Nintendo Wii: Lessons Learned from Noncustomers Interactive Lecture Slides
INSEAD Blue Ocean Strategy Institute 2013
In 2006 the video game console industry was:
INSEAD Blue Ocean Strategy Institute 2013
In 2006 the video game console industry was:
Dominated by three players: Microsoft, Sony and Nintendo
INSEAD Blue Ocean Strategy Institute 2013
In 2006 the video game console industry was:
Dominated by three players: Microsoft, Sony and Nintendo
In a technological race for market dominance, yet faced with increasing pressure on margins and flat demand in the early ’00s
INSEAD Blue Ocean Strategy Institute 2013
In 2006 the video game console industry was:
Dominated by three players: Microsoft, Sony and Nintendo
In a technological race for market dominance, yet faced with increasing pressure on margins and flat demand in the early ’00s
Focused on hard-core gamers under 30 years of age INSEAD Blue Ocean Strategy Institute 2013
In 2006, what were the key factors the video gaming industry competed on?
INSEAD Blue Ocean Strategy Institute 2013
More buttons, futuristic console
INSEAD Blue Ocean Strategy Institute 2013
High resolution graphics, processing power, wifi…
INSEAD Blue Ocean Strategy Institute 2013
Action-oriented game titles
INSEAD Blue Ocean Strategy Institute 2013
Video game industry 2006
Offering Level
High
Low Price
Non-gaming functionalities High resolution graphics
Online gaming Processing power
Available game titles Design aesthetics
INSEAD Blue Ocean Strategy Institute 2013
Video game industry 2006
Offering Level
High
Sony PlayStation
Microsoft Xbox
Low Price
Non-gaming functionalities High resolution graphics
Online gaming Processing power
Available game titles Design aesthetics
INSEAD Blue Ocean Strategy Institute 2013
What pain points prevented noncustomers from entering the video game market?
INSEAD Blue Ocean Strategy Institute 2013
What pain points prevented noncustomers from entering the video game market? Most games are designed for hard-core gamers: very unappealing to non-gaming adults
INSEAD Blue Ocean Strategy Institute 2013
What pain points prevented noncustomers from entering the video game market? Most games are designed for hard-core gamers: very unappealing to non-gaming adults Controllers are complex and difficult to use
INSEAD Blue Ocean Strategy Institute 2013
What pain points prevented noncustomers from entering the video game market? Most games are designed for hard-core gamers: very unappealing to non-gaming adults Controllers are complex and difficult to use Games take a long time to understand and advance levels
INSEAD Blue Ocean Strategy Institute 2013
What pain points prevented noncustomers from entering the video game market? Most games are designed for hard-core gamers: very unappealing to non-gaming adults Controllers are complex and difficult to use Games take a long time to understand and advance levels Expensive
INSEAD Blue Ocean Strategy Institute 2013
What pain points prevented noncustomers from entering the video game market? Most games are designed for hard-core gamers: very unappealing to non-gaming adults Controllers are complex and difficult to use Games take a long time to understand and advance levels Expensive The console is not stylish and doesn't look good in a family living room INSEAD Blue Ocean Strategy Institute 2013
Visualizing the pain points: The buyer utility map The Six Stages of the Buyer Experience Purchase
Delivery
Use
Supplements
Maintenance
Disposal
Customer Productivity
The Six Utility Levers
Simplicity
Convenience
Risk
Fun and Image Environmental Friendliness INSEAD Blue Ocean Strategy Institute 2013
Visualizing the pain points: The buyer utility map The Six Stages of the Buyer Experience Purchase
Delivery
The Six Utility Levers
Supplements
Maintenance
Disposal
X
Customer Productivity
Simplicity
Use
X
X
X
X
X
Convenience
Risk
Fun and Image Environmental Friendliness
INSEAD Blue Ocean Strategy Institute 2013
Visualizing the pain points: The buyer utility map The Six Stages of the Buyer Experience Purchase
Delivery
The Six Utility Levers
Supplements
Maintenance
Disposal
Games take a long time to understand
Customer Productivity
Simplicity
Use
Difficult to install
Games take a long time to understand
Controllers are complex and difficult to use
Games unappealing to nongamers
The console is not stylish for non-gamers
Convenience
Risk
Fun and Image Environmental Friendliness
INSEAD Blue Ocean Strategy Institute 2013
Your Market
Who are the noncustomers of the video game industry?
Third Tier
INSEAD Blue Ocean Strategy Institute 2013
Who are the noncustomers of the video game industry? The Three Tiers of Noncustomers
First Tier – “Marginal Gamers” First Tier Your Market
Your Market
e.g., young adults, students, etc. Third Tier
INSEAD Blue Ocean Strategy Institute 2013
Who are the noncustomers of the video game industry? The Three Tiers of Noncustomers
First Tier – “Marginal Gamers” e.g., young adults, students, etc.
Your Market
Second Tier
Your Market
First Tier
Third Tier
Second Tier – “Tried but refusing” e.g., sports enthusiasts, readers, etc.
