Saturday, June 16, 2012

Nintendo's Blue Ocean has Changed to Red

One thing we learned in researching Nintendo for our group project is that the company created a Blue Ocean when it released the Wii, and it enjoyed a period of prosperity wherein it dominated the video game industry due to the beginning of the casual gaming craze.  With the Wii, Nintendo expanded the gaming market to include parents and grandparents and others who traditionally had no interest in video games but then found them to be a new way to bond with family members and friends.  Expanding the market beyond hardcore gamers allowed Nintendo occupy the casual gaming area alone, reaping record profits while other companies scrambled to find ways to capture a slice of the bigger pie.  Unfortunately for Nintendo, the Blue Ocean it created did not last very long.  Only a few short years later, we have seen the casual gaming market move away from the Wii and onto more convenient or more advanced forms of gaming while Nintendo has been left in the dust.  According to an Industry Gamers article (linked below), “It is clear that the Wii audience is slowly shifting to either HD consoles or to social games, while it is equally clear that mobile game sales are cannibalizing handheld game sales.”

The reason for the audience’s shift in focus is mainly because Nintendo’s strategy has stagnated with the Wii and DS (Nintendo’s portable game console which was released in 2004).  While the Wii was a revolutionary advancement in video gaming in 2006, it did not experience long-term support and development.  Nintendo seemed satisfied to capitalize on the Wii’s success by selling a record number of consoles during the product’s growth phase, but the company did little to foster further innovation or to harness the support of third-party game developers once the Wii entered maturity.  Fast forward six years and the Wii is all but a dead console, with developers largely having moved on to social and mobile gaming on Apple products, as the article suggests.  The DS, on the other hand, is simply no match for the convenience and affordability of Apple devices like the iPhone, which allows gamers to play many games for $0.99 and less.  The negligence of the Wii by both Nintendo and third-party developers has halted any apparent progress or momentum the console had; consequently, Nintendo’s weak strategy may seep into the upcoming Wii U’s release as many consumers and developers have increasingly negative perceptions of the company due to its failure to sustain the momentum it created in finding a Blue Ocean.

Had Nintendo invested more in the Wii and DS after their releases so as to garner steady interest from consumers, and as a result, consistent support from software developers, the consoles may have had better fates.  By comparison, the Microsoft Xbox 360 and the Sony Playstation 3 still experience consistent sales and have the continued support of almost every major software developer.  Not to mention, Microsoft and Sony have offered many additional features and services with their consoles beyond just games.  This kind of long-term support for a console is crucial to not only the success of the console but also to the company and all its future products.

In the Red Ocean that is the video game industry today, where consumer perception is so critical to long-term success, is Nintendo in a position to capitalize on past successes with the release of the Wii U, or has it lost so much goodwill that the next console will inevitably flop due to inconsistent support?

Industry Gamers article:

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