ALI FARHOOMAND
NINTENDO’S DISRUPTIVE STRATEGY:
IMPLICATIONS FOR THE VIDEO GAME
INDUSTRY
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.
- Satoru Iwata, president of Nintendo Co. Ltd1
In the 2008 BusinessWeek–Boston Consulting Group ranking of the world’s most innovative companies, Nintendo Co. Ltd (“Nintendo”) was ranked seventh, up from 39th the previous year. 2 This recognised Nintendo’s significant transformation into an innovative design powerhouse that had challenged the prevailing business model of the video game industry.
In 2000, when Sony,
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During the period 1970 to 1985, Nintendo began focusing on the manufacture of electronic toys and entered the budding field of video games [see Exhibit 1].
Interestingly, 1991, the year when Nintendo launched the highly popular Super NES in the
US, was also the year that saw Nintendo’s vision become Sony’s opportunity—and the creation of what could be described as Nintendo’s “greatest challenge” for over a decade — the Sony PlayStation (“PS”). Nintendo had wanted to incorporate CD-ROM into their Super
NES, and Sony had agreed to create the PS for this purpose. However, over the next two years, conflicts of vision between Nintendo and Sony continued, and the two finally parted ways.
Nintendo went ahead with Philips technology, 4 and Sony was left with the PS, which the company decided to continue developing. Given Sony’s clout and resources, when the PS and its wide range of games were finally released in Japan in 1994, the console was an instant resounding success. In 1995, Sony released the PS in the US, totally uprooting Nintendo’s established name in the industry.
For many years, Nintendo had been a dominant player in the video game industry. It had sold more than two billion games since 1985. Its top-selling series included non-violent and easyto-play games such as Super Mario Bros and The Legend of Zelda. The huge success of its games portfolio could be attributed to its appeal to all age groups across different
Nintendo take the actions it did? How did these affect the value created by the industry?
The video game that popularized video games, Super Mario Bros. The man that designed that game back in 1985 was Shigeru Miyamoto. A living legend in the world of video games. He created a number of Nintendo biggest franchises. Super Mario Bros., Donkey Kong, Star Fox, and The Legend of Zelda are just a few of the games he has helped to create.
As sales of Nintendo’s Wii and DS dominate the PlayStation 3 and Xbox 360, and PlayStation Portable, respectively, the pressure continues to mount on Sony and Microsoft to move to the next level in the ongoing console wars. Sales of the Wii in 2008
However, the extent to which the hardcore gaming demographic dictates the structural aspects of the gaming industry as a whole is remarkable. Companies are still willing to cater to this audience because it is a profitable enterprise, as it is only the most devoted of fans who will line up days before a system release while generating free publicity on the internet and through word of mouth in the months prior. Thus, and perhaps unexpectedly, an important factor in the Wii's meteoric rise was Nintendo's ability, through the strength of its brand and residual nostalgia effects, to co-opt this hardcore gaming culture with a console that at best, only occasionally acceded to its wishes, while at worst, marginalized them completely. What Nintendo realized, and ultimately capitalized on, was that the hegemonic structure influencing the industry was inherently weak, in that it was essentially a small minority overwhelming the relatively silent masses. Although there are doubts to the sustainability of such an endeavor, the signs are present that the Wii has already altered the video game
You may be wondering where it all started, where it all came from. Well I have the answer you see it all started back in September 23 1889, a young man named Fusajiro Yamauchi opened a small store in the middle of Kyoto. He was very young (he only just turned 13) but he none the less was the first owner of Nintendo. He didn’t just go straight to games, and he didn’t want to be like any other shops selling normal everyday good such as silk and tea. He wanted to be unique and start selling a product that the government had just legalized. Can you guess what it is? That’s right nothing more than cards. But these weren’t just some ordinary card these where Nintendo cards as seen in picture #1. You can see how different they were sure there where
The evolution of the PlayStation has changed dramatically over the past twenty two years. Some of the major changes is how the gamer puts in the game; to put it into the PlayStation one the gamer has to hit a button so you can insert the game. To insert a game into the PlayStation four all the gamer has to do is slide the game right in. Another thing that is different between the two systems is how the user saves his progress in the game. Another about the systems that varies about the two systems is what they can play. The PlayStation one can only play video games that are solo player or two on two player. While the PlayStation four can play games that has online
