Abstract
The paper provides the analysis of Wii as an innovative product that was launched by Nintendo in 2006. The paper aims at analyzing the case and answering the questions regarding the nature of the innovation, aspects of the value proposition, and details of the used business model. The analysis is concluded with noting that Wii was promoted as the radical innovation in the broadened market that created conditions for the market competition at a new level.
Nintendo Wii: Case Study Analysis
In spite of the fact that Nintendo experienced difficulties with developing the business, proposing new products, and winning the market position during the 1990s, the focus on the development of an innovative device in 2006 changed the situation. Nintendo launched Wii, a new console for video gaming, and this event changed the market development for the next years. From this point, it is important to focus on analyzing Wii’s place in the innovation matrix in terms of its typology, discussing the value proposition, and evaluating the business model.
Wii’s Place in the Innovation Matrix
Innovation is regarded as the proposition of a new approach, object, or product, and it can be incremental or radical, depending on its nature (Herzog & Leker 2010). The incremental innovation is observed when designers work to improve the existing product or approach (Verganti 2013). The radical innovation usually means the change in a meaning of the product, as well as its form, and the addition of a new product to the existing market, as well as the formation of a new market (Battistella, Biotto & De Toni 2012).
While discussing the location of Nintendo’s Wii in the innovation matrix that has two opposites, it is possible to state that Wii has features of the radical innovation because Nintendo proposed not only a new console for games. Thus, the company changed the approach to video gaming while targeting the new group of customers, altering the meaning and nature of games, broadening the environment, and applying a new technology (Smith 2015). As a result, Nintendo’s competitors focused on proposing alternative products with the similar qualities, and the implementation of the radical innovation led to creating a new market segment.
Value Proposition
While implementing Wii, Nintendo focused on the value proposition for the target customers who were not discussed as potential consumers of products for video gaming previously. Nintendo chose to focus not on skilled gamers, but on female users, families, first-time gamers, and older persons (Smith 2015). The reason was in the fact that skilled gamers traditionally chose the PlayStation and the Xbox that were characterized by the application of the high-level technology and by the high reputation among the target population.
Nintendo could have difficulties with reaching this population while proposing the similar product. However, Nintendo chose to focus on the unique value proposition for the audience in a new niche (Smith 2015). Wii was developed for the wide group of users, and, instead of playing with the help of traditional joysticks and consoles, individuals received the opportunity to simulate different games in three dimensions, and the experience was similar to playing a real game.
The use of the wireless technology to control motions was innovative and attractive for the wide public, including non-gamers. The proposed value was unique for the targeted market, but the demand was high (Abbing 2010). The PlayStation and the Xbox were based on the use of buttons and joysticks to simulate the game, but the use of wireless sensors and controllers in Wii allowed for concentrating on the high-quality simulation.
Business Model and Revenue Generation
The effectiveness of the used business model determines the company’s profitability and the customer’s loyalty (Verganti 2013). The business model used by Nintendo depends on methods that were used for creating and capturing the value. In order to make the audience recognize the advantages of Wii, Nintendo concentrated on accentuating the product’s closeness to the world of real games, the product’s availability to families and non-skilled gamers, and the simplicity of using the product.
In order to guarantee the value capture, it was necessary to demonstrate how the comparably inexpensive device could be more advantageous than the PlayStation and the Xbox because it could be used by the whole family (Smith 2015). From this point, the main revenue generation mechanism used by Nintendo was based on the idea of utilizing innovative but simple sensor technologies in order to provide users with an opportunity to receive the unique experience that was available at a price similar to prices offered by competitors (Smith 2015). However, during a long period of time, the competitors could not propose adequate alternatives for the broadened group of customers, and Wii remained to be a leader in the market.
Conclusion
The focus of Nintendo on using simple technologies for simulating games that are oriented to the wide population of users led to creating a new tendency in the market of video games. The functions that were proposed by the PlayStation and the Xbox did not address the public’s demand anymore. This approach to winning the market position, addressing competitors, and gaining the audience’s recognition resulted in significant revenues. Thus, Nintendo can be regarded as a company that chose a path of completing the radical change and proposing the unique innovation.
Reference List
Abbing, E 2010, Brand driven innovation: strategies for development and design, Ava Publishing, New York.
Battistella, C, Biotto, G & De Toni, A 2012, ‘From design driven innovation to meaning strategy’, Management Decision, vol. 50, no. 4, pp. 718-743.
Herzog, P & Leker, J 2010, ‘Open and closed innovation-different innovation cultures for different strategies’, International Journal of Technology Management, vol. 52, no. 4, pp. 322-343.
Smith, D 2015, Exploring innovation, McGraw-Hill Education, Maidenhead.
Verganti, R 2013, Design driven innovation, Harvard Business Press, New York.