Wii
Nintendo’s new Wii video game console is now out-selling all other consoles combined. Why? Because Nintendo focused every aspect of the Wii’s design on growing the market.
To quote Nintendo’s President, Satoru Iwata, in designing the Wii, “We're not thinking about fighting Sony, but about how many people we can get to play games. The thing we're thinking about most is not portable systems, consoles, and so-forth, but that we want to get new people playing games.” [emphasis added]
To accomplish this objective, Nintendo couldn’t just do the same thing its competitors were doing. It had to do something really different – something that made video games fundamentally easier to learn and play – and offer it at a more-affordable price point. This is a classic example of blue ocean strategy, as others have noted.
Being “really different” is extremely beneficial to establishing new industry standards – as Bill Gates, the all-time world champion standard-setter, made clear long ago. The novelty, elegance, and simple power of Nintendo’s motion-sensing Wii controller have garnered impressive PR, with YouTube flooded by consumer-generated videos of the Wii remote in action.
Nintendo’s success in out-selling its competitors is amazing enough, but what’s even more impressive is that Nintendo makes a direct profit of $50 on each console it sells. Sony and Microsoft each lose money on their consoles, hoping to make it up through per-game license fees from third party game developers. But because Nintendo’s Wii console is outselling all of its competitors, it is also the most attractive platform for third-party game developers – so Nintendo will tend to make more money in licensing fees from these game developers, too.
Any way you slice it, Nintendo’s blue-ocean strategy of growing the market is trouncing its competition.
Meanwhile, the music products & lesson industries are, together, almost as large as the video game industry (2005 data). Thumtronics can do in the music products & lesson industries exactly what Nintendo has done in the video game industry – grow the market with products that are cheap, simple, and fun, and capture that growth with intellectual property.
The success of Nintendo is a ringing endorsement of Thumtronics’ strategy.
To quote Nintendo’s President, Satoru Iwata, in designing the Wii, “We're not thinking about fighting Sony, but about how many people we can get to play games. The thing we're thinking about most is not portable systems, consoles, and so-forth, but that we want to get new people playing games.” [emphasis added]
To accomplish this objective, Nintendo couldn’t just do the same thing its competitors were doing. It had to do something really different – something that made video games fundamentally easier to learn and play – and offer it at a more-affordable price point. This is a classic example of blue ocean strategy, as others have noted.
Being “really different” is extremely beneficial to establishing new industry standards – as Bill Gates, the all-time world champion standard-setter, made clear long ago. The novelty, elegance, and simple power of Nintendo’s motion-sensing Wii controller have garnered impressive PR, with YouTube flooded by consumer-generated videos of the Wii remote in action.
Nintendo’s success in out-selling its competitors is amazing enough, but what’s even more impressive is that Nintendo makes a direct profit of $50 on each console it sells. Sony and Microsoft each lose money on their consoles, hoping to make it up through per-game license fees from third party game developers. But because Nintendo’s Wii console is outselling all of its competitors, it is also the most attractive platform for third-party game developers – so Nintendo will tend to make more money in licensing fees from these game developers, too.
Any way you slice it, Nintendo’s blue-ocean strategy of growing the market is trouncing its competition.
Meanwhile, the music products & lesson industries are, together, almost as large as the video game industry (2005 data). Thumtronics can do in the music products & lesson industries exactly what Nintendo has done in the video game industry – grow the market with products that are cheap, simple, and fun, and capture that growth with intellectual property.
The success of Nintendo is a ringing endorsement of Thumtronics’ strategy.
Labels: blue ocean strategy, grow the market, Nintendo, Thummer, Wii
posted by JimPlamondon | 12:24 PM
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