Nintendo's Wii Strategy
Nintendo has pursued a fundamentally different strategy and business model with the Wii console than that of its competitors, the Microsoft Xbox 360 and Sony PlayStation 3. The heart of Nintendo’s strategy was the assumption that consoles do not necessarily require leading-edge power and performance. This is a radical stance since the gaming industry traditionally competed on technological performance, graphic quality, and game realism: factors valued primarily by die-hard gaming fans. Nintendo shifted its focus to providing a new form of player interaction targeted at a wider demographic than the traditional avid game audience.
Nintendo’s new business model has the following characteristics: 1) a shift from hardcore to casual gamers, which allowed the company to reduce console performance and add a new element of motion control that created more fun; 2) elimination of state-of-the-art chip development and increased use of off-the-shelf components; 3) reducing costs which allowed lower console prices; and 4) elimination of console subsidies resulting in profit on each console sold.
Nintendo’s current strategy for the Wii, which is known as a “Blue Ocean” strategy, has led the product to become the market leader in sales of game consoles. The extra functionality and features appeal to diverse areas of the market such as health conscious people, seniors and families. With its blue ocean approach, Nintendo has found a niche in the market and is successfully exploiting it.
1.2 Problem Statement
It is unknown how far the gaming market could expand, and it is considered to be high risk that Wii is focusing on the new gaming market but not the core gaming market. Consequently, Nintendo is facing significant challenges including:
1) How to continue to expand its customer base;
2) How to maintain its current customer base; and
3) How to defend its market from its rivals. 2.0 ANALYSIS AND EVALUATION
2.1 External Analysis
The video game console industry can
Nintendo’s new business model has the following characteristics: 1) a shift from hardcore to casual gamers, which allowed the company to reduce console performance and add a new element of motion control that created more fun; 2) elimination of state-of-the-art chip development and increased use of off-the-shelf components; 3) reducing costs which allowed lower console prices; and 4) elimination of console subsidies resulting in profit on each console sold.
Nintendo’s current strategy for the Wii, which is known as a “Blue Ocean” strategy, has led the product to become the market leader in sales of game consoles. The extra functionality and features appeal to diverse areas of the market such as health conscious people, seniors and families. With its blue ocean approach, Nintendo has found a niche in the market and is successfully exploiting it.
1.2 Problem Statement
It is unknown how far the gaming market could expand, and it is considered to be high risk that Wii is focusing on the new gaming market but not the core gaming market. Consequently, Nintendo is facing significant challenges including:
1) How to continue to expand its customer base;
2) How to maintain its current customer base; and
3) How to defend its market from its rivals. 2.0 ANALYSIS AND EVALUATION
2.1 External Analysis
The video game console industry can
Cited: Arthur A. Thompson Jr, . A.J. Strickland III, and John E. Gamble. "Crafting & Executing Strategy: The Quest for Competitive Advantage, Concepts and Cases." 240. New York: McGraw-Hill, 2010. Dob, Sami. "Case study: Blue Ocean Strategy - Nintendo Wii." Business Models & Innovation Strategies. 065 23, 2010. http://samidob.blogspot.com/2010/06/casetudy-blue-ocean-strategy-nintendo.html (accessed 01 18, 2012).