Shigeru Miyamoto: "In the world of fun, there's only number one."

[The_Liquid_Laser]

RolStoppable said:

The_Liquid_Laser said:

I've only read the OP really, but I appreciated a good discussion about Blue Ocean Strategy, especially from someone who has either read the book or at least knows enough that they understand the main points of the book.

For the record I would say that Switch IS NOT a blue ocean console.  However it IS disruptive.  (The OP didn't mention disruption, but during the Wii years Nintendo was using both strategies.)  Blue ocean products grow a market from unserved or underserved customers.  Disruptive products grow by competing using asymmetric skills and motivations.  A product can be both, but the Switch is not both.  It is disruptive only.

Why isn't Switch a blue ocean product?  It's not for a want of trying.  Nintendo has made the following games so far in an attempt to reach brand new or underserved customers: 1-2 Switch, Arms, Labo, Pokemon Let's Go, Ring Fit Adventure.  Of these 5 games only Ring Fit Adventure is actually reaching new customers and not nearly on the level of Wii Fit.  1-2 Switch, Arms and Labo are essentially niche games and represent only a small fraction of the customer base.  Pokemon Let's Go would only be Blue Ocean if it could bring in a significant number of mobile gamers from Pokemon Go.  It didn't, because its sales were mostly front loaded.  It was selling to an established customer base instead of a new one.  Ring Fit Adventure is actually selling like a Blue Ocean game, but Switch was already extremely successful before it came along.  There are several other games that contribute to Switch's success much more than Ring Fit Adventure.  Clearly Switch is not a blue ocean product.

What about disruption?  Is Switch a disruptive product?  Disruptive products either start in a different market or on the low end of an existing market.  Switch started in both.  The handheld market is a different market.  Also the launch price of Switch is cheaper than the launch price of a Sony or Microsoft console.  Does Switch fit the profile of a low end/different market product?  Check.  Disruptive products also compete by ignoring functionality and instead improve other aspects that make the product either more reliable, more convenient, or cheaper?  Portable gaming and hybrid gaming are both more convenient than home gaming.  Also carts are more durable (reliable) than disks and it launched at a cheaper price.  Meanwhile it has ignored functionality (hardware power).  Does Switch compete like a disruptive product?  Check.

Switch is a disruptive product, but it is not a blue ocean one.  If it's sales grow to unprecedented levels (and I think it will), it is because it will take customers away from Sony and Microsoft.  In fact that is one reason why I think it is called "Switch".  Iwata liked to give consoles 2 or 3 different meanings.  Obviously Switch refers to switching between home and handheld gaming, but I also think it means Nintendo has a strategy of people switching from Sony and Microsoft to Nintendo.  Switch's growth will come from competition and not from reaching a lot of new customers.

Extremely simplified, a disruptive product that can be described as a crappy product for crappy customers. I don't see that applying to Switch.

As for blue ocean, you are mixing up an analysis of individual games with an analysis of the console itself. Extremely simplified, blue ocean is a creation of uncontested space that renders competition irrelevant. That applies to Switch because it's the only console that works as both a home and handheld console, and also because it is the only portable console.

Up until now, there's a lot more evidence that Switch's success has not been at the expense of other consoles rather than its success coming at the expense of other consoles.

To put it more precisely it is actually handheld consoles in general that are a crappy product for crappy customers.  But disruptive products also improve over time and that is how they move upmarket.  The Switch is a handheld console moving upmarket.  That is when the disruption is really felt by the market.  The Gameboy created the market, and the handheld systems have steadily improved over time, but Switch is the handheld market invading the home market space.

Blue ocean, on the other hand, is a creation of a new uncontested space.  It is about avoiding competition by creating a new market or growing an existing one.  Nintendo did not create a new market with the Switch, because it isn't selling to a new type of customer.  It is true that the handheld market is currently uncontested space, but that is not from the Blue Ocean Strategy.  It is because Nintendo fought very hard with the 3DS and defeated Sony and the Vita red ocean style.  For example, they cut the price by $80 within the first year.  That is the sort of thing a red ocean product does to compete.  Nintendo was not following the Blue Ocean strategy with the 3DS, so much as they were simply creating a monopoly by defeating the competition.  Blue Ocean Strategy is about making the competition irrelevant.  That is not what Nintendo did.  They fought them and beat them and the 3DS wasn't terribly profitable as a result.  But now Nintendo has a monopoly on the handheld market with the Switch.  That still is not the Blue Ocean Strategy.

And when I talk about games I look at which ones seem to be appealing to unorthodox customers.  That gives an indication about how well the Switch as a whole is doing as a potential Blue Ocean product.  Some of Wii's biggest games were Wii Sports, Wii Fit and New Super Mario Bros., and the DS had Nintendogs, Brain Age and (also) New Super Mario Bros.  All of these games were appealing to new or underrepresented customers at the time.  Meanwhile Switch's best selling games are Mario Kart, Smash Bros, Mario Odyssey, Zelda, and soon Pokemon will join that top tier list.  All of these games are the type that appeal to core gamers.  None of the most popular games are trying to reach new or under-represented customers.  The closest game that actually does this is Ring Fit Adventure, which is not one of Switch's top tier games.

So Switch is not a blue ocean product, but not from want of trying.  Nintendo has been trying to follow this strategy with games I mentioned in my last post: Labo, 1-2 Switch, Arms, Pokemon Go and Ring Fit Adventure.  These games are not really exciting the market with the possible exception of the last one.  But Switch is still successful in spite of that.  It's success comes from it being a disruptive product rather than a blue ocean one.  It is the crappy handheld market that is moving up market and invading the space of the home console market.