In 2009 Nintendo reported a growth of 10% in sales and 14% in profits. Is this normal?
Those are great results for any normal year, but they are truly exceptional if they happen in the middle of the worst global recession since the great depression in 1929.
When the whole world is sinking Nintendo is growing fast, and it’s not because Nintendo’s products are the kind that do better in a crisis (like private label products, low-cost airlines, fast-food restaurants etc…). It’s because of superior strategy in very large and unstable industry.
The gaming industry is intensely competitive and it changes very fast. Actually, do you remember Atari? Commodore? Sega? Those companies used to be the leaders, and actually started the whole industry in the early ’70s with Pong (I believe) and Space Invaders. Atari, Commodore and Sega are no longer making consoles, although some are making games. Today the industry of the consoles is dominated by Nintendo, Sony and Microsoft, but only Nintendo has been here since the beginning.
Like with many technology-driven industries a new player comes up with a new technology and it totally disrupts the status-quo. Then the become the undisputed leaders for a while and drive the others out of business. Then a new technology appears and it starts all over again.
Sony and Microsoft didn’t manage to drive Nintendo out of business and in 2007 Nintendo release the Wii, which is just a completely different way to play games. It was directed to people who didn’t use to play games and attracted them with friendly and fun games that could be played with a group of friends.
Nintendo is a very old company that started in Kyoto (Japan) in 1889 selling cards. They were always involved in gaming and when Atari and others developed the video-gaming industry in the 70’s they were there.
What is interesting is that talent is absolutely crucial to succeed in this industry. The boom started when they hired a talented student who later developed Donkey Kong, then they built the NES console that took over America and the world with games like Mario Bros. After a rocky ride in the 90’s they came back strong with new consoles (Nintendo DS and Wii) and new game experiences.
Today that tradition still sits deep and they have managed to re-invent video-gaming by playing the game differently, I guess they are the very best at playing any games…
Nintendo is a large and highly profitable company, yet it has only about 4.000 employees generating $16.000 Million in revenues. That means about $4.000.000/employee/year in revenues… not bad if you know that at Google it’s about $ 1.000.000/employee/year.
Nintendo is the 3rd most valuable company in the Japanese stock market. It’s a solid company although we know that this industry is a bit unstable and things can change quickly.
It is world-class in terms of video-game development and marketing. They are integrated, so they create the consoles, the games and then take them to market. It can be a fantastic place to start a career in the gaming industry, which is now larger than the movies industry and is converging with mobile phones, PCs and any other devices.
Will Nintendo be the next Nokia? Is the iPhone going to replace everything? Are the video-game developers like UbiSoft, EA or GameLoft going to run the show? Or is it rather the hardware developers like Sony?
And careers at Nintendo.
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