Nintendo Wii: Lessons Learned from Noncustomers. Interactive Lecture Slides

Nintendo Wii: Lessons Learned from Noncustomers Interactive Lecture Slides  INSEAD Blue Ocean Strategy Institute 2013 In 2006 the video game conso...
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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?

 INSEAD Blue Ocean Strategy Institute 2013

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