In November 1889, the Japanese entrepreneur Fusajiro Yamauchi introduced a new type of card game, “Hanafuda” or flower card game, in a store named Nintendo Koppai, a Blue ocean strategy since its first day taking advantage its creativity and willingness to be different.
After a 1959 licensing agreement to produce cards with Disney characters proved wildly popular, Nintendo went public, listing on the Osaka stock exchange in 1962. However, the firm initially struggled as a public company until they found a niche developing then-novel electronic toys. The firm partnered with the first video game console, the Magnavox Odyssey in 1972.
Nintendo’s first console, introduced in 1983, called the Family Computer Home Video Game Console (Famicom), or Nintendo Entertainment System (NES) outside Japan. The initial plan was to license characters for videogames; they quickly realized their budget was inadequate; the firm was forced to create its characters.
NINTENDO goes on to dominate home videogame systems, selling just under 62 million units of the NES. Nintendo moved on, innovating an experimental system featuring a low computing power handheld long-lasting battery-operated black-and-white gaming system, the Game-Boy, released in 1989 and priced at just $90. The Game-Boy sold 188 million units.
Super Nintendo Entertainment System (SNES), released in Japan on November 21, 1990, went on to sell 49 million units worldwide. The first game console market had many competitors, the most noteworthy being Sega, but Nintendo did well with a combination of reasonably-priced hardware and imaginative software.
In 1993, then CEO Yamauchi financially rescued independent game studio HAL Laboratory, which created Nintendo games, on the condition they appoint game developer Satoru Iwata as CEO. Yamauchi believed that Iwata would be better able to manage the creative yet commercially challenged game studio. Iwata went on to create Pokémon and Super Smash Bros., two megahits that ran exclusively on Nintendo game systems, By combining high-quality games (software) with their gaming systems (hardware), dominated or came in a close second.
The end of NINTENDO’s blue ocean finished when Sony released the $300 PlayStation console by December 1994, a device packed with high-powered chips for realistic graphics and sound; gamers loved the device. The PlayStation sold over 102 million units. Nintendo responded by offering Nintendo 64 in $200; they sold 33 million units worldwide.
In November 2001, Microsoft entered the market with the Xbox, a high-end computing game console that sold 10 million units. In March 2002, Sony followed up with PlayStation 2, which featured even more powerful graphics, high-quality sound. A decade later, Sony had sold 155 million PlayStation 2 systems. Nintendo countered with the GameCube, which became an unmitigated flop, with worldwide sales reaching 13 million units.
In 2000, Iwata joined Nintendo in the corporate planning division, who believed game consoles had evolved to focus on technology demanded by die-hard gamers, who demanded complex games to run at high speed with realistic graphics and high -definition sound.
Iwata’s first offering was an entirely reworked portable game system to replace the Game Boy. The Nintendo DS was decidedly not for core gamers, with their demanding standards for technical features. It aimed towards the majority of people who cared passionately about fun and variety of games, not the functional elements. With a small screen and without highresolution sound, DS games cost far less to develop than console games. Low development costs encouraged experimentation and innovation, pushing studios to think more about fun than technological sophistication, and creating a wide variety of exciting and low-cost games that increased the appeal of the console.
Released on November 21, 2004, the DS was a smash hit. Nintendo sold 154 million units. “Inside Nintendo, we call our strategy ‘Blue Ocean.’ We’re making games that are expanding our base of consumers in Japan and America. Those who’ve always played games are still playing, but we’ve got people who’ve never played to start loving it with titles like Nintendogs, Animal Crossing, and Brain Games. These games are Blue Ocean in action,” said former Nintendo Vice President of Marketing and Corporate Affairs Perrin Kaplan.
Nintendo Wii: Casual Games
“Many people in this industry tend to categorize our customers into two groups — one is the core gamer, and the other is casual gamers…We want to create a kind of cycle where casual gamers are gradually growing up to become passionate players. To maintain that kind of cycle, we needed to break down the wall.” Satoru Iwata, CEO
Focusing on the pain-points of console gaming for non-gamers – elements that turned nongamers off – Nintendo realized the traditional game controllers were confusing and challenging to learn, NINTENDO found a new blue ocean by finding a new market.
Wii created a brand-new market and offered incomparable value; it was not a substitute for other consoles. No matter whether you owned a Sony or Microsoft console, you could still enjoy a Wii. People who would never consider buying a traditional console but wanted to have fun would buy a Wii.
