and sales as well. Ultimately, there are many levels of

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management that are in charge of realizing maximum profits, as is the same as most other businesses. What sets Nintendo apart is their strict adherence to the same ethical and moral standards that have been in place since their inception as a video game company. Each employee is trained and taught how to act ethically and to make the right decision (Corporate Social Responsibility Report). External External forces on a business will often mold and sculpt they way they act. They must adapt to each pressure and conform to the standards set forth if they wish to stay successful. Nintendo has always been a driving force in many of these areas, although they still face pressure in the legal, economic, and technological fronts of the industry. Legal. The external influences on the video game industry are much different than those on other entertainment industries. Video games are not publicly broadcasted like TV, but are still a digital media. They are published in the same way as books, but they are not a literary form of entertainment; barring text based adventure games that were popular on DOS based personal computers. They also cannot easily be filtered or altered for explicit content without the censorship being built into the core of the game. These factors grant them a very interesting legal standpoint. Take California as an example where it is illegal to sell violent or mature games to children (Staff, 2010). There is a whole rating system and sector of the industry that decides what is and isn’t allowed inside of video games, and Nintendo has these pressures placed against them as a result. Luckily, Nintendo has always had a family friendly atmosphere and still will refuse to publish adult or mature video games that contain certain themes. They still must be cautious to abide by the laws in different countries and states when publishing video games.

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Economic. Nintendo is based in Japan and thus operates using the Japanese Yen as its primary currency. Because of Japan’s dependence on foreign oil, and Nintendo’s dependence on exporting to external countries, they are both very vulnerable to the fluctuation and changes in the exchange rate of the Yen (Economy Watch, 2009). Recently, the Yen has been appreciating in value, which spells larger profits, and a greater realized buying power for Nintendo (Kelly, 2010). Still, they need to be on watch as another oil crisis spells disaster for the company. Technological. Nintendo has always been an innovator. With the introduction of the rumble packs, analog control stick, motion control controller, integrated wireless controllers and countless other improvements. These have all become standards in the video game industry with each subsequent generation of consoles. Because of their focus on innovation, they have no need to worry about Sony and Microsoft adapting existing ideas, in fact Nintendo almost counts on it. With each new generation, the technology driving it only becomes more intense and capable and Nintendo has to keep up with that. As long as they can keep on innovating they can keep on succeeding in their business. Intellectual Properties Franchises and Consoles Nintendo owns and distributes 18 different video game franchises (Nintendo Franchises). They exclusively own the rights to each of their characters and do not lease them to other companies. Nintendo is known for keeping what is theirs to themselves. The only exception is in the iQue player. iQue licenses Nintendo products to sell in China, although they have not been keeping up with the current innovations or markets. iQue is the only exception to the rule that only Nintendo distributes and creates what Nintendo creates.

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Nintendo also owns each of their product lines. They do not lease or contract out the design or distribution of their products. It is all handled in house. Their consoles include the NES, SNES, the Game Boy Line, Nintendo Gamecube, Wii, and the Nintendo DS lines (Nintendo History). Piracy and Emulation Policies Nintendo has very strict anti-piracy and anti-emulation policies. Emulation is the process of creating or recreating a console in a software environment so that it may be used on a personal computer or device other than the one it was made for. Basically, it allows a user to play a Nintendo 64 game on their cellular phone or laptop. It is the official opinion of Nintendo that emulation is used solely for the purpose of piracy and should be outlawed (Intellectual Property). They are vehemently against emulation of their software and games, but they remain the only console manufacturer who has not sued an emulator developer or company (Nintendo). SWOT Analysis Strengths The strengths of Nintendo lie in its size and knowledge of how the video game industry works. Nintendo is the only member of the ‘Big 3’ gaming companies that is solely focused on producing and developing video game consoles and accompanying games. It has distribution networks that are established across the world and has a truly global presence. It is not overreliant on any one of its markets, which helps Nintendo to reduce their risk abroad (Friesner). Nintendo’s long history of innovation has also given them an advantage. They can be trusted to try something new and to take risks. They are trusted to produce quality games and have a long and successful history of doing so. Finally, Nintendo only employs about 3000 people worldwide. Each of those is worth approximately $1.6M USD in yearly revenue (Seedat,

