Blue Ocean strategy is another nautical parallel created by Renée Mauborgne and Chan Kim at INSEAD. It suggests making competition irrelevant by creating a new category or market that takes customer experience to the new level. On 2006 Nintendo did just that powered by small Sacramento based company Gyration in a true Pilot Fish spirit.
Wii appeals to old and young, men and women...
Nintendo, the creator of video gaming was struggling hard on 2005. Although the videogame business grew into $30 billion industry worldwide, Nintendo was selling half less in US than 20 years earlier when they started their journey. It was losing market share to Sony’s PlayStation and Microsoft’s XBox. Its GameCube had failed to regain market share lost by its predecessor and even successful handheld device DS could not build in the gap. The competition was taken to one battleground only – to build more and more powerful graphics chips that attracted sophisticated players with ever improving visualization but also made the gaming consoles and videogames more expensive. But Nintendo had something baking in their oven.
They had been working on a technology that breaks away from usual agenda of video gaming – the graphics – and provides gamers with all new experience – full body involvement. According to Nintendo’s game designer Shigeru Miyamoto, the concept involved focusing on a new form of player interaction. “The consensus was that power isn’t everything for a console. Too many powerful consoles can’t coexist. It’s like having only ferocious dinosaurs. They might fight and hasten their own extinction.”
In 2006 Nintendo launched seventh generation gaming console called the Wii. It established a new category where gamers could control the game with their hand movements. Wii didn’t even upgrade its graphics chip but borrowed it from the last generation console. It generated a machine that besides usual heavy users – the teenagers – appealed to a whole wider market: kids, adults and even grandmas. And it cost less as it was cheaper to build it. On top it came preloaded with a smash hit game Wii Sports that enabled gamers to play tennis, golf, bowling and other sports that made you stand up from couch, the usual gaming environment. Nintendo created a Blue Ocean, an un-competed category with wider market, improved customer experience and cheaper product. I also created a new business model. Sony and Microsoft were selling their consoles below costs hoping to earn with high-margin games but Wii was designed to sell for a profit. Wii outsold competition for years by far before their versions of motion sensing controls came along. Years after launch Nintendo is not rushing to introduce new generation of Wii console saying, that current version can offer gaming surprises for at least two years to come.
But what made Wii so special was the motion sensor in Wiimote, a game control. It is not widely known fact that motion sensing technology used in Wiimote was actually developed in Gyration – a leader of gyroscope sensor technology. Already back in 2001 Nintendo was licensed to use the technology after it acquired a stake in Gyration. CEO Tom Quinn said “Partnering with the largest and most successful game console manufacturer in the world will give us an exciting opportunity to introduce our amazing technologies to Nintendo’s broad home video game market.” That it did helping Nintendo and Gyration to sell millions of consoles. Furthermore, co-operation with Nintendo and the success of Wii took Gyration into spotlight of motion sensor technology world and helped them to leverage their expertise into new products and partnerships. It has been rumoured that Gyration has worked together also with other major gaming console manufacturers. But for certain the co-operation has established Gyration as a leader of motions sensing technology and enabled to launch its own end user range of remotes (Gyration Ultra), computer mice (Air Mouse) and keyboards. It was acquired on 2008 by Movea Inc. and taking into account the success story of Wii, probably with favourable terms to Gyration. Motions sensing becoming THE thing in gaming, many other small and innovative companies are launching their versions of motion sensitive remotes (Motus Games with Darwin) too.
The thrill of the story is to have two disciplines combined. First Nintendo to use Blue Ocean strategy by developing a whole new category and dominating it for years. Secondly Gyration to enable this with its tiny but crucial and unique part of the end product.
Discussion
No comments yet.