Disney Vs. Nintendo Part Two
Saturo Iwata had passed, but Nintendo moved forward, slowly phasing out the Wii U and preparing to launch their new top-secret gaming hardware.
Switching things up
Saturo Iwata had passed, but Nintendo moved forward, slowly phasing out the Wii U and preparing to launch their new top-secret gaming hardware that would come to be known as the Nintendo Switch.
Though Iwata was gone, he had worked on the Switch project until his death, and everyone from the Nintendo brass was well aware of the system's significance. The launch of this console had to be a success. What Nintendo released turned out to be a marriage of the features that made their hardware great. People loved Nintendo handheld systems and home consoles—so the Switch would capture both markets in one product.
Nintendo took feedback, evaluated what made their brand great, and gave the people what they wanted in the form of a system that a gamer could play on the go or docked to a TV—both of which could happen in a matter of seconds. Combining the handheld with the home console space would prove to be a wise move by Nintendo, as the Switch is on pace in 2024 to become the best-selling videogame console of all time at more than 139 million units sold as of December 2023.
A winning strategy driven by trust
Nintendo is notorious for making its products scarce upon arrival in the market. Many lament the coming of a special edition physical release of one of their products or the launch of a new console because it will inevitably be unavailable for months and even years. Those who are lucky enough to get a pre-order or have the money to spend hundreds of extra dollars on eBay are the ones who get to enjoy Nintendo's latest offerings for a significant period of exclusivity.
Many despise this scarcity approach the company takes. However, those same people who spew their hatred for the strategy on online forums will spend their money immediately to buy the product if given the chance. But why is this? The answer to the question is quite simple—Nintendo is beloved, and when you purchase a Nintendo product, you know what you are getting—quality.
Original Nintendo seal of quality
If you look at the back of a physical product released by Nintendo, you will see a golden seal that reads as follows:
Original Nintendo Seal of Quality
The significance of this graphic is lost on many people today; however, back in the 1980s, it carried significant meaning. In the '70s and '80s, purchasing a videogame for systems like the ATARI 2600 was a substantial monetary decision. These simple video games that people scoff at now were highly sought-after technology that every child wanted. However, one thing that gave parents pause was the prices of these games, which were astronomical.
Now, it would be one thing if a parent spent $40 (around $150 in today's equivalent) to get a game they knew their child would enjoy. The problem was that that usually was not the case a lot of the time. By the 1980s, ATARI's brand was no longer beloved or trusted. If you bought a game, it was a complete toss-up on if the thing was good or even worked. These were often rushed-out cash grabs that would leave you out half a day's pay, so people stopped buying, and ATARI died. Most investors believe that that would end home console video games. Luckily, Nintendo saw an opportunity and filled the void.
Where ATARI failed, Nintendo succeeded. Their benchmarks for quality control in the video game industry were unheard of. No game was released broken—when you bought Nintendo, you got what you paid for. Anything less than meeting this quality benchmark would be considered a great dishonor to the company's legacy, which was almost a century old in the 80s. When consumers saw the Original Nintendo Seal of Quality, they knew the game worked and might even be good.
While Nintendo couldn't guarantee that every game on their system would be great to play, they ensured the ones they made themselves were excellent—even groundbreaking. Not only were video games like Mario, Zelda, and Donkey Kong fun for everyone, they were innocent, beloved, and age-appropriate. Like Disney at that time, parents knew they could relax when they bought a Nintendo game because they were well-made and suitable products for everyone.
As the years pass, games released by Nintendo's developers are still considered superior, innovative, and even groundbreaking in game design. Those who play Nintendo first-party games rarely, if ever, even experience a glitch. People are willing to deal with the brutal scarcity strategy and buy into the Nintendo hype because they know what they purchase is quality. A quality that is often rooted in nostalgia for many of these same consumers. Like Disney films of old, they frequently take a person back to simpler, happier times, if only for a moment. They are also passed down from one older generation to a younger one, and that pattern persists with time as quality never wavers.
But unlike Nintendo, Disney would start to take that consumer trust, which is sacred in the success of maintaining legacy brands, and violate it.
Part three is coming next week!
This comparison between what Nintendo is doing right and what Disney is doing wrong has proven much more significant than we initially thought. We are still researching Disney and their numbers. Parts of this series are going to feel more like a retrospective, however, understanding the history of both these companies is quite important in grasping their current performances.
Having said that, we like Nintendo as a stock. We'll delve deeper into why later in this series, but we think it is a well-run company that is currently killing in the gaming and overall entertainment industry. We find their growth encouraging and their careful treatment of their intellectual properties commendable.
The Nintendo stock is experiencing a lot of interest and is still very affordable while also paying a quarterly dividend. Historically, it has been growing slowly due to the company's conservative nature, but it is consistently increasing nonetheless due to its excellent stewardship.
We look forward to telling you more about Disney and Nintendo in part three, which is coming out next week! Thanks for reading.
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