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

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.



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No 1 is 1990s Sega.
No 2 is Neo Geo.
No 3 was 90s Capcom

Everyone else comes after.



Bite my shiny metal cockpit!

The_Liquid_Laser said:
RolStoppable said:

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.

I'd say the Switch is a textbook example of a blue ocean product. It created its own demand rather than fought with others over existing demand.



I describe myself as a little dose of toxic masculinity.

Jumpin said:
The_Liquid_Laser said:

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.

I'd say the Switch is a textbook example of a blue ocean product. It created its own demand rather than fought with others over existing demand.

This might be an example of us having to wait and see who is right.  I never thought Switch would affect PS4 and XB1 sales.  I do think it will affect PS5 and Series X sales instead.  Specifically I think the latter two systems will sell slow out of the gate and peak later much like PS3 and XBox360.  If that is what happens with the coming 2 systems then I am right.  If they sell great while Switch sells great then you are right.

The DS is what I would call a textbook example of a blue ocean product.  It sold great and the PSP sold really well at the same time.  Total handheld sales during generation 7 were incredibly higher than either generation 6 or 8.  The DS grew the market (temporarily unfortunately) and the competition still did quite well, because they weren't really competing.

Last edited by The_Liquid_Laser - on 11 January 2020

The_Liquid_Laser said:
Agente42 said:
Great point. The same coincidence as DS. DS may refer to the developer system, dual screen and disruptive system. With the DS, Nintendo threw Sony out of the handheld market. Climbing the market share and snapping up much of the market even with its successor, the 3DS. Nintendo played Sony so much for the high-end gaming market that Vita ran out of AAA games because it wasn't profitable to produce games for him, despite being very powerful.

I agree that "DS" had multiple meanings, but in practice I don't think it was really a disruptive system.  I DO think DS was a blue ocean system, but I don't think it was disruptive.  (Basically the opposite of my views on Switch.)  Disruptive products invade and take over existing markets even if they start in a new one.  What market did the DS invade?  The generation 6 default for the handheld market was that GBA was the only viable handheld.  DS didn't disrupt the handheld market, but it did grow it a whole lot and at the same time it wasn't really competing with the PSP because it was also fairly successful.  That means it was a Blue Ocean product.

3DS on the other hand was a red ocean product.  Nintendo cut the price by $80 within the first year.  That is red ocean behavior.  The philosophy behind the Blue Ocean Strategy is that you make more profits because you don't have to cut the price or add expensive features or other costly things that products have to do when they compete directly.  3DS defeated the Vita, but it didn't make good profits while doing so.  3DS was neither blue ocean nor was it really disruptive.

I know 3ds is red ocean product. But the effect the DS is so strong and reverberate in the next generation. I believe the DS is both: a blue ocean and a disruptive product. Cheap price is the key feature here. Nintendo DS is a cheap portable and good enough, likewise disrupite products are.



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The_Liquid_Laser said:

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.

You are really trying to put a square piece into a round hole.

Switch isn't a handheld console moving upmarket. It's home console gaming being made possible on the go, that's why people are paying $60 for games without batting an eye. Switch's first revision (Switch Lite) is moving downmarket. You keep saying things that are not only not supported by evidence, but actually contradicted by evidence. In the bigger picture you have Sony and Microsoft launching new consoles, so the gap between Switch and competing consoles is getting bigger, not smaller like it would if Switch was moving upmarket like you say.

https://www.blueoceanstrategy.com/what-is-blue-ocean-strategy/

WHAT IS BLUE OCEAN STRATEGY?

Blue ocean strategy is the simultaneous pursuit of differentiation and low cost to open up a new market space and create new demand. It is about creating and capturing uncontested market space, thereby making the competition irrelevant. It is based on the view that market boundaries and industry structure are not a given and can be reconstructed by the actions and beliefs of industry players.

Even if you denounce the uncontested space of portable consoles as blue ocean - which doesn't make sense because both creating (new) and capturing (seizing a known market that has been left by competitors) uncontested space qualify as blue ocean - that still leaves Switch with the value innovation of being able to play the same exact home console game on the go without the need to purchase additional hardware.

The 3DS wasn't a blue ocean product, that's correct. But that has no bearing on Switch being one. The video game industry was chanting that portable console gaming is dead, but Nintendo didn't listen to them. That was the industry trying to define market boundaries and industry structure.

As for your follow-up post where you say that PS5 and XSX will be seriously affected by Switch, such disruption won't work for the same reason that it ultimately didn't work for the Wii: AAA third party publishers won't put the same games on all consoles and they will also largely refrain from putting similar games on them. Something like Google Stadia and Sony/Microsoft's own streaming offers pose a bigger threat to Sony/Microsoft's console sales than Switch; but the biggest threat to the PS5 and XSX is general PC gaming.

Also, later peaks for PS and Xbox consoles doesn't mean that there was disruption, because disruption would have a permanent effect. Later peaks point to overpriced consoles in the early stage of a console cycle. The only country where you can reasonably expect Switch to be disruptive is Japan because there's notable overlap between Switch and PS as far as relevant games for the country are concerned.



Legend11 correctly predicted that GTA IV (360+PS3) would outsell SSBB. I was wrong.

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areason said:
It's subjective, to many they aren't number one, or even relevant.

Neither are your companies to me.