The Way of WiiAbstractThe worlds TV game consoles had been almost dominated by Sonys PS2 and Microsofts Xbox several years before the advent of Wii. They were more advanced than Nintendos GameCube which cost a little but still only had been sold 14.
6 million by March 31,2004 worldwide (Nintendo 2004 Annual Report).To compete with the two mighty rivals, Nintendo developed its original product Wii which was considered a revolutionary game console allowing people to simulate playing sports by waving a controller around. It was so attractive that was hot pursued by users since launched day. Depending on its low price, unique innovation of game operation and new marketing strategy, Nintendo achieved a phenomenal success in the market. By researching Wii on its development process, we could learn how the Blue Ocean Strategy was applied and its importance for a company.
This essay will through analyzing its design, process selection and marketing strategy to search a way to success in market competition. Though the Blue Ocean Strategy helped Nintendo captured a large pie of market share, it does has shortage. The strategy could be effective in a time, but could never be effective forever. Anyway, it was acknowledged that Wii has changed game rule of TV game console market. It is a breakthrough and a milestone, though there is discontentedness, whine even negative. Comparing with Sony and Microsoft, the two giant of game industry, Nintendos success was more due to its strategy.
So the question is which factor is more important for a business company between strategic and scientific and technological strength IntroductionNintendo and WiiNintendo is a well-known gaming company with its headquarters in Kyoto, Japan. Its products including games, TV game consoles and handheld game console are popular in the world. The classic NES was came from the company. The company purse customer-oriented policy to guide its products research and development. Wii is one of its products, a TV video game console, which released on November 19, 2006. As a seventh-generation console, the Wii primarily competes with Microsofts Xbox 360 and Sonys PlayStation 3.
Nintendo states that its console targets a broader demographic than that of the two others.[1] With a unique controller which you can wave around and simulate the experience of playing boxing or baseball or other sports. Nintendo??™s first generation video game console Blue Ocean StrategyA business strategy which was first proposed in the book Blue Ocean Strategy published in 2005, author by W. Chan Kim and Renee Mauborgne. The book illustrates the high growth and profits an organization can generate by creating new demand in an uncontested market space, or a “Blue Ocean”, than by competing head-to-head with other suppliers for known customers in an existing industry.
[2]Nintendos designBackgroundNintendo was in bad condition for the powerful competitors Sony and Microsoft were the dominated forces in the TV game console market. Both the two rivals are giant in consume electronics and business software. Nintendo is a primarily a video game company, but its performance was abysmal. Its latest released game console was GameCube, the same age with the Sonys PlayStation 2 and Microsofts Xbox but could not compete with them. To fight for shares of market, Nintendo decided to develop a brand new product which would defeat PS3 and the next generation of Xbox. Video-Game Battle (2007)design strategyThe concept of Wii was formed early in 2001, According to an interview with Nintendos game designer Shigeru Miyamoto, the concept involved focusing on a new form of player interaction. “The consensus was that power isnt everything for a console. Too many powerful consoles cant coexist.
Its like having only ferocious dinosaurs. They might fight and hasten their own extinction.”[3]It was a designed as “a new to the world product”. Otherwise, Nintendo has sufficient resources, no matter human sources or capital sources provide a much more stable context in which to develop this product innovation activity.
Developing in the domain for many years, Nintendo has it core competences to execute the product strategy.Nintendo found that the fixed game player were not reliable, they were prone to be attracted by Third-Party software and would change their sides anytime. It is not easy to keep shares of market solely rely on this group player and the profits from them are limited too. The better choice is to attract new players by designing a new game or even not a game software.The path of Wii design was not as flat as a pancake. The technology was involved. It took Nintendo two years to solve the wireless control problem which was the most difficult in the process redesigning the controller, took a year more to develop infrared indicator which worked in ideal environment and was interfered in highlight or sunlight condition.
