NintendoThe Launch of Game Boy Color

Anna Montanana

Rosemary Nocito

Deena Vezo

Maggie Wu

Nintendo History

• 1889: Nintendo was founded by Fusajiro Yamauchi as a manufacturer of 'Hanafuda‘ - Japanese playing cards.

• The name 'Nintendo' actually means 'leave luck to heaven’

• 1970: first field of video entertainment after creating the Beam Gun with opto-electronics

• 1980: launched Game & Watch which was an LCD based platform that had 59 games

• 1983: introduced first home console, Nintendo Entertainment System (NES)

• 1989: released Game Boy, a smaller portable version of Game & Watch that had great potential in terms of graphics and interchangeable games

Nintendo History

• Since the release of Game Boy, Nintendo has also introduced, Super Nintendo, Nintendo 64, and Game Boy Advance to the market

• 1997: it was estimated that more than 40% of U.S. households owned a Nintendo game system

• Nintendo is the worldwide leader in home gaming systems.

Game Boy History

• 1989: Game Boy was initially released coupled with the addictive puzzle game Tetris for $169

• 1993: Original Game Boy was offered in various colors including, blue, yellow, and red

• 1993: Game Boy Pocket introduced to the market

• 1994: Super Game Boy was launched enabling gamers to play Game Boy games on TV through the Super Nintendo system

• 1996: Original Game Boy was released in a new and improved slimmer version

• 1997: Game Boy Pockets released in six new colors

• July 1998: expected launch of Game Boy camera and printer additions that will turn Game Boy into a digital camera with printable pictures and stickers

• November 23 1998: Anticipated launch of Game Boy color in North America and Europe

SWOT

Strengths Opportunities

Weaknesses Threats

Strengths

Strengths• Game Boy is the most successful gaming platform in history

– sold more than 70 million units during its almost 10-year life

• Nintendo was the leader in the worldwide US$15 billion retail video game industry.

• Nintendo manufactured and marketed hardware and software for its game systems

• Nintendo 64 is named Time Magazine’s “Machine of the Year” for 1996.

• Control of the games that ran on its game machines, keeping its third-party software providers under tight control

• Improvements:

o In 1994, an add-on for the Super Nintendo Entertainment System was launched, enabling gamers to play Game Boy games on that system.

o In 1996, Game Boy was relaunched in a slimmer housing with further improvements in screen clarity.

o In 1997, Game Boy Pocket was introduced in six new colors..

• The new Game Boy color would display sharp and vivid color graphics. Game Boy Color’s screen was also not backlit, which meant two AA batteries would last about 12 hours.

• Nintendo Canada would have access to a broad selection of ads from the US that could appeal to all the target segments being considered for their launch plan.

Weaknesses

Weaknesses

• Both Game Boy hardware and software sales had declined steadily from 1992 to 1996 on a worldwide basis.

• By 1998, support of third-party developers for Game Boy was waning. Many viewed it as a “spent force” in the market and were reluctant to invest the US$200,000 to US$300,000 to develop a new Game Boy cartridge, when there were more attractive opportunities in the much larger console market.

• The marketing communications budget for Nintendo in Canada was only a small fraction of the Nintendo budget in the US. Also, Nintendo Canada selected its ads from the pool developed by Nintendo in the US.

• When the original Game Boy was launched in 1989, it had been priced slightly higher in Canada than the US, attributing to Game Boy’s proportionately greater sales in the US.

Opportunities

Opportunities

• On November 23, 1998, a color version of Nintendo’s Game Boy would be released simultaneously in North America and Europe, one of the most important launches in Nintendo’s history.

• Game Boy Camera and Game Boy Printer were scheduled to be released in July 1998.

• Retailers had “open to buy” dollars that could be shifted around during the year to support the “hot” products.

• Sega and other competitors lacked new exciting software for their handheld hardware. Handheld users seemed to want exciting, current software.

• Six new games, specifically developed to take advantage of the 56-color palette on Game Boy Color, were expected to be available at the launch date.

Threats

Threats

• In 1998 Nintendo began to lose momentum as some of the third-party developers began focusing more of their development effort on Sony Playstation, which was viewed as an easier platform on which to develop games, and the Sony business model was viewed as being a more profitable one.

• Sega had been much more aggressive in promoting its console business in Canada than in the US.

• Third-party developers were spending fewer marketing dollars in Canada due to the relatively small size of the Canadian market. Canada represented only about 3 percent of the global Game Boy software market, whereas the US accounted for between 35 percent to 40 percent.

