Nintendo Wii: A 'Revolution' in Gaming?
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Case Code: BSTR247 Case Length: 21 Pages Period: 2004-2006 Pub Date: 2007 Teaching Note: Available |
Price: Rs.400 Organization: Nintendo Industry: Media, Entertainment, and Gaming Countries: Worldwide Themes: Differentiation, New Product Development |
Abstract Case Intro 1 Case Intro 2 Excerpts
"Our competitors are both going down the same path. Both believe that more and more performance with a higher and higher price tag are their keys to success. So what do I see? I think our two competitors will trade share between them, while we go off and grab share in a completely different way."
- Reginald Fils-Aime, President and Chief Operating Officer, Nintendo of America, in 2006.
"By letting Sony and Microsoft split the hardcore teenage/twenty-something video game marketplace, the Wii could end up number one in market share for the next generation."
- David Cole, Game analyst at San Diego-based DFC Intelligence,in 2006.
"If it's just the same pointing and shooting all the time, it won't be particularly attractive."
- Hiroshi Kamide, analyst, KBC Securities, commenting on the Wii, in 2006.
Introduction
On November 19, 2006, Nintendo Co. Ltd (Nintendo), a Japan-based game console manufacturer, launched the Wii, a video game console which came with a unique wireless controller called Wii Remote, in the US. The Wii made its debut in a highly charged gaming market. Sony had launched the Playstation 3 (PS3), a game console with a Blu-ray player, on November 17, 2006 in the US; Microsoft's game console, the Xbox 360, had been launched in November 2005 and had sold around five million units by June 2006. Nintendo, which started out as a manufacturer of playing cards in Japan, had gradually shifted to making toys and video games. It was in the 1980s that it launched its first game console, the Nintendo Entertainment System (NES), which went on to become a huge success.
The NES was followed by the Super Nintendo Entertainment System (SNES) in 1991, the Nintendo 64 in 1996, and the GameCube in 2001. However, in the early 2000s, Nintendo's fortunes in the game console market saw a gradual decline. The sales of Sony Playstation 2 and Microsoft Xbox far outpaced that of the Nintendo GameCube.
With Nintendo's market share falling, industry observers expected it to exit the game console industry. Nintendo, however, had other plans. In 2004, it announced that it had begun work on developing a new console. A few months into the development, Nintendo realized that the continuous technological upgradation in each succeeding generation of consoles was increasing hardware costs but discouraging innovation in the games industry. Therefore, it chose to tread a different path. It decided to develop a console that would offer gamers unique gameplay, even though it would not have the latest processor or graphics. For this purpose, it designed a completely new console called the Wii with a unique controller. Apart from the usual gamers, Nintendo wanted to attract casual gamers and people who had never played video games before.
To widen the appeal of its console, Nintendo priced the Wii low and provided online capabilities, backward compatibility (with GameCube games), and several multimedia features.
The Wii generated a lot of buzz because of its unique design and gameplay, and this was expected to translate into good sales. The Wii, however, faced several challenges. Analysts were skeptical about whether Wii's unique gameplay would be reason enough for serious gamers to accept a technologically inferior product; especially when the competing consoles (PS3 and Xbox 360) boasted of cutting-edge graphics and HD capabilities. In addition, the fact that games developed for the Wii could not be replicated for PCs or competitor's consoles was expected to reduce the number of prospective game developers for the system, resulting in fewer game titles being available for the Wii...
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