Shortly Discuss the Evolution of the Video Game Industry, Particularly in Terms of Competition and Technology

1. Shortly discuss the evolution of the video game industry, particularly in terms of competition and technology

In the early 1970s, the emergence of arcade machines in shopping malls and gaming venues around the world marked the onset of the gaming industry, thanks to large players such as Atari and Namco. The introduction of PCs in the 1980s set the stage for the era of Home consoles, following the large improvements in displays, processing power and memory to update game elements in real time. At that time, various Japanese companies took up the gaming industry. With the introduction of Sony’s PS in mid-1990s, the Japanese giant allowed to capture new players with higher disposable income, thereby growing the gaming industry’s audience base from teenager-focused to mainstream market. Sony later launched its PS2 in 2000, and Microsoft joined the arena one year later with Xbox. As the industry continued to experience significant changes driven by the technology convergence of the early 2000s (including broadband internet, HD videos, and hard-drive storage capacity), new opportunities started to arise, namely in online entertainment and video streaming, thus driving the industry players into a relentless pursuit of higher computing power and graphical interfaces. Interestingly, at that point in time, Nintendo decided to adopt a singular vision, out of the realization that, due the games’ increasingly steep learning curve and complexity, occasional or non-gamers were left out. Nintendo’s decision to develop simpler games for a novice mainstream audience led to the roll out of the DS handheld gaming devices, with quick set up and play, as well as a wireless gaming network. In the video game console segment however, having lost ground to the Sony PS2, and armed with the unorthodox will to serve casual and non-gamers, Nintendo introduced a new paradigm by rolling out its new console the Wii, thereby changing the game.

1. Analyze Nintendo disruptive strategy in details. What are the main features of this strategy that have made the Wii such an overwhelming success? How is it disruptive?

Nintendo’s strategy aimed at marketing its console as “a machine that puts smiles on surrounding people’s faces”, thereby reaching out to people who would not usually describe themselves as gamers, which represented an untapped majority of the market. This association set it apart from its competitors, solely dedicated to their initial customer base: the savvy gamers. Along with its simple design and ease of use, the Wii technology provided remarkable new features including the mimetic Motion control interface, which translates the movement of the wand into on-screen action, allowing real-life games simulations. Less expensive, casual and family-friendly, the Wii focused on putting the player at the heart of the experience, by transforming the space between him/her and the screen into a playground. Nintendo’s blue ocean strategy in this regard didn’t stem solely from its motion-sensitive technology (which already existed), nor did it derive from any inherently social features that competitors didn’t have, it is rather how the game was thought-out that made a difference. The emphasis on the social and health aspects of group activities taking place in the living room, exercising the whole body, standing up more often than sitting on the couch, waving arms instead of using small joypads, contrasted dramatically with the rather stationary and -more often than not- solitary traditional gaming. Since its inception as playing cards company in the 1890s, the company’s brand association with family fun and playful social interactions helped Nintendo retro-invent and reproduce the simplicity of early games. The strategy also aimed at developing early first-party titles that showcased the hardware, focusing on characters rather than special effects to reinforce the nostalgic advantage while cutting costs, allowing backward compatibility with previous games and accessories, and later, in a strategic move, loosening control over content and allowing independent developers to use the WiiWare distribution channel. From a resource-based view point, Nintendo benefitted from its experience in pressure-sensor accessories (Power Glove & Pad) and handheld devices (DS), its software catalogue of beloved historical franchises, its agility to develop the consoles by software engineers to match these games, among other cumulative effects, translated into a path dependency, which lead Nintendo to successfully Deploy, Innovate & Propagate its new technology in untapped markets, thus disrupting the gaming game.

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