Key factors to a successful business is often being at the right place at the right time. Nintendo single handedly resurrected the video game industry back in the fall of 1985 and has continued its meteoric rise ever since. They’ve gone from obscurity to a household name in the U.S. in just four years.
While it’s undeniably the power of the NES and the quality of the games it runs that are core to Nintendo’s popularity, consumer outreach and clever marketing has been just as important. Since the launch of the NES the company has spent millions of dollars advertising on TV, in stores, and directly to consumers. For several years those that sent in a warranty card for their NES were rewarded with a free subscription to Nintendo Fun Club News. This later morphed into Nintendo Power in July of 1988 – a bi-monthly 100 page magazine devoted to the world of Nintendo. It has since garnered almost 2 million subscribers – people Nintendo can directly market to six times a year.
It’s not all about marketing, though. If you take the time to write a letter to Nintendo, they will reply back. No question is too silly for them to respond to and they receive a lot of mail from loyal fans – over 15,000 letters a week! They also have a slew of Game Play Counselors on staff that kids (and adults!) can call to learn tips and tricks for the entire library of NES games.
From sending in pictures of high scores to writing in their own secrets they’ve discovered, Nintendo encourages gamers of all ages to reach out and interact with them. In an age where many companies dread letters from the public and often don’t reply directly to their consumers, Nintendo has taken the opposite approach and it seems to have paid off big time!
Staying In The Game – Nintendo Effort Aims At The Loyalty Of U.S. Consumers
December 26, 1989
On a conference room wall at Nintendo of America Inc.’s headquarters hangs a 20-foot-long picture frame, crammed with hundreds of snapshots and school photographs of children.
They are photographs children sent on their own, said Nintendo spokesman Bill White, usually with a note about how they did on a Nintendo video game.
For a company that gets thousands of photos, tens of thousands of letters and millions of phone calls from customers, 1990 may pose a problem: How to keep that loyalty.
With a Nintendo Entertainment System in one out of nearly four U.S. households, toy industry watchers wonder whether the market is getting saturated.
“I look at Nintendo as a fad that is moving into its fourth year,” said Paul Valentine, an analyst at Standard & Poor’s Corp. in New York.
If for no other reason, he said, that makes Nintendo vulnerable to a slump.
“We’ve certainly seen the predictions of the doomsayers that we’ve reached saturation,” White said. “That certainly hasn’t been the case.”
Nevertheless, game players and marketeers at Nintendo are hustling to keep their top-selling toy fresh among customers. Beyond scouting new and more detailed games, ideas range from “store within a store” retail displays to marketing tie-ins with Pepsi to a feature-length movie.
This Christmas, Nintendo introduced its hand-held game Game Boy, which the company hopes will sell 1 million units. Nintendo forecasts selling 9 million of the entertainment system consoles this year.
By late 1990, Nintendo plans to have its “NES Network” running, which will allow the machines to be used to trade securities and mutual funds through Fidelity Investments and for game players to compete in nationwide tournaments.
At Nintendo’s U.S. headquarters in Redmond, a suburb of Seattle, the bustling hallways, jingling phones and jammed shipping docks during the Christmas selling season testified to the prosperity of a company that has had the nation’s No.1 toy the past three years.
The subsidiary of Nintendo Co. Ltd. of Japan projects more than $2.7 billion in retail sales for 1989, $1 billion more than last year and nearly nine times as much as in 1986.
This year, NEC Home Electronics (U.S.A.) Inc. and Sega of America Inc., also subsidiaries of Japanese companies, brought out competing machines offering more computing power than Nintendo’s. Atari Corp. also has introduced a competitor to Game Boy, called Lynx.
Still, Nintendo claims a 79 percent share of a video game market the company estimates at $3.4 billion. Nintendo’s Japanese parent may introduce a more high-powered system in Japan next summer, White said.
Nintendo expects to have sold 20 million video game systems by the end of this year, with the devices in 22 percent of all U.S. households.
But Valentine said he thinks sales will drop sharply in 1990. He thinks toy crazes just don’t last more than three or four years.
“I think when the fad goes we’ll see a sharp contraction of sales, anywhere from 40 to 70 percent over two years,” he said.
Still, he said, that would leave video games as the largest category within the toy industry.
Many toy makers are hoping Nintendo crashes, said Larry Carlat, editor of Toy and Hobby World magazine.
“It probably will be down, but a lot of it is wishful thinking,” he said.
“No company has been really able to hold onto a smash and be able to manage it in the past. It’s always been a boom and bust cycle,” Carlat said. “It doesn’t look like that is going to happen with Nintendo. People in the toy business use the term ‘soft landing.”‘
White said there are encouraging signs of market longevity in the United States. Two years ago, he said, 75 percent to 80 percent of the primary users of Nintendo games were boys 6 to 14.
The interest has broadened, he said, so that segment only represents 46 percent of the main users now.
Men 18 or older now make up 30 percent of the primary users, while women and girls comprise a 24 percent share, White said.
“The biggest change has been the widespread adoption of the Nintendo Entertainment System as a true entertainment option” to television, video cassettes or stereos, he said.
Nintendo does its best to cultivate fan loyalty, White said. It has 400 game counselors at its U.S. headquarters, who handle 140,000 calls a week from stumped players.
The company’s magazine, Nintendo Power, has 1.8 million subscribers. The company gets 15,000 letters a week, and a roomful of writers responds to each letter personally.
“You’ve got to bond with them,” White said.
So far, Nintendo has lent its name to 200 licensed products, from sweatshirts to dolls, bedsheets to breakfast cereal. It’s also set up about 5,000 World of Nintendo store displays to sell the merchandise.
In addition, there are two television series. Earlier this month a Nintendo-themed movie, The Wizard, opened nationally.
Although the licensing earns money, it also is a powerful marketing tool for Nintendo, White said. Likewise, a Christmas-time promotion with Pepsi broadened Nintendo’s advertising.
White, however, said the tie-ins and licensing deals still are secondary to the core of the industry, the games.
Nintendo has sold 101 million individual games, and hopes for a new hit when it brings out Super Mario Bros. 3 next year, a far more intricate version of this year’s best-selling game, he said.
[Source: Sun Sentinel]