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Foulds, Sefel, & Lefroy). Their low cost of employment mixed with in house production and distribution of product keeps Nintendo’s cost low, and offers them a distinct price advantage over their other competitors. Weaknesses Despite their long history and knowledge of the video game industry, Nintendo falls short in a few key areas. Their over-reliance on in house production and supply chain management has caused inventory problems (Friesner). When the Wii was released in 2006, they could not handle demand and stores were selling out of the console within a few hours. Additionally, Nintendo’s lack of adequate marketing has left the serious gaming community unimpressed. Again, with the Nintendo Wii, it was largely unknown that it possessed online capabilities until after release (Seedat, Foulds, Sefel, & Lefroy) The biggest weakness of Nintendo is that it is the only gaming company that is solely reliant on video game consoles and physical games to drive sales. The other two of the ‘Big 3’, Sony and Microsoft, have a large and diverse product line. Nintendo’s complete dependence on the business of gaming can and has led to financial difficulties in such a unique market. Opportunities Nintendo has many opportunities. To begin, there has not been a period of time where no demand for more games from Nintendo. Especially in recent years, the common emotion emanating from the gaming community is that they are craving more, new games from Nintendo. This gives them an opportunity to create and revitalize old franchises and titles with a level of confidence in the assured sales to these consumers. Additionally, the market for online games is increasing. It is increasingly harder to find newly created or published games that do not have some form of online interaction for the

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players. Nintendo has the capability to expand into the online market and make it an integral part of their system, but outside of a small web store, they have yet to do so (Seedat, Foulds, Sefel, & Lefroy). Finally, Nintendo has the opportunity to combine this trend for online gaming and demand for more products to go after the market segments that they have not tapped yet. Threats The largest threat to a company in the video game industry is the industry itself. It is a fast paced and dynamic industry that has to adapt to harsh demands from customers while trying to outmatch competitors. Customer preferences change rapidly. In order to maintain an advantage, before a new generation of consoles or games is released the next generation must already be in development (Friesner). This seasonality of the video game industry can spell a quick death if a gaming company hits the market at the wrong time. Nintendo needs to keep on their feet in order to remain on top of the industry they helped create. Porter’s Five Forces Bargaining Power Suppliers. Suppliers have a low bargaining power with Nintendo. They produce and distribute their own products. The only suppliers they need to worry about are other video game developers. Ultimately though, Nintendo has the say on what gets published on their systems or not. Thus, suppliers have no real bargaining power with Nintendo. Buyers. Buyers are a huge force in the video game industry. They dictate the sales of consoles, which dictate the sales of games and it’s a vicious cycle. The public and the gaming community wants what they want and they will gladly take their money elsewhere to get it. This is seen in the exodus of console gamers into the PC gaming industry when they seek more customization over their video game experience. It is also seen in the constant swinging between

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which console is better. Buyers are always forcing companies to come out with better, cheaper, faster, and longer lasting consoles than the previous generation. If they don’t get what they want, they find the company that will give them what they want. Existing Rivalry Nintendo is one of what is known as the ‘Big 3’ in the video game console market. Sony and Microsoft are the other two players in the industry. Each of these suppliers and players in the market exhibit their own market strategy. Nintendo is focused very much on innovation and the family friendly nature of their video games. Sony, another Japanese firm, is focused on the maximum performance and highest quality gameplay. Microsoft is focused on the budget gamer that wants an all-round pleasant gaming experience. While they may enjoy hardcore gaming, Microsoft gamers are focused more on the mentality of gaming than the action itself. Each of these players has their own market share. As of right now, Sony is the up and coming big player with promises about their Playstation 4 that have the larger gaming community excited. The threat to Nintendo is that they will lose their key demographic. The age ranges of gaming customers are changing rapidly, and Nintendo is losing their consumers to both Microsoft and Sony. They are at a disadvantage because of the strict policies regarding violent or adult themed games. Not having those available on a Nintendo console hurts sales in the long run. If you look at the data from 2004, Nintendo had one top selling game, the rest were attributed to Microsoft or Sony and many included the adult themes that Nintendo does not allow in their products (Kim, Lamont, Ogasawara, Park & Takaoka, 2011). Another problem arises; Nintendo can’t afford to lose video game sales. They are a video game company, and that’s it. Sony and Microsoft have video game divisions but ultimately sale other electronics. This leaves Nintendo at a disadvantage because they are over dependent on their only market to stay afloat.

