By now the Wii’s runaway success seems inevitable like that of the iPod or Google search. Remember though, the iPod faced entrenched competitors like Creative and when Google entered the market search was considered a “solved” problem by the likes of Yahoo and Excite.
Fortune’s latest issue features a piece titled Wii Will Rock You by Jeffrey M. O’brien that teaches valuable lessons about how Nintendo managed to punch above its weight and upset big scary competitors.
Lesson 1: “Battle indifference not the competition”
Nintendo realized that it couldn’t compete with Microsoft and Sony on brute hardware power. Instead Nintendo focused on a new controller that would reinvent the gaming experience and differentiate the Wii from Xbox and the PS3.
Nintendo CEO Satoru Iwata sums up his strategy: “We are not competing against Sony or Microsoft. We are battling the indifference of people who have no interest in videogames.”
Naturally, Sony misses the point: “If you’ve built your console on an innovative controller, you have to ask yourself, Is that long term.” - Jack Tretton, CEO Sony Computer Entertainment America.
Yes, Jack, it is long term. That’s what Nintendo has been doing from the original cross pad controller, to the DS touch pad, to the Wii-mote. New controllers unleash new types of games and new markets. The Nintendo DS is an example of this. At first a touchscreen seems out of place on a handheld, then you play Brain Age or Nintendogs. Also, if your game depends on special controllers you can generate unique games that are hard to port to other consoles or emulators.
A happy secondary effect of Nintendo’s battle with indifference is that developers are excited by the new ways they can design games. Would you rather work on yet another Madden football game or the inevitable lightsaber game you’ve been dreaming of since childhood?
Lesson 2: Do it on the cheap
While Sony and Microsoft heated up the hardware arms race, Nintendo opted out and used mostly off the shelf components. While Sony lost money on every PS3 sold, Nintendo was turning a profit on every Wii from day one. It’s so elegant: throwing more CPU cycles at games had reached diminishing returns in gameplay, so Nintendo used cheap off the shelp parts to build a revolutionary controller.
Again, there’s a benefit to developers. Since the Wii isn’t Hi-Def, it’s cheaper to develop games ($5 million vs. $20 million according to the article). This of course means that more games can be produced and having a large number of titles is the lifeblood of any game console.
The net effect of doing it on the cheap? According to Fortune, in 2006 Nintendo generated $2.5 million per each of its 3,400 employees while Microsoft generated $624,000 per employee.
Lesson 3: Use your strengths, exploit competitors’ weaknesses
This is an obvious lesson in any competitive field, but it bears repeating because it’s so powerful. Nintendo owns the intersection of innovative gaming software and hardware like nobody else, so that’s where they made their stand.1
- For hardware nerds, here’s an infographic of the various chips that make up the Wii-mote.
- Nintendo gaming pioneer Gunpei Yokoi on repurposing existing technology in unexpected new ways
- On the History Channel show Dogfights pilots always talk about this. For example, Allied pilots would simply refuse to get into turning fights with the more manueverable Japanese Zeros. Instead they would force the Zeros to engage them in head to head slugouts where the Allied planes’ armor and self sealing gas tanks ensured victory.