• As sales velocity slowed in the mid to late 1990s, retailers shifted more of their shelf space to Nintendo consoles and competing platforms and reduced their advertising and promotional support for Game Boy.

• In the late 1990s, a number of specialty stores had delisted Game Boy because they felt that they were not achieving competitive returns on their sales of Game Boy hardware and software.

• Competition:o Atari Lynx, the world’s first color handheld video game system.o TurboExpresso Sega’s Game Gearo Sega’s Nomad

Issue Identification

• Issue #1: Choosing the right target market and the right positioning

• Issue #2: Choosing the right market approach

• Issue #3: How to price Game Boy Color in Canada

• Issue #4: Product

Issue #1: Target Market and Positioning

• Alternative #1: Focus on teens who were more likely to already own a Game Boy

• Alternative #2: Focus on new kid/tween users

Issue #2: Marketing approach

• Alternative #1: In-store interactive display

• Alternative #2: Mall tour

• Alternative #3: Cross Canada tour

• Alternative #1: Price Game Boy Color according to the mid-1998 exchange rate conversion of U.S. price

• U.S.= $79.95 Cdn =$120

• Alternative #2: Price Game Boy Color at a lower cost of Cdn= $100

Issue #3: Pricing

Issue #4: Product

- Alternative #1: Continue to offer the Black and White version of the product

- Alternative #2: Stop offering the black and white version Game Boy

- Alternative #3: Bundle a game cartridge with the Game Boy Color

- Alternative #4: Do not bundle a game cartridge with the Game Boy Color

Group Discussions

• Issue #1: Choosing the right target market and the right positioning

• Issue #2: Choosing the right market approach

• Issue #3: How to price Game Boy Color in Canada

• Issue #4: Product

Issue #1. TM and Positioning

• Alternative #1:Focus on teens who were more likely to already own a Game Boy

– PROs:• If successful in getting teens to adopt, this might spur sales among kids and particularly

tweens, who often aspired to use the same products as teens• Teens tended to purchase machines with their own money, making their purchases all y

ear round, not just at holiday times• If teens already owned a Game Boy we know that they are

interested in this type of handheld device, and we know how to target them because we have reached them in the past

– CONs:• If Nintendo Canada targeted teens that had used Game Boy in the past, they might view

the Game Boy as a product that was great when they were younger but not sophisticated enough to meet their current gaming needs

• If Nintendo was unsuccessful in getting teens to adopt, then perhaps kids and tweens would avoid it as well

• Many in this segment already had a black and white Game Boy and a library of five or six games and viewed the product as “old technology”

• Many teens appeared to have moved past the handheld machines to consoles, which offered greater speed and game complexity

• Only represent 6.7% of the total population of Canada

Issue #1: TM and Positioning

• Alternative #2: Focus on new kid/tween users– PROs:

• If Nintendo targeted kids and tweens and was able to convince kids/tween nonusers of Game Boy that Game Boy Color was a “cool” product, it could become a “gotta have” for the younger set

• This younger audience was less likely to already own a Game Boy product

• Kid/Tween users represent 19.9% of the total population of Canada

– CONs:• The difference between being cool or not cool with the younger set

was a very fine line• If focused on the kids and tweens, it might turn off the teens becaus

e Game Boy Color was “a kid’s toy”• Game Boys were typically purchased for kids and tweens by their p

arents as gifts, resulting in peak sales occurring in November and December for holiday gift giving and in June as a graduation or “great report card” present

Issue #2: Marketing approach

• Alternatives #1: low-cost interactive display – Pros:

• generate brand/product awareness when teens/kids/tweens visit the stores

• Estimated in store interactive displays would be used approximately 20 % of store hours for an average of 3 min/use.

• No sales staff required to monitoring the displays ( easy to operate)• 1000 potential outlets and Nintendo could achieve an 80% placeme

nt rate• Low Cost

– Cons:• No one is there to explain the new product or the benefits of the pro

duct if kids/tweens/teens have questions• Most sales clerks knew little about Game Boy Color hardware or sof

tware • Competitors have similar displays Direct Competition

Issue #2: Marketing approach

• Alternative #2: Mall Tours– Pros:

• Nintendo reprehensive is highly knowledgeable gamers, and would show game insights and tricks that kiosk visitor could use to improve their scores on popular games

• Incentives encourage trial among teens/tweens/kids Mall tour visitors can enter contests for Nintendo products and would receive a temporary Nintendo tattoo when they left

• 6-8 minutes on the product ( more than store displays which lasts only 3 minutes)

