Captain
10-04-2008, 02:27 PM
Nintendo's newfound success was the result of careful planning, not accidental decisions, and Nathan explores the company's use of the “Blue Ocean Strategy”.
“When I think of what faces all of us right now, I imagine what it must have been like for the explorers who first set foot on a new continent. For them, it was impossible to imagine all the adventure that lay ahead.” - Satoru Iwata, GDC, 2006.
And as did Captain Cook and his crew, on the Endeavour, first gazed upon the beautiful land we now know as Australia, we gamers hung on these words, most breaths baited with anticipation, as the ‘rejection of norm’ could have the potential to change the very way that we game. Hold on tight, as we are now swimming in the ‘blue ocean’. However from this seemingly innocent concept spawned an even bigger battle – hardcore v. casual – in what some see as a winner takes all death match. But is this reality, or a serious case of misunderstanding?
“In the past, you've heard us talk about blue ocean strategy and innovator's dilemma and our role in this industry as a disruptor. But let me showcase for you another way to think about what it is that we're doing in this marketplace -- another way to look at our strategy.” – Reggie Fils-Aime, Nintendo Summit for Summer 2007.
Ever since the dawn of the ‘revolution’ we’ve all heard the term ‘blue ocean strategy’ thrown around in the various speeches by Nintendo executives and press releases - however what is truly meant by this term? Firstly the term “Blue Ocean Strategy” (2005) is the title of a book, which explains this business strategy – and admittedly whilst I did not read the whole thing on my brief flick through, not once did the term ‘casual gaming’ arise – and this is where there is a misconception as well as a misunderstanding of the term by us hardcore gamers.
W.Chan Kim explains (http://www.insead.edu/alumni/newsletter/February2005/Interview.pdf) that “the metaphor of red and blue oceans describes the market universe. Red oceans are all the industries in existence today—the known market space. In the red oceans, industry boundaries are defined and accepted, and the competitive rules of the game are known. Here companies try to outperform their rivals to grab a greater share of product or service demand. As the market space gets crowded, prospects for profits and growth are reduced. Hence, the term red oceans.”
We as video game fans understand this excerpt very well, and describes almost to perfection the outcome of the last two generations of hardware. It hits especially harder as Nintendo fans, when we realise we, as of last generation were forced into the niche market. Personally one can read W. Chan Kim’s metaphor a little deeper and compare the red ocean to that of waters that are patrolled by hungry sharks that will stop at nothing to achieve their market share – with the ‘red’ referring to bloodshed.
‘Blue oceans’, as W. Chan Kim continues to explain (http://www.insead.edu/alumni/newsletter/February2005/Interview.pdf), ”…denote all the industries not in existence today—the unknown market space, untainted by competition. In blue oceans, demand is created rather than fought over. There is ample opportunity for growth that is both profitable and rapid. In blue oceans, competition is irrelevant because the rules of the game are waiting to be set. Blue ocean is an analogy to describe the wider, deeper potential of market space that is not yet explored.”
http://www.aussie-nintendo.com/images/NEWS/feature_blue_ocean_strategy.jpg
And from this strategy the Wii is conceived. The Wii aimed to reinvigorate gamers that no longer played, reignite the magic that is gaming for these people, or to introduce people to gaming in the first place – this includes all of the females, families and non gamers that are swimming around in the blue ocean. The aim is to expand upon what the industry already is, not to further water it down.
“Many in the industry think as long as we keep on doing the same things ... the industry will continue to grow. I'm afraid this idea is deeply ingrained in many minds. Will video game players become bored and cause the industry to shrink? We have to expand the market. To do so, we have to abandon the memories of the past and get back to the basics. The whole industry must make an effort. First, unless we can increase the number of people who are willing to play, we can never expand the market. If we cannot expand the market, all we can do is just wait for the industry to slowly die." - Satoru Iwata, GDC, 2006.
“It is our responsibility to make games for all skill levels. Technology can't advance the business.” - Reggie Fils-Aime, 2005, IGN (http://ds.ign.com/articles/664/664482p2.html).
