A

The video gaming industry is dominated by Sony, Microsoft, and Nintendo. The three firms are fiercely competing to outdo each other. Their strategies mainly revolve around innovation, pricing, and adoption of the latest technologies. Nintendo has been the market leader for a long time but was outdone with the entry of Sony’s Playstation, which produced more advanced gaming consoles and thus extending the gaming age bracket. Since the entry of Sony, the companies have relied much on new technology to build their customer numbers. The Wii produced in 2006 and 2007 were completely sold off, and the cumulative sales by 2008 were much higher compared to the other two major firms in the video gaming industry.

However, overall company sales began to fall in the second quarter of 2008. The decline was in both handheld devices such as the Nintendo DS and also in the console segment. Analysts attributed the fall to decreased spending by households due to the ripple effects of global recession and rising fuel prices. The recession and rising fuel costs adversely affected the US and other developed nations that were the main markets for the video gaming devices. Nintendo however decided to proceed on with its innovative strategies to consolidate its presence in the market.

Nintendo also over depends on third-party providers who account for approximately 90% of Nintendo’s video game releases. The company sometimes finds itself in conflict with these third party providers. For instance, between 1996 and 2005, the company had an issue with third party providers for trying to cab video game-related violence. Many of the issues have since been sorted out, but their potentiality remains a big threat to the company.