One of the articles for this week talks about the Blue Ocean Strategy, which suggests that an organization should create new demand in an uncontested market space (Blue Ocean), rather than compete head-to-head with other companies in an existing industry (Red Ocean). In the video gaming industry, most companies like Sony (Playstation) and Microsoft (Xbox 360) have been locked in a Red Ocean, trying to beat the competition and gaining market share. Nintendo on the other hand is trying to make the pie bigger and striving to make the competition irrelevant.
Nintendo initially came out with a gaming product, GameCube, to compete against Sony’s PS2 and Microsoft’s Xbox 360. However, its competition had already gained too much ground in terms of technological superiority and Nintendo had a lot to catch up to. Its competitors were selling in the lucrative market (age 18-34) whereas GameCube was targeted towards the age 7-16 market (which was only one third of the video game industry market). To succeed in the gaming industry, it needed a huge change in its strategy and market focus.
In order to accomplish this, it focused on recognizing its mistakes and making radical changes to its strategy. The three main changes are outlined below:
- Game-Play: They changed their focus from the technological race towards a more user-oriented strategy – wireless controllers and other accessories like shield & sword, fishing rod, etc. made the controls more realistic and the experience much more fun.
- New Consumers: Realizing its mistake of aiming only at younger consumers, Nintendo now decided to venture into the “casual gamers” category, reaching far beyond the hard-core gamers, which were targeted by PS3 and Xbox 360. Being praised as a means for physical therapy, it was also prescribed by doctors to regain strength and help with rehabilitation of certain injuries.
- New Approach: Since casual gamers are not as interested in high definition as the hard-core gamers, Nintendo decided to reduce their processor costs. It provides game packs such as its sports package, which includes a variety of games, allowing hours of fun and entertainment for gaming with family and friends.
Years into the current generation gaming battle, Nintendo with its Wii is so far the winner. In the U.S, Nintendo and Microsoft are having a head-to-head battle. However in other countries such as Japan, Nintendo is the outlier. So, how long will this last? What strategy does Nintendo need to implement now so that it can maintain its dominance and pre-empt strong competition in the near future?
Wii: Creating a Blue Ocean The Nintendo Way – Patricio O’ Gorman(http://www.palermo.edu/economicas/cbrs)