These two statements are perhaps the scariest for hardcore gamers, the later in particular, but what is it that scares the hardcore gamer about the term ‘casual’. There is no word that strikes greater fear into the heart of a reformed video game player, and perhaps for good reason. These are gamers that have grown up playing games, and evolved along with them. We see the games we play as, for lack of a better term, art. We throw our very essence at these games and we expect the same in return, anything less then an immersing, challenging, epic game and we turn our noses up in disgust. We criticise every little pixel, every element of game play, ever striving for a perfect experience.
A ‘casual game’, a term that I use with much disdain, (in the eyes of a core gamer) is the equivalent of someone taking a black marker pen and drawing a thick, bushy, Mario-like moustache on Leonardo Da Vinci’s ‘Mona Lisa’. But why is it the common belief among ‘hardcore gamers’ that these games will be the death of the experiences of what we hold dear?
This leads me directly to my next point – the Nintendo DS. The Nintendo DS was all but laughed upon by the gaming media and the world, with some going as far to compare it to one of Nintendo’s other great failures, the Virtual Boy. The audience, as well as the gaming industry, took its time to come to grips with the technology, let alone the concept behind playing games on the system. The result – game after game of mini games or terrible ports. So were the core gamers right to fear this console?
Deep inside Kyoto, in Nintendo headquarters, they were already busy fishing in the blue ocean. Nintendo dropped, perhaps what will be the biggest bomb the DS will see – Nintendogs. This title allowed people to interpret and understand what the hardware was all about, through the use of easily accessible software everybody could now become a gamer. Coupled with the success of other ‘mainstream’ titles such as the Brain Age series, non-gamers, or gamers who had stopped gaming, were now participating.
Nintendo so eloquently referred to these titles as ‘bridging titles’ – where the ‘casual gamer’ wet their appetite on these games and moved onto something more ‘core’, which was exactly the case with titles such as Mario Kart DS, or New Super Mario Bros.. These gamers would have been oblivious to such titles as these if it weren’t for Nintendogs and the Brain Age titles, proving core titles are far from dead.
Then at this point of the tale we are all aware of what happened, the DS exploded and became a phenomenon, but that was only the tip of the ice-berg. The DS, the system that nobody believed in, now has had Final Fantasy remakes, and is the exclusive console for Dragon Quest IX.
“Over the years, our industry has come to accept progress simply by what’s on the screen. I know many of you were back in our audience in 1996 when Super Mario 64 jumped to life in true 3D. And you said, “Man, that looks great.” But that leap toward a revolutionary form of gaming wasn’t really about the looks. Even then, it was about the feel. Moving your character and your viewpoint, independently, in any direction, all in real-time. And the memory of that moment was also the starting point for Wii. In the same way that Super Mario 64 changed everything, we asked, “How do we make video games that make everything feel new all over again?” This week, every one of you will FEEL our answer.” – Reggie Fils-Aime (2006 E3 Press Conference)
The Wii, which many believe to be a result of the success of the DS, and perhaps would not have seen the light of day if the DS had failed, is now removing the stigma and the negative overtones of being a ‘gamer’. So should we fear such titles as Wii Sports, Wii Play and half of the current Wii games roster? Using the DS as a similar case study one sees that the gamer, as well as the games industry, has to be re-educated on how to play and create games. Using these ‘casual’ games as bridging titles once again, titles such as Super Smash Bros. Brawl, Mario Kart Wii, Super Mario Galaxy and any number of ‘core’ third party titles, all have the potential to be experienced by those that would otherwise not have dared. So core gamers please do not panic, games are coming.
