Discussion Board Post 3

Binary Intelligence

Andrew Young & Justin Redfearn

“The keys to unlocking your success”

Satoru Iwata, President & CEO of Nintendo and Nintendo of America

“The key here is not what you are playing but how you

will be playing”

“The game has changed, ... and the way the game is played has to

be changed”

“We Need To Redefine What Nintendo Must Do”

http://upload.wikimedia.org/wikipedia/commons/3/3d/Satoru_Iwata_-

_Game_Developers_Conference_2011_-_Day_2_%281%29.jpg

The team that’ll bring the change Nintendo needs

• Andrew Young, MBBS student

• Justin Redfearn, MBBS student

Environmental Scanning

• Nintendo Co., Ltd. is an international entertainment business that operates within the video game industry.

• The chief goal of Nintendo is to provide their consumer’s with immersive, quality, family-friendly video games and video game consoles.

• Based on the hardware sales of the Wii U, Nintendo’s latest home console, Nintendo is ahead of Microsoft’s Xbox One but behind Sony’s Playstation 4.

Environmental Scanning (cont.)

• Nintendo has business opportunities that involve smartphone and or tablet utilization, entering new, foreign market, cloud gaming, and virtual reality peripherals.

• After Nintendo’s successful, pioneering console, the Wii, a virtual reality (VR) peripheral in the form of a headset would be the logical next step.

• Sony and Oculus Rift are some companies right now that have given VR peripherals credibility, as well as appeal.

Environmental Scanning (cont.)

• Sony and Microsoft released their eighth generation consoles, the Playstation (PS) 4 and Xbox One respectively, by the end of 2013. Both consoles have been selling at a pace far greater than that of Nintendo’s Wii U.

• With the latest generation of home game consoles comes with it increased technological capabilities.

• Majority of the technological advances made thus far in eighth generation home consoles have solely been tangible in Sony’s PS4 and Microsoft’s Xbox One, like live streaming capabilities.

Challenges and Solutions

• Binary Intelligence’s solution to Nintendo’s recent decline is for Nintendo to research, develop, and manufacture their very own virtual reality headset.

• With the resources available at Nintendo, we believe that Nintendo could have their own VR headset to consumers quicker than most of their competitors.

Strategy Formulation• The solution we have proposed will impact multiple aspects

of Nintendo’s operations and sales and marketing departments, like business structure and staffing.

• To resolve these various impacts, we believe that it will be fundamentally essential for Nintendo to prudently allocate its workforce, as well as expanding some of its departments.

• Majority of the expenses Nintendo will face are costs associated with: staffing, product development (including marketing, publicity, and manufacture of the product), department expansion, facility apprehension.

Strategy Formulation (cont.)• Communication of the VR peripheral to consumers will be

achieved through grassroots and viral marketing campaigns. Examples of these campaigns are listed below:

• Nintendo will produce and release a sharable video through YouTube, which contains “off-the-wall” content that strays from what the audience expects from Nintendo.

• Nintendo will deliberately and stealthy place life-sized iconic Nintendo objects in public parks around the world. On these objects is both a QR code and a website link that’ll lead curious folk to a teaser site for the VR headset.

Strategy Formulation (cont.)• Presently no legal restrictions surrounding the usage of VR peripherals.

• Majority of the risks that come with VR headsets is their effect on the player, such as external sensory inhibition and motion-reliant concept.

• We urge Nintendo to pursue exclusionary insurances to limit the company’s liability towards the above risks.

• Although the technology is fledging, companies like Sony and Oculus Rift have VR headsets that are most certainly patent-protected.

• We urge Nintendo to pursue patents for their own VR headset to avoid legal clashes with competitors and to protect their own device from copyright infringers.

Strategy Formulation (cont.)• We at Binary Intelligence aspire to promote ethical codes and social

responsibilities. As such we would like Nintendo to withhold their corporate code of ethics when it comes to the proposed VR headset.

• Recycled materials should be used in the packages for the final VR headset.

• Offensive content, or content that could be perceived as such, should be avoided at all costs.

• Legible notifications relevant to presumed risks that come with the device, and health-conscious recommendations and advice will be present on the package as well as on the device itself.

• A physical instructional booklet will be replaced with a digital counterpart.

Financial Data Analysis

PRICE/

EARNINGS RATI

PRICE

EARNINGS GRO

CURRENT RATI

O

DEBT TO

EQUITY

RATI

GROSS

PROFIT

MAR

EARNINGS PER SHARE

NINTEND

ON/A N/A 8.77 N/A 0.29 2.69

SONY 18.9138%0.90 0.39 0.23 87.93

MICROSOFT

15.062.19%3.22 0.24 0.70 13.31

Ratio Analysis Chart

Financial Data Analysis (cont.)

Nintendo Stock Price Over Last Three Years

Stoc

k Pr

ice

In U

SD D

olla

rs

$0

$5

$10

$15

$20

$25

$30

$35

1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37

$28

$24

$19 $18 $17$19

$14 $14 $15 $16

$13 $13 $14$16 $15 $16 $15 $15 $14

Financial Data Analysis (cont.)

Nintendo Assets

Cash & DepositsShort-term InvestmentsNotes and Accounts ReceivableInventoriesDeferred Tax AssetsProperty, Plant and EquityInvestments and Other AssetsIntangible Assets

Financial Data Analysis (cont.)

Cash Flow After Investments

Cash required for investment in VR peripheralCash left after investment

Financial Data Analysis (cont.)

Current cash flow compared to projected income from VR peripheral

Current Cash FlowProjected Income from VR peripheral

Strategy Implementation

• The strategy we have in mind for Nintendo’s proposed VR peripheral lasts for three years, and is executed in three different phases.

• The length of this strategy is intended to maximize the quality of the final product.

Strategy Implementation (cont.)

Year 1

DATE/TIMEFRAME EVENT/MILESTONE

JANUARY Allocate the funds to begin process

JANUARY Hire a team of experienced personnel

FEBRUARY Commence technological research

DECEMBER Have a working prototype

DECEMBER Manufacture the first run of the prototype

Strategy Implementation (cont.)

Year 2

DATE/TIMEFRAME EVENT/MILESTONE

JANUARY Send prototype to game developers

JANUARY Begin Beta Testing

AUGUST Make alterations/improvements to prototype

DECEMBER Finalize the product to be manufacture

DECEMBER Research Manufacturers

Strategy Implementation (cont.)

Year 3

DATE/TIMEFRAME EVENT/MILESTONE

JANUARYChoose a manufacture and begin

production

MARCH Media event announcing the release

MAY Being marketing campaign

JUNE Take pre-orders for the VR peripheral

OCTOBER Release date for the peripheral in stores

Strategy Evaluation

• Two different methods of observation will be utilized to ensure the progression and successful execution of the strategy we’ve conjured.

• These two different methods consist of daily, weekly, and or monthly objectives and the amount of funds spent.

Conclusion• The purpose of this proposal is to influence the members

of the Board of Directors at Nintendo Co., Ltd., to exploit the popularity that virtual reality peripherals, especially VR headsets, are presently experiencing.

• We believe this proposal is befitting of Nintendo Co., Ltd. and its products because Nintendo has always been the premium, pioneering company in the video game industry.

• The benefits that Nintendo will witness firsthand is that of an increase in: corporate profitability, brand appeal, brand recognition, and company strength.

Thank you for your attention and presence. It is at this point that we’ll be accepting

and answers any questions you may have.