Nintendo External Analysis

4. External Analysis

4.1 Demographic

For understanding the gaming industry to attract a broader audience, Nintendo has expanded their demographics. Nintendo focuses on three kinds of demographics:

* Gender

* Age

* Family Status

Gender

Many people think that games are mostly played by men, on the contrary, the gender split between gamers is quite even among all age groups. Although females never pass the males, in the younger age groups and oldest the ratio between men and women is equally divided. In the middle age-group the ratio of men playing games is slightly higher, but the stereotype idea of the large gender gap is false. The ratio between the females and males is 45% and 55% on average.

Age

A research has shown that 59% of 6 to 65 year olds in the UK are gamers, which makes a total number of gamers in the UK is 26.5 million. In this age group of 6-65, 48% plays games at least once a week, this percentage makes up 21.6 million people. A quarter of the UK gamers are aged between 36-50 years and 18% (17 million) are aged between 51-65. The average age of a UK gamer is 28 years old. (1) However 41% of the UK population does not play games, this is not because it's the older generation, it's actually that 18% of the key age group of the age 16-24 that never play games. The non-gamers are a huge market that the game industry wants to reach, the same for Nintendo. With a almost even gender split and all age groups that play games in the UK, this could be a good opportunity for Nintendo to attract this broad audience.

Family status

Another important demographic is the family size, seen that Nintendo is segmenting a large group, families. On average the British families consist of 3 children per household. With understanding the gaming industry Nintendo can create opportunities and develop a strategy that targets different gamers and suits their needs.

4.2 Economic

According to a research conducted by ''www.Playr2.com'', the average people who play games in the UK start gaming at an age of ''9.1'' years old, and the majority of this research answered that they would stop gaming between the ages of 40-45.

If we now analyze this market, we see that we can target different segments for the introduction of a new Nintendo product, in the UK. We could choose to target gamers from the age of nine till the age of 15, or from the age of 16 till 30, but we could also choose to target the whole market, just like with the introduction of the Wii, it can be played by each family member, individual or together.

Let's now look to some figures concerning the consumer's spending pattern.

Consumer price index

This indicator measures the average price of goods and services purchased by households. The ECB aims to keep inflation rates below the 2% in order to stabilize prices and maintain economic growth.

United Kingdom Latest 2011 2010 2009 2008 2007

CPI 3.60 4.20 3.70 2.90 3.10 2.10

GDP growth rate

This indicator shows us the increase in the amount of goods and services produced in the United Kingdom.

United Kingdom 2011 Q4 2011 Q3 2011 Q2 2011 Q1 2010 Q4 2010 Q3 2010 Q2 2010 Q1 2009 Q4 2009 Q3

Growth Rate 0.80 0.50 0.60 1.60 1.50 2.70 1.60 -0.20 -2.90 -5.30

What do these figures tell us?

We see that the GDP growth rate of the UK slightly increased, which means that the production of goods and services in this country increases, and this results indirectly in an increase of spending power for consumers.

However, if we look to the CPI, we do see an increase in the inflation rate, which means that the average price of goods and services purchased by the uk's inhabitants increased. Though, analyst Chris Williamson of Markit, claims that there will be further decease in the inflation rate, and this will provide a boost in the economic growth in 2012. This claim in turn supports the expectations of the Bank of England, about the inflation, which will reach a point of below the target of 2% at the end of 2012.

Our company could benefit from this economic growth in a way that consumers will have more to spend, and they will not eliminate their spending just to necessary consumption, but also for entertainment, and that's exactly what we could use to release our new product.

4.3 Socio-cultural

The gamer group in the UK is large, people of all ages play games and the gender split is evenly divided. However, males and females have different preferences when playing a games. Females indicate that they like games with music/dance, puzzles/quizzes and classic games, whereas men like action-adventure, racing and sports games.

Yet, simulated games seem to attract both genders. Over the years, there has been a shift in values and culture, from just being a hobby for only young children, to an activity for all ages and demographics, such as for families and the older generation. This goes along with a change in lifestyle, from being limited to an individual single experience to a large community and lifestyle.

According to different studies, video games have a bad influence on the education and health, playing videogames increases aggression and antisocial behavior, and it is suggested that videogames increase obesity. However, Nintendo shows the contrary with the Wii, a family game that emphasizes playing together and being active while playing a video game.

4.4 Technological

Gaming has come certainly a long way over the recent years with all the advantages of modern technology. Today, the gaming industry is a highly competitive multi-billion dollar, globally oriented growth industry. The global game market size is estimated at over US$49 billion( 3,78 Billion British pound) and has even exceeded that of the Hollywood film industry, and there is the possibility that the game industry could succeed film as the definitive form of popular culture this century.

The worldwide spending on the gaming ecosystem (gaming hardware, software, mobile and PC games) will exceed