Released on November 19, 2006, at a retail price of $249, the Wii went on to outsell Sony and Microsoft combined through 2009. Unlike Sony or Microsoft, who sold consoles at a steep loss to buy market share.
On July 10, 2008, Apple opened the App Store, allowing developers to sell and install software on their popular phones. Games quickly became one of the most popular app categories. Smartphones were great for gaming, especially casual games. Smartphones allowed users to game everywhere and anywhere. By connecting wirelessly to the internet, they enabled people to play against one another easily.
The Wii’s successor, called the Wii U, was released on November 18, 2012. The system featured a 6.2-inch (15.7cm) touchscreen tablet, GamePad, that connected wirelessly to the game console. In contrast, the state-of-the-art iPhone 5 featured a 4-inch screen. The iPad Mini released ten days before the Wii U, featuring a 7.9-inch display. The standard iPad sported a 9.7-inch screen. Whereas the iPhone and iPad contained full-blown computers, the Wii U required the GamePad to be within 25ft (8m) of the base system that included the Wii U’s processor.
Sony and Microsoft released new consoles in the same period, in a race focused on technological advances for ever-faster and realistic gaming. As of October 2018, Sony had sold 86 million PlayStation 4 units and Microsoft 39 million Xbox One units. Nintendo sold an abysmal 13.5 million Wii U units before the system discontinued in 2017.
Searching for a New Blue Ocean, “It’s time for Nintendo to leave consoles in the past. I’ve rewritten this opening paragraph multiple times, trying to figure out the right way to say that. I’ve written that there are few surprising things in the gaming industry these days, save for Nintendo, which remains a wild card of poor marketing decisions, and that Nintendo’s mistakes have proven that it’s software, not hardware, that people are interested. Sometimes, though, it’s best just to come out and get to the point: Nintendo needs to close the curtains on its hardware business and transition to being a pure software developer.” Eric Abent, Slash Gear, September 5, 2016,
Nintendo moved into the mobile space, partnering to release one game and developing several other games on its own. Pokémon Go Game studio Niantic, formerly part of Google. Pokémon Go was a success, becoming the most popular smartphone game on both Android and iOS, with over 20 million daily active users.
By the end of 2018, Pokémon Go had exceeded $2 billion in revenue; a milestone shared with only four other phone games. Nintendo released Super Mario Run, the first Mario game run on non-Nintendo computing hardware.
Despite an arguable lack of originality in gameplay, Super Mario Run proved incredibly popular, with 50 million downloads in the first week and 200 million by the end of 2017. All Nintendo mobile games had a standard business model – known as a “freemium,” where apps are free to download and try. Still, users must pay for additional features or functions. In the case of Super Mario Run, early levels were open, but a relatively steep $10 fee was required to unlock further levels. The other games were also downloadable for free but offered smaller in-game purchases, at a lower cost, rather than one large purchase to open an entire game.
Nintendo describes the core Switch value proposition as an “Anytime – Anywhere – With Anyone” play concept. The Switch could be used as a traditional console and also a portable system – a new ‘hybrid’ product category. As a mobile system, it featured a 6.2 inch (15.75cm) bright and responsive touchscreen, with two motion-sensitive controllers that attach on each side. As a console, remove controllers and the console placed in a dock to control a television. The same games run in both portable and console mode, though the graphics were smoother when the system is attached to a TV.
The Switch eliminated all non-game functions: it did not play movies, stream video, or allow web surfing. When it came to the development of the Switch, noncustomers had been made aware of casual games either by Wii or mobile technology. Nintendo reconstructed market boundaries, capturing the best of high-powered game consoles and smartphone games.
First, it raised the depth and complexity of its casual games. Nintendo also created a framework to enable multiplayer games on one device. A hybrid system that worked as both a portable device and a docked system was the inspiration for the name – Switch – because first-time players could easily switch between the two dominant game platforms with one equipment that worked seamlessly as a portable and as a docked station.
Eventually, they concluded, “Nintendo is mostly competing against itself … Nintendo created a new market category, and is reaping the rewards.”
Once again, it made the competition irrelevant. Epilogue Nintendo continues to innovate. The company is releasing new games that follow the same strategic path, more complex than casual games yet less violent and more comfortable to get started than traditional console games.
Additionally, Nintendo released a series of toys called the Labo, pieces of cardboard that use the Switch console and controller to create entirely new physical/digital world hybrid systems.
However, as demonstrated by the boom-and-bust nature of prior systems, somebody else will inevitably copy what makes the Switch special, sending Nintendo back to the drawing board. Successful blue ocean innovations eventually copied, some with more success than others.