Wii Innovate - How Nintendo created a New Market through the Strategic Innovation Wii (ePub)

Bachelor Thesis from the year 2009 in the subject Business economics - Offline Marketing and Online Marketing, grade: 1,3, University of Applied Sciences Bielefeld, language: English, abstract: 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'.