From an email:
You’ll love this:
http://www.nintendo.co.jp/ir/en/library/events/110608qa/index.html
I’m pretty sure the first question was meant to be a rhetorical question:
Six years ago before the Wii launched, we discussed the Blue Ocean strategy, a strategy which aimed to bring in lapsed gamers and to capture non-gamers. The Wii, I think, appropriately addressed that issue in that it made gaming accessible to everyone. So, you addressed a consumer need that consumers did not know they had; but when they picked up the remote for the first time, they said, “Wow, I could be a gamer,” and people were immediately drawn in, and you were very successful. What consumer need does Wii U address that will attract new gamers, keep gamers within the Wii family or potentially take market share from the other HD consoles? Or, what is the feature that you think will draw consumers to this platform?
Iwata proceeded to answer the rhetorical question with a hollow answer. I may not agree with you on many things, Sean, but I most definitely agree that the Wii U is a Red Ocean product.
Everyone will agree with me… eventually. Thomas Paine says, “Time converts more than reason.”
But why do you think the question is rhetorical? That doesn’t even make any sense. At an investor Q and A, how could any question be ‘rhetorical’?
The Blue Ocean Strategy is about uncontested marketspace. What part of the Wii U strategy is about uncontested marketspace? Iwata answers in a cliche: ‘hardcore market and casual market’. With Kinect and Move, Sony and Microsoft are clearly in ‘casual’ and ‘hardcore’ markets and Nintendo would be competing among those gamers (if you look at it as Iwata is). It is pure Red Ocean.
Here is how Iwata answered the question:
So, the first thing that we did when we designed the Wii U console was to think about what we could do to enhance and refresh the Wii experience.
We started by looking at some of the things that we wanted to achieve, but weren’t fully able to, with the original Wii console. And, we also looked at things like technological advancements in terms of the penetration of HDTV, and we have incorporated it into the Wii U console.
What we are proposing this time with Wii U is a console that will give those consumers who did not even have an opportunity to interact with the Wii system, more opportunities to connect with and use the Wii U console and, at the same time, offer the consumers who desire those high-quality HD visuals in their gameplay, a product that will meet their needs as well.
In Nintendo’s E3 Presentation, I mentioned that there are now two categories of consoles: one for casual players, and the other is for core gamers. In our world, what has been said is that there have been two categories of players: one group is casual and the other group is core and that there is a barrier between these two groups. We believe novice players, who started playing games as casual players (since there is no one who is inherently a core gamer), come to have a budding interest in games and spend a greater amount of time with gameplay so that they mature into core gamers. What we have tried to do with the Wii U console is to create an environment where we can break down the barrier that exists between those two groups and provide, on a single console, an experience that will satisfy both types of users. Through that process we continue to expand the gaming population.
I believe the concept of the “Blue Ocean” conveys the idea that if you try to have too broad of a focus, then you may not have as great of an impact, or things may not go as well as you desire. So, part of the philosophy of the Blue Ocean strategy is to really bring your focus into a specific area by “abandoning” or “eliminating” some good ideas.
Perhaps the reason that you asked this question is because you may feel that we have lost our focus by going with this seemingly broader strategy.
So, to define what the focus is this time, there are really two points that we are focused on. One is that we looked at the system and we asked the question, what can we do to attract people who were not inspired by even the Wii Remote or the Wii Balance Board to participate in video gaming, and how can we, through this system, capture their attention? The second point that we focused on was how can we satisfy and meet the needs of everyone in the industry who is developing games now and their desire for HD visuals, and how can we convince them that this will be a system with which “they can take full advantage of their game development.”
Let me go through this…
So, the first thing that we did when we designed the Wii U console was to think about what we could do to enhance and refresh the Wii experience.
We started by looking at some of the things that we wanted to achieve, but weren’t fully able to, with the original Wii console. And, we also looked at things like technological advancements in terms of the penetration of HDTV, and we have incorporated it into the Wii U console.
Stop the tape. This has nothing to do with the question. Of course you are going to upgrade your console technologically. Durrr. That happens with all consumer products. Blue Ocean Strategy is about uncontested marketspace. The investor wants to know why the Wii U does not suggest it is going to any uncontested marketspace. And if the Wii U isn’t going for uncontested marketspace, what is the Wii U’s strategy in the contested space?
Resume the tape.
What we are proposing this time with Wii U is a console that will give those consumers who did not even have an opportunity to interact with the Wii system, more opportunities to connect with and use the Wii U console and, at the same time, offer the consumers who desire those high-quality HD visuals in their gameplay, a product that will meet their needs as well.
So let me get this straight. The reason why consumers did not play the Wii enough was because of lack of opportunities? Apparently, baseball games were such a problem that the console must now resort to being played in the controller? Why even bother buying a home console then? Why not just buy a handheld? This isn’t uncontested marketspace. This is where handheld games occupy. If someone is playing the PlayStation 3 and another person walks in and demands to watch the baseball game, that person could switch to the PSP or Vita or DS. How is this a new market space?
In Nintendo’s E3 Presentation, I mentioned that there are now two categories of consoles: one for casual players, and the other is for core gamers.
Stop the tape.
I am not a ‘hardcore gamer’. I am not a ‘casual gamer’. What the hell am I? Whatever I am, Iwata is telling me that the Wii U is not for me.
