Nintendo Co. SWOT & PESTLE Analysis

Strength

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Weakness

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Opportunity

1. Utilize strong research & development capabilities: Nintendo has developed strong research and development capabilities in the technology area, both hardware and software, over the years. It can utilize the same in other technological areas apart from gaming, such as non-entertainment consumer electronics and diversify its business. It spent U.S. $527 million in R&D in FY 2016-17.

2. Capitalize on success of Pokemon GO: The blockbuster game, Pokemon GO which was Nintendo’s first venture in mobile gaming has the potential to significantly increase its earnings. While the game has been only launched in major markets, it has a good potential globally. Nintendo can also capitalize on its other hit characters such as Super Mario and Zelda.

3. Online Switch service expected to bring in significant subscribers: Nintendo has announced the launch of online Switch service which will be available from 2018. The service is priced at $20 per year and is expected to bring significant subscription revenues. The service will also bring in more users availing other games through Nintendo’s digital download platform.

Threat

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Political

1. Political stability in Nintendo’s major markets: Nintendo’s major markets include Japan, the Americas and Europe. These geographies have stable political climate and provide good opportunities for business expansion. The government and administration in these markets promote fair business practices and have also stepped up efforts on piracy and counterfeits, which helps Nintendo’s sales. In a notable recent example, Nintendo won an anti-piracy court case in Italy in 2015 against devices which were evading piracy protection on Nintendo's consoles. Growth of online business ecosystem in these markets also helps Nintendo to deliver its products and services to its customers.

Economic

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Social

1. Increase in smartphone adoption globally will also increase digital gaming penetration: According to leading industry research, 2.4 billion people will be using a smartphone by 2017 and by end of 2018, two-thirds of the global population will be using a smartphone. Further, approximately 50% of the users globally will be playing digital games on their smartphones. In UK market alone there will be estimated 42.7 million smartphone users and 54% of the same or 23 million, will play digital games in 2017. Further mobile gaming growth is expected to lead way ahead of the growth in other devices such as PC’s and consoles over the next five years till 2022. These trends signify growing potential for Nintendo’s products and opportunity to capitalize in the growing market.

2. Increasing disposable income in emerging economies to drive gaming market: There is strong correlation between per capita income and spending in games and entertainment, especially in emerging economies as people grow richer and become better educated. The Asia-Pacific region will account for $51.2 billion of global gaming revenues with China alone accounting for a forecasted $27.5 billion of gaming revenues in 2017. Thus, the scenario provides the ideal opportunity for companies like Nintendo to expand their offerings in the rapidly growing gaming segment.

Technological

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Legal

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Environmental

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