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A Case Study of Nintendo about the digital business model Long-Tail and the Drivers of digitalization

Written by T. Engel

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Term Paper


Business Administration>Communication & Media




What is a digital Business Model? A digital business model leverages digital technologies to improve numerous aspects of an organization. Starting from the process of how a company connects with its customers, to the way they provide value with the company`s product or service. Digitalization requires to look at business in different ways with the customer at the center of all processes. Once digital technology helps to enhance the value proposition, it can be regarded as a digital business model, this happens by providing the upside without the downside.(Cuofano,G,2020) The Long-Tail ModelOne of the typical blueprints of digital business models is the long-tail model. The long tail is a business strategy that generates revenues through a "long tail" of niche products. This allows companies to obtain significant profits by selling low quantities of hard-to-find items to several customers, rather than selling large volumes of a few popular items.Separately, the niche products neither demand high volumes nor urge a high margin. The resulting profits of a lot of small sales combine to a meaningful amount of revenue, by the vast variety of niche products sold.(BMI Lab AG, 2020) Drivers andConsequences of Digital Transformation: Three Drivers of Digital Transformation have a strong impact on the Long-Tail business Model. Firstly the pure increase in worldwide internet usage. The usage percentage of people in Industrialized countries grew around 30 percentage points over the last 15 years, reaching almost 90%. (International Telecommunication Union,2020)Secondly, Cloud computing is the delivery of on-demand computing services. Companies borrow access from a cloud service provider, rather than maintaining their computing infrastructure or data centers. The advantage for firms is to avoid the upfront cost and complexity of owning their individual IT infrastructure. (Ranger, S., 2018)Lastly, Big Data opens innumerable possibilities to obtain insights that stimulate innovation. An increase in Data Volume, Velocity, and Variety over recent years enables reliable forecasting and sophisticated operational efficiency. Driving the development of more desirable new products.(Oracle, 2020) Case Study Nintendo To show the effect of the digital Drivers this paper takes a look at the Case of Nintendo and their incorporation of the long-tail business model.Nintendo is a Japanesemultinational video game company. Founded in September 1889, it formerly produced handmade playing cards. By 1963, the company had tried several small niche businesses, such as cab services and love hotels. Abandoning prior ventures in the 1960s, Nintendodeveloped into a video game company. Establishing its position as Japan's third most-valuable company with a market value of over $85 billion. (BMI Lab AG, 2020)Nintendo develops a broad variety of games for its game consoles. The games are not all produced by Nintendoitself but also by third-party companies. All games have to be approved by Nintendo to run on the consoles. This enables Nintendo to target different age groups and genres with their product offering. (BMI Lab AG, 2020)The improvement of cloud computing options helps tosupport the development of games by Nintendo and third-party partners. Adding more variety of games to their network. By reducing the barrier of IT-Structure development is gets easier for Indie-Game developers to work on their titles for Nintendo.(Bahirat, T.,2020) Addingto all aspects of this Industrie is the increase of Big Data which nurtures both the development process as well as strategy and customer acquisition making more niche products more profitable.(Rands, K.,2018) Read Less