Since 2006, video game console industry has been dominated by Sony, Microsoft, and Nintendo. Of these major players, Nintendo had smallest market share, even slowly kicked out and losing more and more until something happened when Nintendo came up with an innovative strategy to surprise their wealthier rivals.
Generally, game console company competing on graphic quality and high game performance to satisfy their market who called as ‘serious players’. As a result, company spent huge budget in order to produce a sophisticated game that has detail and complicated graphics.
Nintendo thought otherwise. They created a console with eliminate high resolution graphics and reduce processing power so that become lower than its industry standard. On the other hand, they offered more intertaining console like a remote control that lets players to control the movement through physical motion. It attracted neglected segment of the market: casual players who wanted simpler and more intuitive gaming experience. They named it ‘Nintendo Wii’.
Wii managed to sell a console in cheaper price and open wider market that Sony and Microsoft never imagined before. Nintendo successfully created new demand and generated revenue in billion dollars.
What pattern we can adopt from this case? What we should do to nail the competition are:
- Left the competition and look for neglected market.
- Create a leap in value for the company and customer while unlocking new demand and making the competition irrelevant.
In the business terms, this concept is known as the Blue Ocean Strategy. It challenges the company to get out from fierce, tight, and bleeding competition (illustrated by red ocean) then look for new possibilities that there isn’t any competitor there (ilustrated by blue ocean).
For further explanation about Blue Ocean Strategy include the methods that can be practiced, we’ll discuss it in other posts.