So this again generates another question, apart from Nintendo’s own survival in the gaming world was this shift in direction necessary for the industry as a whole? Since 1997 the gaming industry in Japan has been in a decline. Allow me to use The Legend of Zelda franchise sales as an example.
http://www.aussie-nintendo.com/images/NEWS/feature_blue_ocean_zelda_stats.jpg
The sales of one of Nintendo’s key franchises in Japan is a little alarming, as with every title since Ocarina of Time, sales numbers have fallen. It is not an issue of quality, as all of these titles have rated very highly. The Legend of Zelda series epitomises the very meaning of the term ‘core’ game. Notice that the last title on the list, Phantom Hourglass, actually begins to reclaim lost ground. Two things that can be read of this; Either this title sold well due to the popularity of the DS (which in itself means that potential ‘casual gamers’ are picking up the title) or the new approach to control and features of the title actually have encouraged Japan to give Zelda another try.
Nintendo took the Zelda franchise, dragged it from the blood drenched red waters, and ‘disrupted’ the norm, and created an entirely new audience. This is referred to as a ‘disruptive trend’.
“Just as disruptive technology is set to prove vital to the coming console generation, so too will this disruptive trend in software be key - and the ability of publishers and platform-holders to embrace this trend could help to decide the winners and losers of the coming years.” -Rob Fahey, 2006, Games Industry.biz (http://www.gamesindustry.biz/content_page.php?aid=17739)
The video game console industry has always, from the very beginning been about creating software to take advantage of the hardware, and in this generation, even very early this has become very clear already. The Wii Remote or the touch screen of the DS are merely the interface that allows us humans to partake in these digitally created worlds. This is not the first time that Nintendo has ventured into the ‘blue ocean’, they first started to tread the water about 20 years ago with the NES, which totally disrupted the way the video game market was heading at the time. Iwata sums it up best "Even before someone invented the term blue-ocean strategy, we were exercising it. It is an unwritten company credo, something that runs deep in our DNA."
“Nintendo’s Revolution will be its last console; it's a two-horse race right now." -Michael Wallace, UBS Analyst (http://kotaku.com/gaming/console-wars/analyst-revolution-nintendos-last-console-138532.php)
So have patience, don’t dismiss early on in this generation, because even if the Wii is a stepping stone to another more interesting land, at least ‘core gamers’ and ‘casual gamers’ will be able to board the boat and sail into the ‘blue ocean’ together.
By Nathan Powell
“When I think of what faces all of us right now, I imagine what it must have been like for the explorers who first set foot on a new continent. For them, it was impossible to imagine all the adventure that lay ahead.” - Satoru Iwata, GDC, 2006.
And as did Captain Cook and his crew, on the Endeavour, first gazed upon the beautiful land we now know as Australia, we gamers hung on these words, most breaths baited with anticipation, as the ‘rejection of norm’ could have the potential to change the very way that we game. Hold on tight, as we are now swimming in the ‘blue ocean’. However from this seemingly innocent concept spawned an even bigger battle – hardcore v. casual – in what some see as a winner takes all death match. But is this reality, or a serious case of misunderstanding?
“In the past, you've heard us talk about blue ocean strategy and innovator's dilemma and our role in this industry as a disruptor. But let me showcase for you another way to think about what it is that we're doing in this marketplace -- another way to look at our strategy.” – Reggie Fils-Aime, Nintendo Summit for Summer 2007.
Ever since the dawn of the ‘revolution’ we’ve all heard the term ‘blue ocean strategy’ thrown around in the various speeches by Nintendo executives and press releases - however what is truly meant by this term? Firstly the term “Blue Ocean Strategy” (2005) is the title of a book, which explains this business strategy – and admittedly whilst I did not read the whole thing on my brief flick through, not once did the term ‘casual gaming’ arise – and this is where there is a misconception as well as a misunderstanding of the term by us hardcore gamers.
W.Chan Kim explains (http://www.insead.edu/alumni/newsletter/February2005/Interview.pdf) that “the metaphor of red and blue oceans describes the market universe. Red oceans are all the industries in existence today—the known market space. In the red oceans, industry boundaries are defined and accepted, and the competitive rules of the game are known. Here companies try to outperform their rivals to grab a greater share of product or service demand. As the market space gets crowded, prospects for profits and growth are reduced. Hence, the term red oceans.”