[4]The stage of process selection was decided by three reasons. One of Blue Ocean Strategys defining characteristics is low cost. It indicates that “strategy is essentially a choice between differentiation and low cost. But when it comes to create blue oceans, the evidence shows that successful companies pursue differentiation and low cost simultaneously.”[5] The second is manufacturability. Typically, the easier the process technology is, the higher manufacturability becomes. The third is product life cycle. Generally, a game console could be sold for a long time.
the life span is over shortly after the launch of the next generation game consoles. Marketing strategySales of Wii roared after release. It proved the marketing strategy innovation Nintendo took for Wii is successful. There are several aspects attribute to the triumph.Firstly, the advent of Wii upset the traditional high value costs high and low value costs low, Wii gives users the different new experience of gaming by lower price. High performance-price ratio leads to high sales. Nintendo could do this was close related to its high-standard cost control.
At the very first, the planned selling price was 25,000 yen (about $211) and the finally price in America was $249.99, much lower than its competitors productions.[4] http://www.pcpop.com/doc/0/203/203489_all.shtmlSecondly, it protects its existing domain and expands into a new domain. A corporate-level strategy was taken.
For many years, most of the software developed by Nintendo was targeted at a younger audience and does not appeal to old gamers.[6] But Wii found another way that it targeted family, especially mothers. The core value of Wii is “integrate into family” instead of creating conflict at home.
It is said that the president of Nintendo even asked for adding functions like automatic cut off power of the console when the time set by parents is up. After a hot debate, finally, they decided keeping the record of play time but allow parents to check the record. [7] Through perfectly positioned targeted customer, Nintendo exploit the ability to create value from its core competences, which includes:??? Expanded the video-game market, attracting new users that would not have purchase a console.??? Attract a very profitable segment: One with a higher purchasing power than teenagers and what is more important, less likely to get pirate games.
??? Be the only player in that ???ease of use??? segment. So there is no need to aggressive discounts and to share the market with competitors. [8]The influence of marketing strategy on WiiThe marketing strategy on Wii caused two kinds of influences.The positive effect was obviously. Sales of Wii as well as sales increase speed were much faster than Xbox 360 and PS3.It seized the larger share of market at a alarming rate and created huge profit for Nintendo which was smaller and in a weak position for a long time in game console market competition.
Fig.4 Market share of Nintendo Wii and competitors Fig.5 Nintendo unit sales , Games and Consoles, 203-2008But the negative effect could not be ignored either. The first, the difficulty of developing game software for Wii was hard.
Being taken low price strategy, the hardware standard of Wii hampered third-party game studios developing the same high quality games compared to Xbox and PS3. Undoubtedly, it will fail to attractive players who pursue high quality games. The number of this group may be small but they are happen to be the core players who will continued to purchase game software from third-party game developers.
A games price is usually consisted of two parts. One is development cost and the other is profit sharing supported to third-Party by game companies. Hence the sales will directly influence the profit of game company. The lost of core players of Wii will cut the profit from the sales for Nintendo.
While this part is the main source of profit for Xbox 360 and PS3.The second, the differentiation between Wii and other game consoles was easily being copied. Depending on powerful scientific and technological strength, Sony and Microsoft absolutely are able to develop more accurate body-induction game controllers. The latest news shows Microsoft has launched its new generation controller named Kinect in the US on November 4th, 2010 and it can bring the same experience to users as Wii even without a controller.The challenge Nintendo faceHelped by Blue Ocean Strategy, Nintendo is ahead of Microsoft and Sony at the moment.But there are shortages of Blue Ocean Stratery.
It is also the problem Nintendo has to face.Blue Ocean Strategy needs the company lower a characteristic of its products under industrial standard. It seems benefit to lower cost, but it also could be a bottleneck for the product developing. The low-performance of Wii helped lower price which enhanced its competitiveness, but also caused third-party unwilling to develop more game software for it either.
Lack of games weaken Wiis attractiveness and is of no advantage for selling. The border of Blue Ocean and Red Ocean is not so clear. With more competitors enter the field, Blue Ocean will transform into Red Ocean.
