Wednesday, June 19, 2013

Did Nintendo do the right thing?


For years, Nintendo fought a dismal battle against other game console competitors such as Sony and Microsoft. By 2005, Nintendo was labeled as a “has been” in the industry. However, similar to Cirque Du Soleil, Nintendo fought back by finding a new target audience. Instead of continuing to bleed in the red ocean, they found a new, blue one! This new audience included people that were not in the traditional gamer market. Some of the targeted people may have been gamers before, but lost interest as they became older and different responsibilities took their interest elsewhere. They also wanted to attract online gamers that played somewhat easy internet games. This crowd was female and male and varied in age. The new audience would also target older people with money that would want to pay for an entirely new game system. This new target market was called the “casual gamer” audience. Before the Wii, they were not a sought-after group.

When Nintendo announced its new strategy through the Wii, analysts questioned whether this new, creative approach would work. In a way, Nintendo was jumping ship and abandoning the small, yet committed followers of serious gamers. However, in 2006, Nintendo had the delight of storming its competitors and making a dynamite success.

For the next several years, Nintendo was used as an example of how to forge on when business looks bleak. They fought a tough fight not by finding a new way to steal existing customers, but by attracting new ones in a completely different method, just like Cirque Du Soleil won over customers not by stealing existing circus enthusiasts, but by creating something that would attract outsiders.

The Wii was something revolutionary. Its sleek, clean look was non-threatening. Its remote, which resembled a TV remote, was simple and easy to use. Users could essentially wave their arms in the air to play a game. This new system was not intimidating and welcomed new users by making the steps to play a game fun and extremely user-friendly.

While opening up the floodgates to the casual gamer community seemed like the golden answer for Nintendo’s financial longevity, operating cost, along with other financials, plummeted in 2012. While some may argue that Nintendo is fine and has another trick up its sleeve, others believe it’s the start of Nintendo’s end.

Apparently, the disenchanted hardcore gamers that were forgotten have since left Nintendo’s market since their needs are no longer met there. They seemed to not be the market Nintendo wanted or needed for financial success.

 However, time has revealed that committed gamers are the primary ones that perpetuate the game console industry by continually buying games and consoles. The casual gamer market is not as committed. Although casual gamers may initially spent a lot of money on the Wii and its games, they did not continue to do so because they lack the interest.

With this consequence in mind, should Nintendo have changed audiences in 2005/6? Should they have left closed their doors and ended business? Or should they have found a way to steal customers from their competitors and bolster sales amongst the traditional gaming community?
 

References:

The Whole New World: Nintendo’s Targeting Choice by Alexander Rusetski, Ph. D. , Journal of Business Case Studies



Interviews with Dominic M. and Christopher C.

Blue Ocean Strategy  by Kim and Mauborgne, Harvard Business Review

 

 

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