Strengths

1) Established brand - synonymous with gaming and entertainment: Nintendo is an established and popular brand globally and is synonymous with gaming. It enjoys the trust and loyalty of its customers. Nintendo’s core values – originality, flexibility and sincerity also add to its strength and make it reach its entertainment goals.

2) Strong performance of Nintendo Switch and 3DS: Nintendo Switch launched in March 2017 has seen strong demand with more than 2.7 million units sold by March end. The cumulative sales outlook for FY ending March 2018 for Switch is 12.7 million units. Nintendo 3DS gaming console has seen strong sales in 2016 after a good 2015. The overall unit sales stand at 56 million till April-16 and the sales of Nintendo 3DS software are also showing positive signs, which will ensure profitability in the software segment.

Threats

1) Intense competition from players like Sony and Microsoft: Nintendo faces strong competition from Sony and Microsoft which offer more versatile and multi-utility gaming consoles, which can be used for overall entertainment purposes, such as online surfing and streaming. Thus Nintendo has a threat of low install base growth.

2) Rise in availability of counterfeit gaming products in emerging markets: Counterfeit video gaming consoles are being increasing shipped internationally, with every nearly one in every fourth product shipped being fake according to a 2016 OECD report. The major source of these fake products is China where copyright laws are hardly enforced and violation is rampant. The growth of e-commerce platforms such as Amazon and Alibaba has provided an easy market access to these products where they are available at throwaway prices. Thus the rise of counterfeits not only causes loss of revenues to Nintendo but also makes it difficult for Nintendo’s business expansion and growth in emerging markets where the counterfeits are preferred by the consumers because of low prices.

The unpublished sections of the entire Nintendo SWOT PESTLE / PESTEL analysis is available in the 'Complete Report' on purchase.

References

1. Financial Results Briefing for Fiscal Year Ending March 2017: https://www.nintendo.co.jp/ir/pdf/2017/170428_2e.pdf

2. Nintendo Report 2016: https://www.nintendo.co.jp/ir/pdf/2016/annual1603e.pdf

3. Nintendo shares dive as company plays down Pokemon GO's earnings impact: http://www.reuters.com/article/us-nintendo-pokemon-stocks-idUSKCN10504G

4. Financial Results Briefing for Fiscal Year Ended March 2016: https://www.nintendo.co.jp/ir/en/library/events/160428/index.html

5. Nintendo abandons plans to release consoles in China: http://www.mcvuk.com/news/read/nintendo-abandons-plans-to-release-consoles-in-china-report-claims/0149262 

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.

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.

The unpublished sections of the entire Nintendo PESTLE / PESTEL analysis is available in the 'Complete Report' on purchase.

References

1. Financial Results Briefing for Fiscal Year Ending March 2017: https://www.nintendo.co.jp/ir/pdf/2017/170428_2e.pdf

2. Nintendo Report 2016: https://www.nintendo.co.jp/ir/pdf/2016/annual1603e.pdf

3. Nintendo shares dive as company plays down Pokemon GO's earnings impact: http://www.reuters.com/article/us-nintendo-pokemon-stocks-idUSKCN10504G

4. Financial Results Briefing for Fiscal Year Ended March 2016: https://www.nintendo.co.jp/ir/en/library/events/160428/index.html

5. Nintendo abandons plans to release consoles in China: http://www.mcvuk.com/news/read/nintendo-abandons-plans-to-release-consoles-in-china-report-claims/0149262