We as video game fans understand this excerpt very well, and describes almost to perfection the outcome of the last two generations of hardware. It hits especially harder as Nintendo fans, when we realise we, as of last generation were forced into the niche market. Personally one can read W. Chan Kim’s metaphor a little deeper and compare the red ocean to that of waters that are patrolled by hungry sharks that will stop at nothing to achieve their market share – with the ‘red’ referring to bloodshed.
‘Blue oceans’, as W. Chan Kim continues to explain (http://www.insead.edu/alumni/newsletter/February2005/Interview.pdf), ”…denote all the industries not in existence today—the unknown market space, untainted by competition. In blue oceans, demand is created rather than fought over. There is ample opportunity for growth that is both profitable and rapid. In blue oceans, competition is irrelevant because the rules of the game are waiting to be set. Blue ocean is an analogy to describe the wider, deeper potential of market space that is not yet explored.”
http://www.aussie-nintendo.com/images/NEWS/feature_blue_ocean_strategy.jpg
And from this strategy the Wii is conceived. The Wii aimed to reinvigorate gamers that no longer played, reignite the magic that is gaming for these people, or to introduce people to gaming in the first place – this includes all of the females, families and non gamers that are swimming around in the blue ocean. The aim is to expand upon what the industry already is, not to further water it down.
“Many in the industry think as long as we keep on doing the same things ... the industry will continue to grow. I'm afraid this idea is deeply ingrained in many minds. Will video game players become bored and cause the industry to shrink? We have to expand the market. To do so, we have to abandon the memories of the past and get back to the basics. The whole industry must make an effort. First, unless we can increase the number of people who are willing to play, we can never expand the market. If we cannot expand the market, all we can do is just wait for the industry to slowly die." - Satoru Iwata, GDC, 2006.
“It is our responsibility to make games for all skill levels. Technology can't advance the business.” - Reggie Fils-Aime, 2005, IGN (http://ds.ign.com/articles/664/664482p2.html).
These two statements are perhaps the scariest for hardcore gamers, the later in particular, but what is it that scares the hardcore gamer about the term ‘casual’. There is no word that strikes greater fear into the heart of a reformed video game player, and perhaps for good reason. These are gamers that have grown up playing games, and evolved along with them. We see the games we play as, for lack of a better term, art. We throw our very essence at these games and we expect the same in return, anything less then an immersing, challenging, epic game and we turn our noses up in disgust. We criticise every little pixel, every element of game play, ever striving for a perfect experience.
A ‘casual game’, a term that I use with much disdain, (in the eyes of a core gamer) is the equivalent of someone taking a black marker pen and drawing a thick, bushy, Mario-like moustache on Leonardo Da Vinci’s ‘Mona Lisa’. But why is it the common belief among ‘hardcore gamers’ that these games will be the death of the experiences of what we hold dear?
This leads me directly to my next point – the Nintendo DS. The Nintendo DS was all but laughed upon by the gaming media and the world, with some going as far to compare it to one of Nintendo’s other great failures, the Virtual Boy. The audience, as well as the gaming industry, took its time to come to grips with the technology, let alone the concept behind playing games on the system. The result – game after game of mini games or terrible ports. So were the core gamers right to fear this console?
Deep inside Kyoto, in Nintendo headquarters, they were already busy fishing in the blue ocean. Nintendo dropped, perhaps what will be the biggest bomb the DS will see – Nintendogs. This title allowed people to interpret and understand what the hardware was all about, through the use of easily accessible software everybody could now become a gamer. Coupled with the success of other ‘mainstream’ titles such as the Brain Age series, non-gamers, or gamers who had stopped gaming, were now participating.
Nintendo so eloquently referred to these titles as ‘bridging titles’ – where the ‘casual gamer’ wet their appetite on these games and moved onto something more ‘core’, which was exactly the case with titles such as Mario Kart DS, or New Super Mario Bros.. These gamers would have been oblivious to such titles as these if it weren’t for Nintendogs and the Brain Age titles, proving core titles are far from dead.