Resume the tape.
In our world, what has been said is that there have been two categories of players: one group is casual and the other group is core and that there is a barrier between these two groups.
Stop the tape! Stop the tape!
Who invented the term called ‘bridge games’? Why, that would be Mr. Iwata! Now, Iwata is saying ‘bridge games’ never existed?
Mario Kart Wii was a ‘bridge game’. So was ‘Super Mario Brothers 5’. And on the DS, so was NSMB DS. These so-called ‘bridge games’ are all Old School-esque games. It is a philosophy of gaming Nintendo has been running away from since the N64. Maybe a single definition of gaming DOES exist. Hell, a single definition exists for movies, novels, theaters, and music.
Gaming wasn’t invented by computers. Gaming has carried on through millenniums just fine. If Nintendo made cars, they would be re-inventing the wheel because they never accepted a single definition of ‘transportation’.
Resume this stupid tape.
We believe novice players, who started playing games as casual players (since there is no one who is inherently a core gamer), come to have a budding interest in games and spend a greater amount of time with gameplay so that they mature into core gamers. What we have tried to do with the Wii U console is to create an environment where we can break down the barrier that exists between those two groups and provide, on a single console, an experience that will satisfy both types of users. Through that process we continue to expand the gaming population.
It’s called the NES. It’s called arcade games. You guys did all this before. Old School gaming satisfies both. But you don’t want to face that reality.
Iwata’s talk of hardcore and casual is slang and has no place in a business discussion. When Blue Ocean Strategy is brought up (which is not slang), Iwata refuses to talk business and continues to talk slang.
Reggie Fils-Aime, standing beside him, also refuses to speak up on this question.
I believe the concept of the “Blue Ocean” conveys the idea that if you try to have too broad of a focus, then you may not have as great of an impact, or things may not go as well as you desire. So, part of the philosophy of the Blue Ocean strategy is to really bring your focus into a specific area by “abandoning” or “eliminating” some good ideas.
Stop the tape.
Iwata is revealing he has no idea what the Blue Ocean Strategy is. Maybe he should look it up before he declares it is the company’s direction.
You don’t ‘abandon’ or ‘eliminate’ good ideas in Blue Ocean. Blue Ocean means not competing directly. Sega Genesis versus Super Nintendo is Red Ocean. They are competing at the same level. PlayStation 3 and Xbox 360 is Red Ocean. They are competing on the same plane. Wii was Blue Ocean because instead of competing on graphics (which was overshooting the market anyway), Wii focused on the interface and found an uncontested market.
Have I been in bizarro world the last five years? Wii has performed extremely well in the market while the PlayStation 3 and Xbox 360 have performed badly. The Wii direction was clearly the correct move. Nintendo did the graphics race with the Gamecube and the Industry still avoided putting its games onto the system.
Adding more power or HD graphics wouldn’t make the Wii U a Red Ocean product. What makes the Wii U a Red Ocean product is the lack of any desire for uncontested marketspace. Talking in cliches and saying, ‘Satisfying both the ‘hardcore’ and the ‘casuals’ “expands the gaming population”‘ makes Iwata sound like the blathering idiots that populate gaming message forums.
You know what my problem with all this is? I don’t care if Nintendo wants to go Red Ocean. What angers me, and what should be seen as fraud to investors, is Nintendo declaring their strategy is ‘mass market’ while employing tactics and strategies that are ‘narrow market’. To see what I mean, listen to what Iwata says next.
Perhaps the reason that you asked this question is because you may feel that we have lost our focus by going with this seemingly broader strategy.
He is trying to re-ask the question! What a politician!
And the investor’s question is not referring to the Wii U as a ‘broader strategy’ but as a ‘narrower strategy’. This is why he referenced Blue Ocean and non-gamers and lapsed gamers. The investor is confused as to what the hell Nintendo’s mission is with the Wii U. He wants Iwata to clear the confusion. Instead, Iwata is being very obtuse and creating more confusion.
So, to define what the focus is this time, there are really two points that we are focused on. One is that we looked at the system and we asked the question, what can we do to attract people who were not inspired by even the Wii Remote or the Wii Balance Board to participate in video gaming, and how can we, through this system, capture their attention? The second point that we focused on was how can we satisfy and meet the needs of everyone in the industry who is developing games now and their desire for HD visuals, and how can we convince them that this will be a system with which “they can take full advantage of their game development.”
Look at what I put in bold. Iwata is saying, in the second point, was the purpose was to make the Industry happy. Who the hell cares? The Industry doesn’t buy your console. Customers buy your console. Why must Nintendo play the wet nurse to the Industry anyway? Industry games are not selling the PlayStation 3 or Xbox 360 to anything worthwhile.
When asked about how to expand gaming, Iwata gave two non-answers:
In his first answer, he said to do things to attract people who were not attracted to the Wii. OK. What are these things? And in order to pull this off, he must bring back the Wii audience or the market will shrink. Iwata gave no answers on this.
In his second answer about how to expand gaming, he said Nintendo must placate to the Industry. But this makes no sense because Industry are not customers and are not a market. Worse, the Industry is the problem because they keep making games that are shrinking the market (which Iwata warned about five years ago).
Iwata is talking out of both sides of his mouth. I would not do business with this man.
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