Nintendo, Innovation in Gaming

(Midterm task)

Nintendo Co., Ltd. (任天堂株式会社 Nintendō Kabushiki gaisha) is a Japanese multinational consumer Electronics Company located in Kyoto, Japan. Nintendo is the world’s largest gaming company by revenue. Founded on September 23, 1889 by Fusajiro Yamauchi.

I chose Nintendo as my company because I have strong emotional connections to it. When I was about 6 years old I got my first Nintendo 8-bit playing console. I still have it in my home in Finland and believe it sculpted a little of who I am.

So let’s talk about the innovation of Nintendo by looking at the following factors: : a) technology b) process  c) the product / service d) business model

Technology and the product. 

Nintendo started off as a company selling playing cards for a game called Hanafuda. It was widely popular in Japan. However, Nintendo really started to innovate seriously in 1974 when they reached their “electronic era”. Developing personal gaming consoles that could be attached to the color TV was a huge innovation in its time.

The NES (Nintendo entertainment system) was launched in 1985 in north America along with the game Super Mario Bros, one of the bestselling video games of all time. This revolutionized gaming in the world. People could now own their own game consoles in their homes and could play with their families or friends. Before they could only play arcade games in separate arcades.

After this, Nintendo became an immortalized stepping stone for the video game community. Nintendo has always been an important part of the video game community and its literacies. The literacies vary from writing to creativity to creation of the games themselves. Nintendo’s creativity has worked wonders in the gaming industry, and inspired other companies like Microsoft and Sony to follow suit with the ideas that were brought up.

The games that were created by Nintendo would later be the standard of how video games should be made. For example, when Legend of Zelda game out in 1986, it set up the standard of how an adventure video game should be created with the puzzles that were in the game. People that play video games see these types puzzle in multiple adventures games nowadays like God of War, Uncharted, and Darksiders. Legend of Zelda has held up with some of the greatest game series of all time, even being the first video game franchise inducted into the Video Game Hall of Fame.

After gaming consoles Nintendo was successful in the handheld game consoles market with their introduction of the Game Boy, featuring improved technical specifications similar to those of the SNES. After that came the Game Boy Advance and Nintendo DS. The successor to the Nintendo DS line, the Nintendo 3DS, uses the process of autostereoscopy to produce a stereoscopic three-dimensional effect without glasses. That’s what I call thinking outside of the box right?

Nintendo’s most recent home console, the Wii, uses motion sensing controllers and has on-board online functionality used for services such as Nintendo Wi-Fi Connection and Internet Channel (in contrast to GameCube’s limited functionality on select games with an additional modem accessory). Nintendo’s upcoming home console, the Wii U, will feature a touch screen controller.

It is easy from these examples to say that Nintendo has been innovative in pushing advanced technology further to create innovative new products to gamers worldwide.

Business Model and Process

But what has made Nintendo so succesfull compared to for example Sony? How do the two differ? They differ a lot in their business models.

Nintendo is a pure video game company and as such it has taken on an integrated hardware and software approach – offering both the console and the games. Nintendo attempts to make money both on the console and the games.  Sony with significant interests in the entertainment industry has established a Playstation Network – an online console service where users can also purchase or rent music, movies and other digital entertainment content. Sony has positioned the Playstation as a multipurpose entertainment console. As such Sony markets the Playstation at a loss and attempts to leverage the platform and realize profits from the games and other entertainment properties.

The production cost of the Wii is far below the Xbox360 and PS3 – it comes in at a total of a little less than $160 per unit. Selling the console at a retail price of $199, Nintendo is not making incredible profit of its hardware console – but it in a decisively advantageous position in comparison to Sony. This shows that Nintendo have mastered their processes.

Sony, and Nintendo – rely on games to generate profit for the little to no value they capture on consoles, but only Nintendo does not heavily rely on third party titles. With more in-house development, and a larger emphasis on first-party titles (unique to the Nintendo gaming experience), This allows Nintendo to operate on a “top-down” approach – creating consoles based on the games that will run. Creating a system with lower development cost and one that has a function to create a gaming experience focused on both console and video game, Nintendo has created a product (the Wii) with good value, great accessibility, and broad based appeal. The Wii does not effectively capture the market for “hard-core” gamers (it is undoubtedly graphically inferior), but has focused its efforts and resources on expanding and then penetrating new markets.

 

 

Prediction for future innovation

In the past years Nintendo has been falling behind a little bit for the competitors Sony and Microsoft especially in the “hardcore” gamers market. However Nintendo does not target these markets and and are doing well in the segments that they do target, mostly in Japan.

The future of gaming will move more towards the 3D scene and more into the area of kinetic controlling. In that sense Nintendo is on a good path. They have already taken a first step in the 3D area by launching the 3DS. The Wii is an example of the kinetic movement in gaming.

Perhaps a new innovation from Nintendo will be similar to the Xbox Kinect, just targeted to Nintendo’s Loyal customer base. Or something even more futuristic like virtual gaming where the games are controlled by your mind?

Sources

http://sites.duke.edu/soc142-videogames/global-value-chain/market-power/why-nintendo-has-dominant-market-share-2/

http://en.wikipedia.org/wiki/Nintendo

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