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Substitutes Substitution is the largest threat in the video game industry. There are always new games and new technologies coming out. Even though each company and rival has different games and experiences to offer, from a consumer standpoint, they are all the same (Muncy, 2011). They sell entertainment, and there are many substitutes for entertainment. What sets Nintendo apart in this area, is that they have always been the price leader in the market, making them more attractive to consumers. Keeping the costs of their systems low allows them to lessen the threat of substitutes. New Entrants The threat of new competitors is lessened in the video game console industry. Mainly because of how large the industry has become. The size of the distribution networks, the size of the gaming market, and the cost associated with entering that market has kept new entrants out. Even if new entrants have come in, Nintendo is in a cushioned place. They would have to change their strategy up a bit, but as the largest video game company in the world by a huge margin, even after both Sony and Microsoft entered the market in the past fifteen years, Nintendo has little to worry about in the form of new entrants. Finally, there is a sense of loyalty with consumers. A person who buys an XBOX over a Playstation will be loyal to that console. They see it as an investment and they want it to mean something and they want it to succeed. This loyalty is another barrier to new entrants and keeps the ‘Big 3’ in the position they have today. Value Chain Inbound Nintendo has always been very close mouthed about their manufacturing process. There is enough information available to know that for inbound product, Nintendo will outsource

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production on certain components and assemble them in house in order to reduce costs. Nintendo has also been known to purchase or buy out the companies that they contract with, in order to further reduce costs and implement features that they wish to see in their product (Dietel & Royer, 2003). In House Operations Nintendo has dedicated factories in Japan that turn their raw materials and supplies into finished goods. They do not assemble any in America, although their regional division in Australia does assemble and produce goods. The product is met and assessed by the Marketing and Sales team in each region to push out the product in the best way possible (Dietl & Royer, 2003). The bottlenecks here arise from not having enough product created in house to meet the demands of the world wide regions. Outbound Logistics Nintendo has a level of control over retail outlets that Sony and Microsoft do not possess. Because of Nintendo’s niche marketing strategy, they are able to push their products in bundles through different gaming outlets. They also do not license themselves out to other companies, as a result all customer service and quality control is done directly through Nintendo (Dietl & Royer, 2003). This cuts out the middleman between the consumers and Nintendo, reducing costs and increasing customer loyalty. Nintendo has a distinct advantage in this area, as both Sony and Microsoft will allow external companies to process and service their equipment. Performance and Financial Analysis Assets Nintendo currently has $16.6 Billion USD in assets. The breakdown is seen in the table below (Hoovers, 2013).

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Assets (mil) Current Assets

2012 2012

2011 2011

2010 2010

Cash

$5,614.9414

$9,808.9023

$9,568.9023

Net Receivables

$501.056

$1,628.2365

$1,411.1675

Inventories

$953.3542

$1,118.7557

$1,344.9723

Other Income Assets

$6,794.6206

$5,166.981

$4,842.8521

Performance, Financial Statement, & Current Stock Price The following income statement shows the declining revenue and profits of Nintendo measured in millions (Hoovers, 2013). 201202012 202

2011

2010

Year

2012

2011

2010

Revenue

$7,870.915

$12,240.101

$15,473.93

Gross Profit

$1,867.369

$4,681.574

$6,205.624

Operating Income

$-453.55

$2,064.374

$3,846.656

Net Income

$-525.058

$936.653

$2,466.514

Diluted EPS

$-0.51

$0.92

$2.41

Their current stock price is $12.62 per share. Down from their high of $76.87 that they had in 2007 before the market crashed in 2008. Nintendo’s stock has steadily declined over the last 4 years, as investors have been unimpressed with the consoles and game availability that has come from Nintendo. The effects of this can be seen in Figure 3.

