Wednesday, June 23, 2010

Case study: Blue Ocean Strategy - Nintendo Wii

Nintendo’s successful Wii game console is an example of a multi-sided platform business model pattern.

Let's look at how Nintendo differentiated itself from competitors Sony and Microsoft XBOX from the standpoint of Blue Ocean Strategy.
Compared to SONY Playstation and Microsoft XBOX, Nintendo pursued a fundamentally different strategy and business model with Wii. The heart of Nintendo strategy was the assumption that consoles do not necessarily require leading-edge power and performance. This was a radical stance in an industry that 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.
With the Wii Nintendo brought to market a console that technologically underperformed rival console, but boosted the fun factor with new motion technology.Players could control the game through a controller simply through physical movement.
The Wii was an immediate success with casual gamers and outsold its rivals focused on traditional market of “hardcore”.
Nintendo new business model has the following characteristics: 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; elimination of state-of-the-art chip development and increased of use of off-the-shelf components; reducing cost and allowing lower console prices; elimination of console subsidies resulting in profit on each console sold.

Recently, Microsoft XBOX has released a motion controlled device, the Kinetic. The device added to the XBOX, and the game will be controlled by the gamers body...

references: businessmodelalchemist, Alex Osterwalder


  1. Nice casetudy...The right question for Nintendo now is how to continue and stay in the blue ocean when competitors are coming. Sony has developped a Wii-like remote called PS move,and as you've mentionned, Microsoft provides now Kinect,a full body experience. But competitors bring theses features too late to be competitive, Nintendo has to provide new experience to continue its growth.
    This has changed the life cycle of every consoles. Usually, life cycle is around 5 full years + 1 or 2 years for the leader of each generation. It will be 5 years for the Wii at the end of this year,will Nintendo introduce a new system ? Sony and Microsoft have just released their response to the Wiimote,will they suddenly change their system to introduce the new ones ? Or will they give a chance to their new features to sell ? it is possible for these two,to see two different systems : one for casual gamers with PSmove and Kinect and the others for core gamers,but this is very challenging for a company to succeed with that many systems on the market,I don't believe it. The only possibility for Sony and Microsoft is too bring retrocompatibility between Xbox360/PS3 and the further system,which was not really the case with the previous generation because of technical issues. We'll have probably more information about the strategies at next E3,in Los angeles end of spring.

  2. thanks Adlene for the detailed & interesting infos.
    I agree it's becoming challenging now for Nintendo as competition has turned the blue ocean bloody.

    Let's try to help Nintendo with some more strategy ideas...