INSEAD Blue Ocean Strategy Institute 2013
Who are the noncustomers of the video game industry? The Three Tiers of Noncustomers
First Tier – “Marginal Gamers” e.g., young adults, students, etc.
Your Market
Second Tier
Your Market
First Tier
Third Tier
Second Tier – “Tried but refusing” e.g., sports enthusiasts, readers, etc.
Third Tier – “Never Considered” e.g., the elderly, very young children, etc.
INSEAD Blue Ocean Strategy Institute 2013
What alternative activities did noncustomers pursue instead? Why?
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What did Nintendo do to unlock new demand from customers and noncustomers?
INSEAD Blue Ocean Strategy Institute 2013
What did Nintendo do to unlock new demand from customers and noncustomers? Eliminate High resolution graphics Non-gaming functionalities HDTV capability
INSEAD Blue Ocean Strategy Institute 2013
What did Nintendo do to unlock new demand from customers and noncustomers? Eliminate High resolution graphics Non-gaming functionalities HDTV capability
Reduce Processing power Online gaming Price
INSEAD Blue Ocean Strategy Institute 2013
What did Nintendo do to unlock new demand from customers and noncustomers? Eliminate
Raise
High resolution graphics Non-gaming functionalities HDTV capability
Design aesthetics Available game titles
Reduce Processing power Online gaming Price
INSEAD Blue Ocean Strategy Institute 2013
What did Nintendo do to unlock new demand from customers and noncustomers? Eliminate
Raise
High resolution graphics Non-gaming functionalities HDTV capability
Design aesthetics Available game titles
Reduce
Create
Processing power Online gaming Price
Motion Family-friendly games
INSEAD Blue Ocean Strategy Institute 2013
Nintendo Wii Strategy Canvas
Offering Level
High
Low Price
Non-gaming functionalities High resolution graphics
Processing power HDTV capabilities
Design aesthetics Online gaming
Available game titles
Motion
Family friendly games
INSEAD Blue Ocean Strategy Institute 2013
Nintendo Wii Strategy Canvas High
Nintendo Wii
Offering Level
Video Game Console Industry
Low Price
Non-gaming functionalities High resolution graphics
Processing power HDTV capabilities
Design aesthetics Online gaming
Available game titles
Motion
Family friendly games
INSEAD Blue Ocean Strategy Institute 2013
Nintendo Wii Strategy Canvas Eliminate High
Nintendo Wii
Offering Level
Video Game Console Industry
Low Price
Non-gaming functionalities High resolution graphics
Processing power HDTV capabilities
Design aesthetics Online gaming
Available game titles
Motion
Family friendly games
INSEAD Blue Ocean Strategy Institute 2013
Nintendo Wii Strategy Canvas Eliminate
Reduce
High
Nintendo Wii
Offering Level
Video Game Console Industry
Low Price
Non-gaming functionalities High resolution graphics
Processing power HDTV capabilities
Design aesthetics Online gaming
Available game titles
Motion
Family friendly games
INSEAD Blue Ocean Strategy Institute 2013
Nintendo Wii Strategy Canvas Eliminate
Reduce
Raise
High
Nintendo Wii
Offering Level
Video Game Console Industry
Low Price
Non-gaming functionalities High resolution graphics
Processing power HDTV capabilities
Design aesthetics Online gaming
Available game titles
Motion
Family friendly games
INSEAD Blue Ocean Strategy Institute 2013
Nintendo Wii Strategy Canvas Eliminate
Reduce
Raise
Create
High
Nintendo Wii
Offering Level
Video Game Console Industry
Low Price
Non-gaming functionalities High resolution graphics
Processing power HDTV capabilities
Design aesthetics Online gaming
Available game titles
Motion
Family friendly games
INSEAD Blue Ocean Strategy Institute 2013
Unlocked new demand from noncustomers
INSEAD Blue Ocean Strategy Institute 2013
Created an uncontested new market space in the video game industry Cumulative Units Sold (in Millions)
Dec 2006
Apr 2011 INSEAD Blue Ocean Strategy Institute 2013
Created an uncontested new market space in the video game industry Cumulative Units Sold (in Millions)
MS X360 53.5 M
Sony PS3 50.1 M
Dec 2006
Apr 2011 INSEAD Blue Ocean Strategy Institute 2013
Created an uncontested new market space in the video game industry Cumulative Units Sold (in Millions)
Nintendo Wii 86.2 M
MS X360 53.5 M
Sony PS3 50.1 M
Dec 2006
Apr 2011 INSEAD Blue Ocean Strategy Institute 2013
In review:
INSEAD Blue Ocean Strategy Institute 2013
In review: Can you explain why the video game industry largely missed the Wii's potential, when the rest of the world overwhelmingly embraced it?
INSEAD Blue Ocean Strategy Institute 2013
In review: Can you explain why the video game industry largely missed the Wii's potential, when the rest of the world overwhelmingly embraced it? What are the key strategic lessons to be learned from this strategic move? INSEAD Blue Ocean Strategy Institute 2013