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dharh said:

I don't really agree with the premise that if SONY and MS try to beat Nintendo at its own game (casual and motion control) that they will burn. They will attempt to do both casual and hard core, motion and traditional gaming all at once (at least SONY will definitely try that). 

What? If they believe that they can take away a significant part of Nintendo's audience AS A SIDE MISSION of their "true hardcore" console war,  that's the very definition of beating Nintendo in its own game. 

And if Nintendo senses the slightest chance of the other two trying to go downmarket, or "casual", as you said it, they will counterattack. And they will win, because the downmarket is their new core. They will fight like a trapped animal, and they  have much greater rescources than either Sony's or Microsoft's gaming division.

I take issue with the notion that there is any more blue ocean strategy left for Nintendo to do. You can boil the blue ocean strategy down two ways. One is 'disruptive' the other is 'good enough'. In some ways both are saying the same thing. Keep it simple stupid.  

WHAT??? Sorry but you are totally wrong. Disruption is the complete opposite of what you described.

 

In short, it could be described as: 

1. Find a blue ocean, with new values. 

2. Find the downmarket, the least demanding part of the market

3. Start upstreaming, A.K.A. Making your Blue Ocean downmarket product Harder, Better, Faster, and Stronger, until it kicks the old value upmarket's ass hardly, and make it leave the market.