With the competition in the video games industry getting more intense, the next steps of the video game companies become more crucial for their positioning on the market. Due to the low product differentiation, the next market leader will be the platform provider that manages to offer an innovative gaming experience and a wider population of buyers that include all demographics. Although the industry is being totally dominated by Nintendo’s console, the industry is still considered to show a
Nintendo a company with many accolades and an history of achievements has constantly made their mark in the gaming industry. Founded by japanese businessman Fusajiro Yamauchi in 1889 known for being a small card trading company. Nintendo grew over the years with the innovation of the new gaming systems like handhelds (Gameboy) and consoles (Magnaox Odyssey) which both were really successful and helped advances gaming the process. But in 1991 Nintendo released the Super Nintendo which helped the design of the controllers; after releasing the Super Nintendo, Nintendo looked into making more advances with the gaming side of the company. By teaming up with Sony, Nintendo established a way of play CD roms on gaming consoles, which is a huge event
In 1988 one company sat firmly on top of the home video gaming market: Nintendo. No one expected it to be toppled especially not from it partner, Sony. Since the PlayStation was announced at the Consumer Electronics Show in 1991, it has been making its mark on history. Sony announced the Play Station which was the Super Disc, but so much more: it could also read Super NES cartridges and play music. Being the behemoth it is, Sony had a whole music division and movie studio (Columbia Pictures) to work with.
"Work hard, but in the end it's in heaven's hands." This is a quote from Game Over about the meaning of the word "Nintendo." In the video-gaming market, though, it was really in consumers' hands. Nintendo has always needed to adapt to survive in the market. Nintendo always needed to be on top; it was a company that needed to be ahead of the rest. Nintendo had to set new standards, or improve on an existing product or idea.
The latest product launched by Nintendo has been the Game Cube, a video game console which will undoubtedly prove to be yet another bestseller.
One of the biggest giants in the video game world today is Sony and their revolutionary Playstation. Right now their Playstation 3 is in circulation throughout the world, but prior to last year there was the original Playstation, and Playstation 2. This was the first video game system that used CD’s as disks for their games, instead of the usual cartridges used by Nintendo, Sega, Atari, and many other companies. It started off as a collaboration with Sony and Nintendo in 1988 trying to create an extension to Nintendo’s console Super Nintendo called the Super Disk, since most companies were about to start making systems that way, and it was also much cheaper to create. Since Nintendo figured out that Sony would get all of
The role of technology is vital in this industry as it focuses on technological efforts for competitive advantage. Every new development uses new technology. Though there are restricted innovations in the gaming industry, the speed of technological transfer is very high. Nintendo’s role from playing cards to toys to video games and then with each console introduced, included many technological changes. Technological up gradation increased hardware costs and discouraged innovation. The online capability of Nintendo Wii was a major change in the technology of the video game industry though they were not able to do as well as their competitors (Sony, Microsoft).
Nintendo however is not present in this new market and therefore it is very important to take in consideration to enter this new area because at the moment the company does not have products that satisfy those new needs resulting in the loose of sales and consequently revenues.
The 32 and 64-bit Game Systems. From 1993 through 2000, the video game industry jumped from 16-bit to 32-bit, and eventually to 64-bit systems (Gerald Lynch). As 64-bit systems emerged, the mere classification of “bit” numbers became less important due to the fact that performance now depended on increasingly important factors such as processor clock speed, bandwidth and memory size. However, there were benefits to be gained from the 64-bit upgrade. Enhanced speed and memory allowed games to render more realistic collisions, lifelike simulations of graphics and real-time multi-channel audio features. This era proved to be dominated by the Nintendo 64 and the Sony PlayStation. Sony entered the market in 1995 at the 32-bit level with its PlayStation able to provide “CD-quality stereo sound,” including “built-in support for digital effects such as reverb and looping.” One year later, Nintendo