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18 Deficiencies and Recommendations

Current Position State of the Company. Nintendo is losing money and market share, and they are losing it rather quickly. Ever since the release of the Nintendo Wii, they have focused on appealing to families and non-gamers. They are trying to attract a part of the industry that has not been tapped before. While not a bad strategy, it has clearly been causing problems for the company. They have a very adept and capable marketing, research & development, and manufacturing teams. These teams working together are Nintendo’s aces in their pocket. The marketing has given Nintendo the brand loyalty, and the R&D has given it the concepts and innovation needed to give consumers what they desire (Muncy, 2011). They created the Wii, the first console of its kind. It offered the motion sensor bar, the wireless controllers and nun chuck set-up, fully functioning online capabilities and offered it all at a lower cost than competitors. But that’s still not enough. Problems Identified. Nintendo is too focused on one aspect of the market, and they can’t afford to do that. They are dependent on the gaming industry; it’s their only source of income. Despite that, Nintendo has been so focused on attracting the non gamer that it has led to their decline. They are losing their cash reserves and they are losing their market share. Nintendo was once known for being the one and only gaming company. It was the first place people turned to when they thought of video games. For a while it was the only viable option for at home gaming. This set them up with high expectations and they have fallen short of those expectations. They have lost the faith of their long time customers. Developers no longer want to produce for a Nintendo console because of low console sales. Developers are also hesitant to produce for a Nintendo console due to the strict content regulations from Nintendo. While they are more lax with what they allow, there is still a negative

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stigma within Nintendo that is attached to violent games, or games that are not family friendly. Customers don’t want to buy a Nintendo console because there are limited games available. Thus the cycle perpetuates itself. The final issue is that Nintendo is so focused on being an innovator and first mover in the industry that they have begun to sacrifice hardware capability for an earlier release in their consoles. The gaming industry and consumer base is changing; they demand higher quality games across all sectors. Nintendo consoles no longer have the capability of meeting those demands from a quality standpoint because of the poor hardware specifications of their new products. Future Recommendations Nintendo needs to take a step back from innovation. If they are going to recreate their successes they need to start emulating the things that made them successful to begin with. Clearly, being an innovator and a first mover use to work for them, but that’s no longer the case. Nintendo was known for producing the video gamer’s game. The term ‘Nintendo hard’ was slung around. It showed a level of complexity and dedication to the game that required an effort to play. Their consoles and games offered a truly unique experience. Now, Nintendo is lack luster, falling behind on most fronts, and their consumer base has changed. They can still reconcile their situation by going back to basics. Creating games that gamers’ will care about. Stop focusing on the non-gamer market, instead focus on the splits between the aging gamer and the young gamer. Nintendo has the opportunity to bridge that gap by reintroducing their classic video games, reintroducing the term ‘Nintendo hard’ and marrying the old gamer who is nostalgic for the good old days, while filling the need of the young gamer who is looking for a challenge.

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20 References

Corporate Governance. (n.d.). Nintendo. Retrieved May 28, 2013, from http://www.nintendo.co.jp/ir/en/management/governance.html Corporate Social Responsibility Report. (n.d.). Nintendo. Retrieved May 28, 2013, from http://www.nintendo.com/corp/csr/ CSR Report 2012. (n.d.). Nintendo. Retrieved May 28, 2013, from http://www.nintendo.co.jp/csr/en/report2012/05/index.html Dietl, H. M., & Royer, S. (2003). Intra-system competition and innovation in the international video game industry. Innovation: Management, Policy & Practice, 5, 158-169. Famous Names in Gaming. (n.d.). CBSNews. Retrieved May 28, 2013, from http://www.cbsnews.com/2316-100_162-1673418-2.html Friesner, T. (n.d.). SWOT Analysis Nintendo. Nintendo SWOT. Retrieved May 28, 2013, from http://www.marketingteacher.com/swot/nintendo-swot.html Gaming Company Top 25. (2011). Software Top 100. Retrieved May 28, 2013, from http://www.softwaretop100.org/gaming-company-top-25 Hoovers. (2013). Nintendo Co., Ltd. Revenue and Financial Data. Hoovers. Retrieved May 28, 2013, from http://www.hoovers.com/company-information/cs/revenuefinancial.Nintendo_Co_Ltd.30448ece704bc9b7.html Intellectual Property. (n.d.). Nintendo of Europe. Retrieved May 28, 2013, from http://www.nintendo.co.uk/Legal/Intellectual-Property/Intellectual-Property-Policy-625951.html Kim, S., Lamont, I., Ogasawara, H., Park, M., & Takaoka, H. (2011). Nintendo's "Revolution" MITSloan Management, 11, 124. Miller, C. (1994). Sega Vs. Nintendo: This fights almost as rough as their video games. Marketing News, 28(18), 1. Muncy, R. (2011). Nintendo: Maintaining competitive advantage. Gatton Student Research Publication, 3(1), 1.

