230 We’ve discussed Nintendo’s successful Wii game console as an example of a multi-sided platform business model pattern (see p. 76). Now we look at how Nintendo dif- ferentiated itself from competitors Sony and Microsoft from the standpoint of Blue Ocean Strategy. Compared to Sony’s PlayStation 3 and Microsoft’s Xbox 360, Nin- tendo pursued a fundamentally different strategy and business model with Wii. The heart of Nintendo’s strategy was the assumption that consoles do not necessarily require leading-edge power and performance. This was a radical stance in an industry that traditionally competed on technological performance, graphic quality, and game realism: factors valued primarily by diehard gaming fans. Nintendo shifted its focus to providing a new form of player interac- tion targeted at a wider demographic than the traditional avid gamer audience. With the Wii, Nintendo brought to market a console that technologically underperformed rival machines, but boosted the fun factor with new motion control technology. Players could control games through a sort of “magic wand,” the Wii Remote, simply through physical movement. The console was an instant success with casual gamers, and outsold rival consoles focused on the traditional market of “hardcore” gamers. nintendo’s w ii Nintendo’s new business model has the following characteristics: A shift in focus from “hardcore” to casual gamers, which allowed the company to reduce console performance and add a new element of motion control that created more fun; elimination of state-of-the-art chip development and increased use of off-the-shelf components, reducing costs and allowing lower console prices; elimination of console subsidies resulting in prof- its on each console sold. game developers off-the-shelf hardware component manufacturers state of the art chi development high end console performance & graphics motion controlled games fun factor & group (family) experience narow market of “hardcore” gamers large market of casual gamers & families game developers new proprietary technology motion control technology retail distribution console production price technology development costs console subsidies profi t on console sales console subsidies royalties from game developers VP CR CH CS KP KA KR R$ C$ new proprietary technology motion control technology eliminate unchanged create reduce bmgen_final.indd 230 6/15/10 5:45 PM