Casual Nintendo: the Blue Ocean Strategy

What are casual games? They could be described as quick and fun mobile, browser, or console games, easily played and understood. Because of their accessibility, these games are usually marketed at “non-gamers”, in other words people who are not traditional gamers and who don’t sink hours or days into games, but who could still enjoy gaming now and again. This genre is usually associated with small publishers or mobile developers, but one video game giant has famously dipped its toes in the casual market: Nintendo and their Blue Ocean strategy.

In the early 2000s, hardware competition in the gaming industry was rife. Sony was riding on the success of its acclaimed PlayStation consoles, followed with the PlayStation 3 in 2006. Microsoft, the computing giant, had entered the market with the Xbox and, in 2005, indicated it was here to stay by releasing its follow-up, the Xbox 360. Nintendo found themselves and in a bind: how could they retain (or regain) their market-share with their new 2006 console while competing with this increasingly sophisticated competition?

Nintendo turned away from technical escalation and chose instead to apply a strategy known as “Blue Ocean”. Perrin Kaplan, VP of Nintendo of America in 2006, explains this model in an interview: “Seeing a Blue Ocean is the notion of creating a market where there initially was none–going out where nobody has yet gone. Red Ocean is what our competitors do–heated competition where sales are finite and the product is fairly predictable.” (Kaplan, 2006) He then explains how Nintendo will now strive to make games for people who have never played games, or who may not like core gaming genres such as first-person shooters or role-playing games, adding on this subject that these games were “not the core of what we want to develop, but we do offer them” (Kaplan, 2006).

The result? A resounding success. This new Blue Ocean console, the Wii, sold over 100 million units (Nintendo, no date). Despite its technical inferiority, the Wii allowed for sensing devices, allowing the platform to release game genres never seen before. One of the Wii’s flagship titles, Wii Fit, came with sensing platform and prompted the user to do physical exercise, monitored and explained on-screen; the game sold 42 million copies worldwide (Hollensen, 2013). Nintendo released numerous titles based on family mini-games (Wii Sports) or petting animals (Nintendogs), all with great results.

However, this success was not to last eternally. By 2011, Sony and Microsoft had their own version of the Wii’s sensing device, and had regained their market share superiority over Nintendo (Hollensen, 2013). This shows that appealing to the Blue Ocean “new gamers” proved to be insufficient as the only growth incentive, unfortunately for Nintendo. With their following console, the Wii U, Nintendo moved back towards a hardcore gaming market, a strategy which resulted in the console selling a disappointing 2 million less units than expected in its first year (Hollensen 2013).

Has the Blue Ocean strategy damaged Nintendo for good by focusing on a casual market that proved to be lacking? Will their next console attempt a full swing back to its principles and attempt to attract yet more new gamers, or will it succeed in convincing hardcore gamers to pay attention? We should have the answer soon!


References

Hollensen, S (2013) ‘The Blue Ocean that disappeared – The case of Nintendo Wii’, Journal of Business Strategy, Vol. 34: 5, pp. 25-35. Available at: http://www.academia.edu/3254871/Hollensen_S._2013_The_Blue_Ocean_that_disappeared_-_The_case_of_Nintendo_Wii_Journal_of_Business_Strategy_Vol._34_5_pp._25-35 (Accessed 22 February 2017)

Kaplan, P (2006) ‘Nintendo’s New Look’. Interviewed by Rachel Rosmarin for Forbes, 7 February. Available at: http://www.forbes.com/2006/02/07/xbox-ps3-revolution-cx_rr_0207nintendo.html (Accessed 22 February 2017)

Nintendo (no date) ‘Hardware and Software Sales Units’ [online]. Available at: https://www.nintendo.co.jp/ir/en/sales/hard_soft/ (Accessed 22 February 2017)

Images

Wind Waker Ocean (2014) [image]. Available at: http://www.howtobeabettergamer.com/2014/07/11-years-later-i-finally-beat-wind-waker.html (Accessed 22 February 2017)

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Rewind: Putting the 1983 Video Game Crash in Perspective

The 1983 video game crash. A sinister sentence for gamers who lived the event or those who recently saw tons of Atari 2600 E.T. cartridges being dug-up from decades in landfill. What was this crash, and did it really almost destroy gaming?