The new domain will be a new battlefield for companies to compete. If companies were not prepared for the challenge, they will get into trouble in the process to explore the second chance of Blue Ocean. The Wii itselfA standard set of Wii includes a console, a Nunchuk, a Wii Remote. The Nunchuk was a successful design from man-machine engineering and aesthetic perspectives. Researching on patent documents shows there were many versions of Wii controllers during the developing process. The picture below is one of these versions. Fig.
6 One of previous version of Nunchuk designIt seems uncomfortable for taking comparing with the current product. The Wii Remote is the primary controller for the console. It uses a combination of built-in accelerometers and infrared detection to sense its position in 3D space when pointed at the LEDs within the Sensor Bar. This design allows users to control the game using physical gestures as well as traditional button presses. [9] Some remote controllers in design progressThere are more than 7 candidates of the design, seems Nintendo didnt know which one is the best either.
The rightmost in picture is current product.The significant contribution of Wii Just as the code name of the console “Revolution”, Wii revolutionized the idea of game. The original creation of operation mode gives people the new experience of playing game. It attracts a mass market of first-time game players, women, and older consumers not typically drawn to this form of interactive entertainment.
[10] Wii greatly expanded the domain of video game market. It is a milestone of game industry. Debate on Wii There are many debates on Wii. The fiercest may be about the game picture, for the game picture becomes more and more exquisite since TV-games appearance. However, the game picture of Wii still remains the level as NGCs five years ago.
The picture function was received negative criticisms and was whined by many users. But Nintendo defended this with its own point of view. “If the game is not interesting, no one will play no matter how exquisite the game picture is. We will consider advancing quality of game picture once the high definition TV is popular.”[4] Wii??™s graphic quality Ps 3??™s graphic qualityStrategy or scientific and technological strength Nintendos Wii created a miracle.
Regardless of finance, human source, suppliers etc are inferior comparing with its mighty competitors, depending on differentiation product strategy and marketing strategy innovation, it won the battle. So the question is which factor is more important for a business company between strategy and scientific and technological strength The outcome of market competition eventually depends on each competitors respective scientific and technological strength. The low-priced Blue Ocean Strategy may be effective for a time, but never effective forever. Nothing could improve the quality of products and reduce the products cost except for new technology. Over-reliant on strategy and omit the strength disparity with rivals will lead to being eliminated in market competition.
But there are too many examples of giant companies decline and go bankrupt because of poor strategy. Such as MOTO, once a leader of communication industry, now linger on in a steadily worsening condition. There are too many examples of small businesses evolved big companies attribute to successful strategy, such as Google. To conclude, it a waste of power without good strategy, it could not be a strategy without considering power. A correct strategy makes it possible to achieve great success at a low cost. And the core competence of the company will be enhanced during successful courses as well as strength So strategy is more important than scientific and technological strength for a business company just as what Wii show us.
[1] “Nintendo hopes Wii spells wiinner”. USA Today. 2006-08-15. http://www.usatoday.
com/tech/gaming/2006-08-14-nintendo-qa_x.htm. Retrieved 2006-08-16. [2] Kim and Mauborgne. Blue Ocean Strategy. Harvard Business School Press.
2005. [3] Hall, Kenji. “The Big Ideas Behind Nintendos Wii”. BusinessWeek. http://www.
businessweek.com/technology/content/nov2006/tc20061116_750580.htm. Retrieved 2007-02-02. [4] Business week–How the Wii came to be.[5] Harvard Bussiness Rivew- what is strategy–Blue Ocean Strategy.
page 76.[6] consoles.pdf –Nintendos status in 2004 -last row.[7] endless e-entertainment.
http://e3.endless.com.cn/html/tvgame/wii/news/2008-02/25/185908daa44f49d3c272ac.htm[8] Nintendos wii and the power of segmentation http://marketing.blogs.ie.edu/archives/2007/09/nintendos_wii_a.php[9] ????-wii-Wii remote.[10] Will Nintendos Wii Strategy Score http://www.businessweek.com/globalbiz/content/sep2006/gb20060920_163780.htm
