Why is Nintendo's Competition Policy Successful?

Introduction 

Nintendo is a Japanese based corporation established in 1980. Since its foundation, Nintendo has struggled to become the world leader in the production of interactive entertainment products. In 2006, competition in the industry was stiff, and this forced Nintendo to adopt a new competition policy: “competing against non-consumption” (Ziesak, 2009). Based on this policy, the company created “The Wii”; this is an innovative video game console. The primary reason for introducing the Wii was to attract the biggest demographic than other gaming products. This strategy was and continues to be a success story; it attracted many people across all age groups and led to huge profits. This essay is to reveal factors that made Nintendo’s competition policy successful thus becoming a leading player. 

Nintendo’s Competition Policy 

For years, the game industry had remained stagnant even though profits continued to soar. Most game producers focused primarily on what has been termed as “hardcore” demographic market segment (Kim & Mauborgne, 2015). This segment comprises of consumers who are willing to pay a premium price for a narrow range of games. Most new games offered similar gameplay to the previous games. It reached a point where games had become more difficult and complicated to learn for the casual gamers. 

Nintendo saw this as an opportunity and decided to create a console and games, which appeal to the market segment that had been ignored by Sony and Microsoft (Ziesak, 2009). The core of Nintendo’s success rests on the competition policy of “competing against non-consumption” (Jung, 2013). This policy has allowed the company to fly past giant corporations such as Sony and Microsoft by capturing other market segments that had been largely ignored. Although hardcore gamers were always ready and willing to pay a premium price for the games, the casual gamers outnumbered them (Thompson, 2016). Nintendo’s console was much easier to use the rival products. Nintendo’s games were comfortable to learn; people who had never used a game before could learn and enjoy games in a short time. Both games and consoles were cheaper and hence appealed to a broader range of consumers. 

This strategy is advantageous because it is not imitable; Sony and Microsoft cannot imitate it (Kim & Mauborgne, 2015). The two companies sought to appeal to the hardcore market segment, as such; their competition is based on features and hardware performance. For them to start competing with Nintendo, they will need to abandon their hardcore market segment (Ziesak, 2009). 

Why Differentiation Was the Best Factor 

Nintendo released its Wii shortly after the introduction of the GameCube (Jung, 2013). Its primary attributes include a new version of user interaction. Besides using the joysticks and buttons to control the games, the user could point or swing the new controller as he/she would with a tennis racket or a sword. Unlike other game consoles, this gave users a much more intuitive interface and enjoyable experience. This is mainly if the game involved swinging tennis rackets or swords. In addition to being cheap compared to other consoles, the Wii games targeted a wider audience (Thompson, 2016). 

It is estimated that since the Wii was released, it has sold more units, overtaking both of Sony and Microsoft combined. Though Nintendo does not make a profit as large as that of Microsoft and Sony, the most significant share of consoles in the market will drive future software sales. Today, it is predicted that Sony and Microsoft will continue to appeal to the hardcore consumers with their advanced consoles. Though Sony and Microsoft’s strategies are somehow profitable, they cannot directly compete with Nintendo because for them to do so, they will have to abandon their current customer pool. 

References 

Jung, C. (2013).  Strategy analysis of Nintendo - executive summary . München: Grin Verlag. 

Kim, W. C., & Mauborgne, R. (2015).  Blue ocean strategy: How to create uncontested market space and make the competition irrelevant . Boston, MA: Harvard Business School Publishing Corporation. 

Thompson, B. (October 27, 2016). Surface Studio, Nintendo Switch, and Niche Strategies.  Stratechery by Ben Thompson,  2016-10. 

Ziesak, J. (2009).  Wii Innovate - How Nintendo created a New Market through the Strategic Innovation Wii . München: GRIN Verlag GmbH.