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Figure 1: A fictionalised 1980s Atari game designer

In 1982, the home console market looked pretty solid in the US: sales totalled $3.2 billion, and 25% of US households owned a console. Atari (figure 1) and its 10,000-strong workforce represented 70% of this market share (The Dot Eaters, 2017). However, things were perhaps a little *too* good, leading to an overall saturation of the market. In 1982 alone five different consoles were released (Video Game Console Library, 2016), adding to the growing list of hardware released by various manufacturers, all eager to carve their share of this profitable market. Wider acceptance of third party game development and fast turnarounds on game production lowered overall production quality (Oxford, 2011), allowing the market to become saturated both with consoles… and with poor quality games. This is famously illustrated by the game “E.T.” for the Atari 2600, of which 4 million produced only 1 million was sold; the game cartridges ended up in landfill, and the gaming industry was forced to its knees, with revenues dropping 97% (World Public Library, no date).

Was gaming almost eradicated as a hobby and industry, however? Hardly.

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Figure 2: The NES arrives in the US

Firstly, it is worth noting that this event is also sometimes called “the American video game crash”. Indeed, this crash, while having an impact on the industry worldwide, did not have the same disastrous consequences in every country. Japan, for example referred to this event as the “Atari Crash” (World Public Library, no date), not as a global disaster. Nintendo, equally undeterred by this so-called American crash, continued production on their first home console during this period and released the Famicom in Japan on July 15th 1983; it would later be released in the US and prove to be an enduring success in both countries (figure 2).

There is an even bigger trend to consider when discussing the 1983 video game crash: home computers. Technology was advancing at a fast pace in the early 1980s, making computing increasingly cheap, small, and powerful, and this improvement created the perfect environment for the rise of home computers. Not only could these machines be used for work or programming, but they could also be used for gaming. Testament to their versatility, their success endured throughout, and long after, the video game crash.

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Figure 3: A fictionalised 1980s programmer at work on the Commodore 64

The UK had its own gaming sensation with the ZX Spectrum, an inexpensive home computer with gaming capability and developed by Sinclair Research Ltd. How would this 1982 console fare in the doom and gloom of 1983? Very well: in the run-up to Christmas 1983, over 50k machines were sold every month in the UK (Retroinspection: Sinclair ZX Spectrum, 2015, p11). On the other side of the pond, and in the very land for the video game crash, the Commodore 64 was released in August 1982. The Commodore 64’s success was such that it eventually became the largest-selling console in history, with an estimated 20 to 30 million sales (Commodore Computers, 2016).

Was the 1983 video game crash as disastrous as it sounds? The answer is yes, but only for part of the industry. Did the industry truly learn the lesson? This is a question for another day…


References

Commodore Computers (2016) Commodore 64 – The Best Selling Computer In History [online]. Available at: http://www.commodore.ca/commodore-products/commodore-64-the-best-selling- computer-in-history/ (Accessed 29 November 2016)

Oxford, N. (2011) Ten Facts about the Great Video Game Crash of ’83 [online]. Available at: http://uk.ign.com/articles/2011/09/21/ten-facts-about-the-great-video-game-crash-of-83 (Accessed 22 February 2017)

Retroinspection: Sinclair ZX Spectrum. (2015). Retro Gamer, (The ZX Spectrum Book).

The Dot Eaters (2017) The Great Video Game Crash – End Game [online]. Available at: http://thedoteaters.com/?bitstory=the-great-video-game-crash (Accessed 22 February 2017)

Video Game Console Library (2016) History of the Video Game Console : 1980s [online]. Available at: http://www.videogameconsolelibrary.com/pg80-over.htm. (Accessed 22 February 2017)

World Public Library (no date) North American video game crash of 1983 [online]. Available at: http://www.worldlibrary.org/articles/north_american_video_game_crash_of_1983 (Accessed 29 November 2016)

Images

Halt and Catch Fire – Computers (2014) [image]. Available at: http://mashable.com/2014/05/29/halt-and-catch-fire-amc-compaq/#LbfUQu.qYsq2 (Accessed 22 February 2017)

Halt and Catch Fire – Atari (2016) [image]. Available at: https://onpiratesatellite.com/home/halt-and-catch-fire-season-finale-s3-e9-nim-and-s3-e10-next (Accessed 22 February 2017)

Halt and Catch Fire – NES (2016) [image]. Available at: http://www.polygon.com/tv/2016/9/19/12971136/halt-and-catch-fire-super-mario-bros-clip (Accessed 22 February 2017)

Halt and Catch Fire – Cameron (2016) [image]. Available at: http://observer.com/2016/09/halt-and-catch-fire-3×04-recap-firing-lines/ (Accessed 22 February 2017)