• Teens/kids/tweens spend a lot of time in the mall

– Cons:• Expensive: $10,000 per Mall visit, means only 25 mall tours p

er year• Mall selection problems• staff is limited/place is limited

Issue #2: Marketing approach

• Alternative #3: Cross-Canada tour– Pros:

• Most likely to generate buzz/PR• Automatically high awareness due to scale of the events• More freedom to promote in a bold manner• Bigger kiosks, more staff to promote the new product• High reach due to the size of audiences attending each event

---80%

– Cons: • costly $150,000 per year for major regional or national

events: CNE, Klondike Days, and the Calgary Stampede• Events only take place in summer months

Issue #3: Pricing

• Alternative 1: Price Game Boy Color according to the mid-1998 exchange rate conversion of U.S. price– Pros:

• Remain consistent with pricing in the US• Nintendo Canada wouldn’t experience proportionately lower

sales than the US similar to when the original version had been launched in 1989

• Prevent black market trafficking and sales from the US to Canada because of the cheaper price

• produce a retail margin of 20% on Game Boy consoles

– Cons:• Hardware price would be too high to drive-high volume sales

in Canadian market• Higher cost make it unaffordable for kids/tweens market• Could lose business to competitors because of high cost of g

aming system

Issue #3: Pricing

• Alternative 2: Price Game Boy Color at a lower cost of Cdn= $98– Pros:

• Lower price makes the gaming system more attractive and affordable to buy, especially for kids/tween market segment

• Retailers could make more profitable returns per square meter

• Lowest sale price of Game Boy to date– Cons:

• Could lead to black market exporting of product to other markets

• Nintendo Canada would only receive a gross margin of 5% instead of the past 6%

• With a lower margin received from each Game Boy sold, retailers might chose to spend their money on carrying and aggressively marketing other game systems

Issue #4: Product

• Alternative #1: continue to offer the black and white version of the product– Pros:

• Low price Cdn $49• Backward compatibility of game boy color games mean that

consumers could buy the black and white version and then trade up at a later date with out making their games obsoletes.

– Cons: • With the low price, the black and white version would not gen

erate any profits• Cannibalizing sales of Game Boy color

Issue #4: Product

• Alternative #2: do not continue to offer the black and white version of the product– Pros:

• Avoid losing money producing the black an white version

• Avoid cannibalizing sales of Game Boy color– Cons:

• Excludes consumers looking for a more affordable option

Issue #4: Product

• Alternative #3: Nintendo Canada should bundle a game cartridge with Game Boy color at Launch– Pros:

• Incentive to purchase• Teens/Tweens/Kids can see the difference between color an

d black and white games…and if they think color is superior, they would keep purchasing the color games instead of just keep using their old/already owned black and white games

• History could repeat itself with Game Boy having the same success it experienced when packaging Tetris with the original Game Boy

• Increased perceived value of game system– Cons:

• A high price will be charge??• Lose revenue from independent game sales

Issue #4: Product

• Alternative #4: Nintendo Canada should not bundle a game cartridge with Game Boy color at launch

– Pros:

• Avoid higher retail prices

• Higher profits from the individual game sales

– Cons:

• Less incentive to buy

• Consumers may expect Game Boy to come with a game cartridge because that is what they have experienced in the past

Recommendations

– Focus on both teens already own a Game Boy and new kid/tween users

– The best marketing approach is a cross-Canada tour because we felt this is the best way to generate buzz and increase brand awareness and same time it is the most informative way to educate users on the new product. We also felt the other two approaches can be carried along after the launch of Game Boy Color

– PR: • we also recommended what has been stated in the case

– Sales Reps visit leading magazine/web publications three month before product launch and let the writers to play the game for 5-6 hours

– We decided to price Game Boy Color at Cdn $120 to best satisfy factors such as profitability, consumer price sensibility and sufficient motivation for retailers to carry the product.

– Lastly, we have decided that Nintendo should stop offering the black and white version Game Boy and bundle a game cartridge with Game Boy Color. This will not only encourage users to try new Game Boy Color but also make them adopt to the new product faster.

Expert Choice

– See printouts

Implementations

• short-term:– focus advertisements and literature on the $120 price, which incl

udes a game cartridge, and towards both teen and new kid/tween user markets

– begin research and creation of the cross-canada tour– gather information about consumer response and satisifaction– advertise aggressively in the beginning to promote the new Gam

e Boy Color to both target markets with separate campaigns focused at each market individually

• long-term:– execute the cross-canada promotions tour– sign a young celebrity as a spokesperson for Game Boy Color to

appeal to the young target markets

Thank You