that is geared towards families as it allows for the Wii U to be in use even if

That is geared towards families as it allows for the

This preview shows page 8 - 10 out of 11 pages.

that is geared towards families, as it allows for the Wii U to be in use even if another family member wishes to use the TV for another purpose. However, if the original Wii represented a shift away from the hardcore gaming market, the Wii U signals a movement back towards the hardcore gaming market space. The GamePad, although innovative, actually resembles a traditional controller in more ways than the original Wii motion controls. Nintendo has equipped the Wii U with features that allow it to be used as a multimedia entertainment device rather than only as a video game console. These features focus on online services, instead of physical media. This strategy signifies Nintendo’s intention to look forward, rather than backwards. For example: Nintendo has placed a large emphasis on the entertainment features of the Wii U. The Nintendo TVii service, launched at the end of 2012, is a service that combines TV streaming services, social media, and movie streaming services such as Netflix and Amazon Instant Video (Reisinger, 2012). The Wii U is available at two price points: Basic ($300 in the USA) and Deluxe ($350 in the USA). With these prices Nintendo will take a loss on selling the hardware, but as soon as the consumer buys one piece of software, the entire customer relationship becomes positive in terms of profits for Nintendo. The purpose of the business model is to drive the installation base of hardware, and then to drive a strong tie-in ratio with all the software (games) for the consumer (Robinson, 2012). Until now the sales of the new Wii U has been disappointing for the Nintendo management. By the end of July 2013 the U console had sold 3.6 million units, clearly under Nintento’s prediction of 5.5 million. The console is still being sold with a loss, and all the profits are generated on the games (Byford, 2013). The question is whether Nintendo can still create another ‘‘Blue Ocean’’. These worries about Nintendo’s Wii U come at a time when smartphones and tablet PCs are taking shares away from games consoles. Table I shows the worldwide sales of games consoles (in millions units) from 2005 to 2012, together with the corresponding world market shares, which are also illustrated in Figure 2. Nintendo’s launch of the its ‘‘Wii’’ in 2006 was highly successful. In the world market for game consoles Nintendo Wii moved from third place to first place within a year of introduction. As seen in Figure 2, the peak in terms of market share came in. Since then the market share has gone down to a low point of 25 percent in 2012 (Table I). The sales of Nintendo Wii U in 2013 (until September 2013) indicate a further decrease in the market share. This has led the management to use price cuts on Wii U as an attempt to stop the decrease of world market share (Reuters, 2013) PAGE 32 j JOURNAL OF BUSINESS STRATEGY j VOL. 34 NO. 5 2013
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Conclusion This case underlines that the Blue Ocean strategy cannot be a static process (Kim and Mauborgne, 2005b).
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  • Fall '14
  • Wii, Video game console, Nintendo Wii, Nintendo Playing Card Company

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