Wii Innovate. How Nintendo created a New Market through the Strategic Innovation Wii

Bachelor Thesis , 2009 , 128 Pages , Grade: 1,3

Business economics - Offline Marketing and Online Marketing

In the year 2009, Nintendo was placed fifth in the BusinessWeek’s ranking of the world’s most innovative companies. This confirms Nintendo’s significant rearrangement into an innovative design powerhouse that redefined the predominant business value factors of the video game industry. However, a few years ago no analyst would have anticipated that Nintendo would develop in this direction.

Until the mid-1990s, the global home video game console industry was dominated by Nintendo, a Japanese video game hardware and software manufacturer. Rivalry in this industry only marginally existed. This changed when Sony entered the market in 1994. By offering a console that was technologically superior, Sony outperformed the then-Nintendo console. Thereby new challenges arose for the Japanese company.

Nintendo lost its long lasting market leadership to the new entrant. Despite several trails to recapture market leadership during the end-1990s, Nintendo was stuck in second place. Instead of regaining market share, the opposite was the case when Microsoft, a computer software giant, joined the market in 2001. Nintendo’s market share slipped dramatically because they were not able to keep up the technological progress of its competitors. The former market leader fell back to the third place of the industry. Analysts of the video game entertainment industry even recommended that Nintendo withdraw completely from the highly competitive console market in order to concentrate on developing software.4 However, Nintendo refused to surrender, but they were in biggest need to recover market share.

Nintendo had a very different approach to strategy than Sony or Microsoft. Instead of competing for core gamers, Nintendo tried to expand the market and to win new customers. For Satoru Iwata, the president of Nintendo, the industry had been following a wrong path by only concentrating on core gamers, because the number of overall users was getting smaller and decreased its spending patterns. "You must know when not to follow the traditional way of thinking", Iwata argued. “For some time, we have believed the game industry is ready for disruption. Not just from Nintendo, but from all game developers. It is what we all need to expand our audience. It is what we all need to expand our imaginations.” Their new strategy was called 'Blue Ocean Strategy'.

Table of Contents

• Introduction
• Background and current situation
• Formulation of Objectives and Problem Area
• Disposition of the Thesis
• Designing a Competitive Strategy
• Create Competitive Advantage
• The Structural Analysis of Industries
• Generic Competitive Strategies
• Cost Leadership
• Differentiation
• Focus
• Sustainability of the Competitive Advantage
• Blue Ocean Theory
• Nature of Blue Oceans
• Value Innovation
• Analytical Tools and Frameworks
• The Strategy Canvas
• The Four Actions Framework
• The Eliminate-Reduce-Raise-Create-Grid
• New Product Development
• Introduction
• Innovation
• Opportunity Identification
• Design
• Testing
• Product Life Cycle Management
• The Video Game Entertainment Industry
• Market Demarcation
• History of Nintendo
• The Market that the Wii would face
• The Current Generation
• Recent Trends in the Industry
• The Need for Change
• Structural Analysis of the Home Video Game Console Industry
• A New Strategy
• Nintendo's Blue Ocean
• Development of the Wii
• Identifying Blue Opportunities
• Designing a Blue Ocean
• Testing the New Console
• Introducing the Wii
• Managing the Product Life Cycle of the Wii
• Review on success
• Conclusion
• Concluding Remarks
• Outlook

Objectives and Key Themes

This thesis analyzes the strategic innovation of the Nintendo Wii, focusing on how the company created a new market through its innovative approach. It aims to explore the competitive strategy behind the Wii's success, analyzing the company's use of Blue Ocean Strategy and its impact on the video game industry.

• The strategic innovation process of Nintendo Wii
• The application of Blue Ocean Strategy by Nintendo
• The impact of the Wii on the video game industry
• The importance of market analysis and identifying blue opportunities
• The role of product development and life cycle management in strategic innovation

Chapter Summaries

• The introduction provides background information on the current situation of the video game industry and formulates the objectives and problem area of the thesis. It outlines the structure of the thesis and sets the stage for the subsequent analysis.
• Chapter 2 delves into designing a competitive strategy, examining the creation of competitive advantage through various frameworks such as the structural analysis of industries and generic competitive strategies. It introduces the Blue Ocean Theory, exploring its key concepts like value innovation and analytical tools like the Strategy Canvas, the Four Actions Framework, and the Eliminate-Reduce-Raise-Create-Grid.
• Chapter 3 focuses on new product development, exploring innovation and opportunity identification as core aspects of the process. It discusses the design, testing, and product life cycle management of new products, providing a framework for understanding the development of innovative products.
• Chapter 4 dives into the video game entertainment industry, starting with market demarcation and a historical overview of Nintendo. It analyzes the market the Wii would face, the current generation of consoles, and recent trends in the industry. The chapter then explores the need for change in the industry, examining the structural analysis of the home video game console industry and Nintendo's Blue Ocean strategy. It details the development of the Wii, including identifying blue opportunities, designing a Blue Ocean, testing the new console, introducing the Wii, and managing its product life cycle. The chapter concludes with a review of the Wii's success.

Keywords

This thesis explores the strategic innovation of Nintendo Wii, focusing on the company's use of Blue Ocean Strategy and its impact on the video game industry. The key concepts explored include competitive strategy, value innovation, market analysis, product development, and product life cycle management.

• College: University of Applied Sciences Bielefeld
• Grade: 1,3
• Author: Jörg Ziesak (Author)
• Publication Year: 2009
• Pages: 128
• Catalog Number: V140601
• ISBN (eBook): 9783640498031
• ISBN (Book): 9783640497744
• Language: English
• Tags: Nintendo, Blue Ocean, Blue Ocean Strategy, Sony, Microsoft, Market Share, Innovation, Innovation Management, Strategy, Strategic Innovation Management, Iwata, Strategy Canvas, Marketing, Porter, Structural Analysis of Industry, English, Video Game Market, Gaming, Video Game, Product Development, Mauborgne, Chan Kim, Five Forces, 5 Forces, Three Generic Strategies, Cost-Leadership, Differentiation, Wii, New Market, Product Development Process, Value Curve, FHDW, Product Life Cycle, Value Innovation, Opportunity Identification, Design, Testing, Introduction, 4 P's, Marketing Mix, Four P's, Price, Product, Place, Promotion, Analysis, Corporate Strategy, Schumpeter