Then at this point of the tale we are all aware of what happened, the DS exploded and became a phenomenon, but that was only the tip of the ice-berg. The DS, the system that nobody believed in, now has had Final Fantasy remakes, and is the exclusive console for Dragon Quest IX.
“Over the years, our industry has come to accept progress simply by what’s on the screen. I know many of you were back in our audience in 1996 when Super Mario 64 jumped to life in true 3D. And you said, “Man, that looks great.” But that leap toward a revolutionary form of gaming wasn’t really about the looks. Even then, it was about the feel. Moving your character and your viewpoint, independently, in any direction, all in real-time. And the memory of that moment was also the starting point for Wii. In the same way that Super Mario 64 changed everything, we asked, “How do we make video games that make everything feel new all over again?” This week, every one of you will FEEL our answer.” – Reggie Fils-Aime (2006 E3 Press Conference)
The Wii, which many believe to be a result of the success of the DS, and perhaps would not have seen the light of day if the DS had failed, is now removing the stigma and the negative overtones of being a ‘gamer’. So should we fear such titles as Wii Sports, Wii Play and half of the current Wii games roster? Using the DS as a similar case study one sees that the gamer, as well as the games industry, has to be re-educated on how to play and create games. Using these ‘casual’ games as bridging titles once again, titles such as Super Smash Bros. Brawl, Mario Kart Wii, Super Mario Galaxy and any number of ‘core’ third party titles, all have the potential to be experienced by those that would otherwise not have dared. So core gamers please do not panic, games are coming.
So this again generates another question, apart from Nintendo’s own survival in the gaming world was this shift in direction necessary for the industry as a whole? Since 1997 the gaming industry in Japan has been in a decline. Allow me to use The Legend of Zelda franchise sales as an example.
http://www.aussie-nintendo.com/images/NEWS/feature_blue_ocean_zelda_stats.jpg
The sales of one of Nintendo’s key franchises in Japan is a little alarming, as with every title since Ocarina of Time, sales numbers have fallen. It is not an issue of quality, as all of these titles have rated very highly. The Legend of Zelda series epitomises the very meaning of the term ‘core’ game. Notice that the last title on the list, Phantom Hourglass, actually begins to reclaim lost ground. Two things that can be read of this; Either this title sold well due to the popularity of the DS (which in itself means that potential ‘casual gamers’ are picking up the title) or the new approach to control and features of the title actually have encouraged Japan to give Zelda another try.
Nintendo took the Zelda franchise, dragged it from the blood drenched red waters, and ‘disrupted’ the norm, and created an entirely new audience. This is referred to as a ‘disruptive trend’.
“Just as disruptive technology is set to prove vital to the coming console generation, so too will this disruptive trend in software be key - and the ability of publishers and platform-holders to embrace this trend could help to decide the winners and losers of the coming years.” -Rob Fahey, 2006, Games Industry.biz (http://www.gamesindustry.biz/content_page.php?aid=17739)
The video game console industry has always, from the very beginning been about creating software to take advantage of the hardware, and in this generation, even very early this has become very clear already. The Wii Remote or the touch screen of the DS are merely the interface that allows us humans to partake in these digitally created worlds. This is not the first time that Nintendo has ventured into the ‘blue ocean’, they first started to tread the water about 20 years ago with the NES, which totally disrupted the way the video game market was heading at the time. Iwata sums it up best "Even before someone invented the term blue-ocean strategy, we were exercising it. It is an unwritten company credo, something that runs deep in our DNA."
“Nintendo’s Revolution will be its last console; it's a two-horse race right now." -Michael Wallace, UBS Analyst (http://kotaku.com/gaming/console-wars/analyst-revolution-nintendos-last-console-138532.php)
So have patience, don’t dismiss early on in this generation, because even if the Wii is a stepping stone to another more interesting land, at least ‘core gamers’ and ‘casual gamers’ will be able to board the boat and sail into the ‘blue ocean’ together.
By Nathan Powell