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Nagata, K. (2009, March 10). Nintendo secret: It's all in the game. Japan Times. Retrieved May 28, 2013, from http://www.japantimes.co.jp/news/2009/03/10/news/nintendo-secret-its-all-in-thegame/ Nintendo Franchises. (n.d.). Encyclopedia Gamia. Retrieved May 28, 2013, from http://gaming.wikia.com/wiki/Category:Nintendo_franchises Nintendo History. (n.d.). Nintendo (archived). Retrieved May 28, 2013, from http://www.webcitation.org/query?id=1349093916789326&date=%400&fromform=1 Nintendo. (n.d.). Emulation Nation. Retrieved May 28, 2013, from http://www.emulationnation.com/nintendo/ Rashed, M. A. (2010, April 30). Organizational chart for companies [Scholarly project]. In Pennsylvania State University. Retrieved May 28, 2013, from http://www.personal.psu.edu/maa5127/blogs/mohamed/2010/04/organizational-chart-forcomapanies.html Seedat, N., Foulds, K., Sefel, C., & Lefroy, A. (n.d.). An Analysis of Nintendo Co. Ltd. [Scholarly project]. Snow, B. (2004). The 10 Worst-selling consoles of all time. GamePro. Staff, T. (2010). California Game Law. Travel Insurance. Retrieved May 28, 2013, from http://www.travelinsurance.org/the-california-game-law/

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22 Tables

Table 1 Nintendo Balance Sheet Comparison Assets (mil) Current Assets

2012 2012

2011 2011

2010 2010

Cash

$5,614.9414

$9,808.9023

$9,568.9023

Net Receivables

$501.056

$1,628.2365

$1,411.1675

Inventories

$953.3542

$1,118.7557

$1,344.9723

Other Income Assets

$6,794.6206

$5,166.981

$4,842.8521

Note: Balance sheet of Nintendo’s assets over the last 3 years of operation. (Hoovers, 2013).

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Table 2 Nintendo Income Statement Comparison 2011

2010

Year

2012

2011

2010

Revenue

$7,870.915

$12,240.101

$15,473.93

Gross Profit

$1,867.369

$4,681.574

$6,205.624

Operating Income

$-453.55

$2,064.374

$3,846.656

Net Income

$-525.058

$936.653

$2,466.514

Diluted EPS

$-0.51

$0.92

$2.41

Assets (mil)

2012

2011

2010

Note: Income statement of Nintendo’s last 3 years of operation. (Hoovers, 2013).

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24 Figures

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5

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Figure 1. Breakdown of Nintendo’s corporate organizational structure. Retrieved from Pennsylvania State University (Rashed, 2010).

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Figure 2. Nintendo’s corporate governance system. Retrieved from Nintendo’s official report on corporate social responsibility (Corporate Social Responsibility Report).

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5

4

3

2

1

0 Category 1

Category 2 Series 1

Category 3 Series 2

Category 4

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Figure 3. The trend of Nintendo’s stock prices over the last 13 years. You can clearly see the peak in 2007 as well as the crash of 2008. The price has slowly declined since then. Snipped from: https://www.google.com/finance?cid=685139.