Understanding Nintendo’s Blue Ocean Approach to NX
Nintendo of America’s Reggie Fils-Aime has caused a bit of confusion amongst gaming fans this month after fielding a question posed by a journalist about the Nintendo NX.
When asked about if Nintendo’s next console — currently codenamed ‘NX’ — would be able to compete on a “power” level with Microsoft’s upcoming “Project Scorpio”, Reggie had this to say;
“We’re focused on bringing our best entertainment to both the Wii U as well as the NX in the future. So for us, whatever Microsoft and Sony are doing in terms of talking about new systems, that’s for them to fight out in that red ocean.”
Of course, this lead to widespread speculation that what we’ll get from NX will be a console of limited technical prowess, similar to the Wii which was often seen as a “generation behind” the competition, despite the fact that it introduced an entirely new way to interact with software thanks to its motion controllers.
What most commentators are missing in Reggie’s comments, however, was the nod to the Blue Ocean Strategy adopted by Nintendo to market the Wii console.
Essentially, when you come up with a new product you have a choice to either compete for customers with what’s already out there, or make something that caters to a different group of customers entirely. When you go into a bloody battle with competitors, this is called a “red ocean”. Think of two sharks going at it over a fish. Ignore the fight and head to a blue ocean, one where you’re the only shark, and you get all the fish.
This strategy worked wonders with Wii. At the time, Sony and Microsoft were offering high definition consoles with impressive hardware specs. Nintendo obviously could’ve done the exact same, but as GameCube was hardly a mega hit, doing so might’ve meant a third expensive console on the market with many of the same issues that burdened GameCube: increased competition from fierce rivals.
Instead, Nintendo offered a way to attract people who had never played video games before. The Wii’s motion controllers were instantly understandable to millions of people. It was high tech, but wasn’t confusing anyone with talk of “definition” or “teraflops”. If you could waggle your arm, you could play. I remember playing Wii Sports with my dad, it being the first time he’d ever seemed interested in gaming. Friends who never were interested in games would rush out to buy a Wii. Those other friends who loved games but hated Nintendo would also pick one up, probably to be socially relevant.
Nursing homes bought a game console for the first time. Oprah had the thing on her show. Games went from being something ogre-like teenagers would do in their bedrooms to something you could talk about at the dinner table. Nintendo might’ve lost the “hardcore gamer” market, but it made up for it tenfold in the “never touched a game in my life” market, because no one was daring to touch it before.
Since Wii, everyone and their dog has tried to break into the “casual” marketplace. Facebook rode the Wii wave and introduced games, and then everyone somehow realised they could afford iPhones which killed off social network games and introduced App-games, many of which are free. And so, the casual market was lost to the video game makers. Microsoft’s Kinect flopped, Sony’s PlayStation Eye/Camera, Move and Wonderbook all failed to gain momentum. The battle for the hardcore gamer dollar rages on with these two companies.
Nintendo actually unwittingly entered the Red Ocean when it launched Wii U. Had the console launched a year or so earlier, it wouldn’t be dropped in the middle of the iPad/Table battle. Since the iPad was such a success, the Wii U’s GamePad confused media who thought it was trying to compete with that growing market. Tablets became the extension of casual gaming, especially with younger kids. For whatever reason, Wii’s audience — who moved to Facebook then to iPhone — were now buying iPad. Nintendo, thinking it had something genuinely new with a dual screen video game device was left to vie for the attention of hardcore gamers who were being lured in with beefier specs afforded by the PlayStation 4 and Xbox One. With the Wii U hardware pouring off the production line, Nintendo had only the choice of swimming from the tablet Red Ocean to the game console Red Ocean.
Undoubtedly, Apple is the king of Red Ocean warfare. It never really re-invents the wheel, Apple merely makes the best looking wheel and convinces customers that it is the best choice. In the gaming Red Ocean, Sony is currently on top thanks to a crystal clear message around PlayStation 4. While Microsoft was trying to win dollars with grand ideas of TV integration and always online functionality, Sony assured gamers that it would be “more of the same” with PlayStation 4. That PS4 would be a PS3, but better. This, ironically, was how Nintendo won the Red Ocean battle back in the 1990’s with Super Nintendo. It was easy enough for most people to understand that the console was a NES (the biggest console at the time), but better.
At the same time, Nintendo was dominating the Blue Ocean with the GameBoy. This was a device created for an entirely new market: those who wanted to play games outside the home. Nothing like it really existed and while competitors popped up in the form of the Atari Lynx and the Sega Game Gear, the high price of those devices underlined Nintendo’s strategy of targeting a different class of consumer — one who didn’t care about fancy specifications — was key to victory.
The next console generation looms with Microsoft announcing it is working on “the most powerful console” and rumblings within Sony of a “Project Neo”. While the discussion around these devices talk about upgrading current hardware rather than throwing it out and starting fresh as has been the norm for gaming, Nintendo’s NX device is sounding like it will will be less about the best hardware imaginable and more about catering to the mass market consumer. A console for everyone.
Of course, it’s still a game console so it’s important that it be able to run whatever “flavour of the month” game that comes along. It just needs to do it in a simple, straightforward manner that is just “plug and play” or “set and forget” and not in a way that has people trying to understand the concept of “60fps” or “4k vs HD”. These concepts excite me as a gamer, but are too confusing and complicated to those who have lives and interests outside the gaming world.
It’s also worth noting that the “Blue Ocean” that Nintendo is targeting does not necessarily mean they’re going after the casual audience all over again. As I pointed out, the casual market is now a Red Ocean, or in fact will quickly become one if Nintendo rocks up to Apple’s ocean and starts snapping away.
I personally feel that Nintendo would best extend their success in the handheld gaming space. Since owning that Blue Ocean in 1989 with GameBoy, each successor handheld product has dominated. Competitors have popped up, but as they try to compete with power they miss the genius in Nintendo’s approach: the Nintendo 3DS doesn’t succeed because it’s the best example of a handheld device, it succeeds because it appeals to all kinds of people with a huge range of software. Not just gamers, not just kids, not just casual players. The fight for TV screen time is a little different, of course. It requires a different approach than the handheld space. If they could pull of a device that was both great to play on your TV but instantly worked perfectly in a handheld format it would stand alone in a Blue Ocean. There isn’t currently any device that does that excellently, and zero devices that does that with the kinds of games that Nintendo and third party video game developers can produce.
The closest thing to a hypothetical device that works well on your TV and can go with you is a tablet, like Microsoft Surface. But tablets aren’t suitable for games that Nintendo likes to make, games like The Legend of Zelda: Breath of the Wild. Of course, this is just one idea that I had. Nintendo has the technical expertise and the marketing data required to make their own decisions so it’s entirely possible it has something up its sleeve that I can’t yet comprehend.
The key here is to remember that Nintendo’s aim of releasing a “Blue Ocean product” is not cause for alarm. It’s almost a guarantee that the next few years will be quite fruitful for the gaming industry, that hopefully the market can be revitalised and the trend of game studios shuttering will come to an end as more cash is flooded into the development scene.
