Why is it a good option to buy Nintendo shares? In the following article, we describe the Japanese video game company in detail; its history, how it was reoriented towards this sector, why it is a very affordable option, and how to invest in the Japanese brand. We start:
What is Nintendo?
We all think of Nintendo when hearing that famous jumping plumber from video games: Marios Bros.
Nintendo is a Japanese company that makes consoles and video games and has amazing games that (almost) all of us have played. Its best-known consoles are the Super Nintendo Entertainment System, the GameBoy and the Wii.
But as we know the brand today, it has little to do with what it was in its beginnings. I will tell you more about the history of Nintendo and how it came to be what it is today.
The creation of a brand
Nintendo was born in 1889 in Kyoto, Japan, but it wasn’t until almost 100 years ago, in 1977, that it made its first console.
The history of Nintendo was not as we imagined. At first, it was a company focused on leisure and entertainment and produced a type of traditional Japanese playing card. These cards were made by hand, and due to their high demand, their owner Fusajiro Yamauchi had to hire a lot of staff, thus creating a distribution company in 1930. Thus, it became Japan’s first and most crucial playing card company.
But, its owner was already very clear about his business idea, and it was to start promoting his brand and expanding. To do this, he teamed up with Walt Disney in 1951 to make card games with characters from the factory. Thus, it also opened the market to children.
Nintendo goes public
Its need for diversification led it to be listed on the Osaka Stock Exchange in 1962, becoming a public company: Nintendo Company, Ltd. and in 1964, it had revenues of 150 million yen.
From this year until 1970, he had great difficulties.
The reason?
The dependence of the children’s public, the exhaustion of card games, the drop in demand for its traditional cards, and the failure of new businesses such as taxi chains and love hotels did not make Nintendo come back afloat.
Their reality was dependence on the only source of income from the manufacture of toys, which they did know how to exploit. Nintendo has always been characterized by developing its own ideas and creating exclusive toys that could not be seen in other brands, nor was it limited to copying American toys.
Despite Japan’s rise at the 1964 Tokyo Olympics, Nintendo was not so lucky, and its shares plunged to 60 yen from their all-time high of 900 yen.
The big change for Nintendo
In the 70s, the story changed. Years before, he began to develop his own ideas with incredible results, such as the Ultra Hat game, and gradually made a name for himself in the toy industry, taking his most important step in 1970: the first electronic toy, Nintendo Bean Gum, which sold more than 1 million units, beginning to be listed on the main section of the Osaka stock exchange.
These were followed by a host of other successful games leading the company to open its New York subsidiary in 1979 and create a new Arcade Products department. Two years later, in 1981, we would meet the Donkey Kong Jumpman, who would become the brand’s icon.
In 1983 the video game crisis arrived due to market saturation due to the emergence of other creators. What it caused was a recession and a drop in income. This coincided with the release of the Famicom family console, which was redesigned as a cartridge-compatible entertainment system. From this was born the Nintendo Entertainment System (NES) and its seal of quality to prevent it from being hacked.
The betrayal of PlayStation
At the end of the 80s, Sony and Nintendo signed an agreement to make the definitive console combining cartridge and CD ROM technology. But in 1991, Nintendo said it would do it with Philips, Sony’s number 1 rival. Sony’s reaction was to make the console without them and cartridges, creating the PS1, being a great success and sales leader, leaving Nintendo and Sega light years away.
Nintendo’s rebirth
Nintendo returns to its beginnings, regardless of what its competitors did. They took up the idea of the Famicom as a family brand, emerging with the Wii in 2006, a living room console to play in a group. They saw this need in the market and took advantage of it. It has sold more than 100 million devices.
Then came the Nintendo Switch, a hybrid between a tabletop and portable console, selling 111 million consoles. It is clear that Nintendo had its ups and downs, but it knew how to find a place in the market’s needs.
Why buy Nintendo stock?
Although we are experiencing a global downturn in the video game industry, Nintendo is in good shape to launch its Pokemon game, Scarlet and Purple, which has become the brand’s best-selling game. Its success has generated a rise in the stock market for Nintendo, revaluing its shares by 11%.
Already in September, it achieved a maximum of sales with the launch of Splatoon 3, which Pokemon surpassed, and for May, they have planned another launch of which they hope to be sales leaders and the company’s subsequent success.
But the outlook for the sector looks quite dark due to the supply crisis due to the Russian war, and Nintendo Switch sales are in jeopardy as a result. In the 3rd quarter of the year, its sales fell by 3% compared to the previous year and 6.3% compared to the previous quarter.
The pandemic, the drop in the Yen and its plans for the future
Video games and consoles had a boom in the pandemic with the confinements. Now the industry is normalizing.
But do not let it pass that the yen has lost a fifth of its value in relation to the dollar, reaching the lowest price since 1990. The Yen’s depreciation has affected its hardware business’s profitability, which may lead to a rise in prices.
Now Nintendo is expanding its market, creating amusement parks and apps and getting into the cinema, so it shows great potential, and its long-term approach is positive.
How much do you pay for dividends?
Because Nintendo is a leading company in the world of video games, it has been a popular choice for investors for many years. And it is that, like any mature company, many people choose to buy Nintendo shares because the company has an attractive semi-annual dividend plan.
In general, Nintendo offers a semi-annual dividend of around 3%. This can be an attractive way to generate passive income through your Nintendo investment. Thus, its next dividend, scheduled for March 2023, will be 3.10%
A minimum lot of Nintendo shares
If you are interested in buying Nintendo shares, it is essential to note that the company only allows the purchase of shares in packages of 100 shares. You must do so in increments of 100 shares at a time to buy Nintendo shares.
Who are Nintendo’s main competitors?
Nintendo is a leading company in the world of video games. However, this is a highly competitive sector with other leading players, making video games a world evolving by leaps and bounds in terms of excellence. Let’s take a look at some of Nintendo’s main competitors:
- Sony (6758.T): Sony is another leading company in the gaming world, offering a line of video game consoles, such as the PlayStation, that directly competes with Nintendo’s line of consoles, such as the Nintendo Switch.
- Microsoft (MSFT): Microsoft is also a major player in the world of video games, offering its own line of video game consoles, such as the Xbox, which competes with Nintendo’s line of consoles.
- Apple (AAPL): Although Apple is not primarily known for its video games, it has begun to enter the mobile gaming market through its App Store and offering exclusive games for its iOS devices.
- Activision Blizzard (ATVI): Activision Blizzard is a leading company in the world of video games, offering a wide variety of games for consoles and PC. Although it doesn’t compete directly with Nintendo in consoles, it does compete with the company in individual games and game franchises.
Where to buy Nintendo shares?
That said, several brokers meet all the seriousness requirements and are not a financial stall waiting for inexperienced and unsuspecting investors. In this way, the investment options are various, from just buying their shares to investing through price difference contracts and CFDs.
