MRKT 452 Lecture Notes - Lecture 5: Satoru Iwata, Shigeru Miyamoto, Wii U
11 Jun 2018
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February 20, 2018
Nintendo Case
How could Nintendo sustain a competitive advantage over the past 100 years?
• R&D looked for something new
o That's why they had two teams
• Leadership encouraged to get as many ideas out as possible
o Very conversional
• Complication 1: card industry no longer profitable, failed diversification into taxi, hotel, rice
product
• Hiroshi Yamauchi (CEO)
o Innovative culture and skills in identifying and meeting customer expectations
• Gunpei Yokei (electrician) created mechanical hand, then toys with electronic
components
▪ Diversification into toys
• Complication 2: 1980s overstock of arcade video machines in US subsidiary
o Creation of Donkey King, Peach, Mario for arcade machines (Shigeru Miyamoto)
• Arcade games then adapted for Game & Watch
• Strong autonomous R&D teams competing with each other
o One team used high-end technology to develop Family Computer (Famicom)
• Explanatory R&D
o Another team used old technology to develop Game Boy
• Exploited existing know-how
• Unique character set (Zelda, Mario), creativity in hardware & games, integration of hardware and
games, games unique to Nintendo platform
• Complication 3: strong competition from Sony and Microsoft
• Leadership CEO Satoru Iwata after 2002
o Not enough to focus only on games for children and families
• Created the Wii and DS
• Lukewarm reception for GameCube led to operating losses in 2004
• Complication 4: multi-year operating losses(2012-15)
o 3DS and Wii U (2011) had lower sales
• Partly due to slow release of games for these machines
• Poor communication on role of Wii U
▪ Users did not understand what the tablet was for
Why were the Wii and DS unexpectedly so successful amid fierce competition from the PlayStation
and Xbox?
• Nintendo lacked resources to compete head to head with Sony and Microsoft to fight for market
share in game console for typical gamers (male teens-35)
• Followed the "blue ocean" or "entrepreneurial discovery" strategy
o Wanted to create new uncontested spaces at edges of video console market, with Wii and
DS
• Who are the non-customers in existing space?
o New value proposition
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• Not competing on high resolution graphics or creating a console that serves as centre
for home entertainment (no DVD player)
• Lower processing power
• Focus on games (software) rather than hardware: expand range of family-friendly
games
▪ Wii for older population
• Innovate on game controller by shifting from buttons to motion control
▪ Involved players moving around
▪ Wii Controller intuitively easy vs lots of buttons on other controllers
▪ DS: 2 screen, one tactile
• Strategy of Sony and Microsoft
o Quite similar offerings
find more resources at oneclass.com
find more resources at oneclass.com
