I can make a stab at predicting the market's direction, but understand that it's necessarily vague. Nintendo's actions to defend their Blue Ocean will vary according to the actions of incumbents (existing players in the market) and newcomers alike.

One thing I'm sure of is that the Wii itself is going to be their workhorse for as long as they can manage it. There's evidence of this already: Wii Zapper, Wii Wheel, Balance Board, and MotionPlus are all upgrades to the same values that the Wii embraces interface-wise. They're beating the competition to the punch on out-innovating them, and basically taking the sustaining value innovations as far as possible before any competitors even appear for those same values. A very sneaky tactic, but an effective one.

What the incumbents do will vary. Microsoft has already started their counterattack with rumors of a Wiimote knock-off for the 360. At this point, it remains vapor and acts only as a limitus test to see how much interest they can generate. That's standard MS tactics; they don't make it unless they think it's worth it, especially when a rumor will suffice. Really, it's economical, but they risk falling behind the new value curves since Nintendo keeps pushing the value requirements higher with Wii add-ons.

Sony's response so far has been to keep on with their original plan for the PS3. That's not a smart thing to do in a shifting market, though; it tends to lead the incumbents who do that to leave the market. I doubt it will kill Sony if they continue the way they are, but it won't be kind to them either.

Eventually, somebody will try to compete with the Wii's new values. When that happens, you can be certain Nintendo will respond with a strengthening of the Wii's appeal to the new audiences. Since the value challenger will likely be targeting the old market that took up the Wii's values, we might even see a slight shift of core gamers to the Wii's same-value competitor. But most of the Wii's userbase will stick with the Wii, due to the elusive brand loyalty (which, incidentally, tends to be much stronger for Blue Ocean products).

At the end of the cycle (I'd guess it'll be a short one; the market is too volatile for the full 15 years of Blue Ocean-inspired brand loyalty to last), Nintendo has made it perfectly clear that they're going to disrupt again and start another Blue Ocean. So you can expect this whole mess to start again around 2015 or so. Only this time, it will be the newer pro-Wii hardcore that will be raising the most hell about whatever Nintendo comes up with next.

Edit: I should note that this all only applies if nobody successfully disrupts the market with a new-value product before the end of the Wii's cycle. If that happens, we'll see a restart much earlier in favor of whomever disrupted Nintendo.

The blue ocean strategy utterly destroys all living things, including economic markets. Think Death Star vs Alderaan.

So essentially since this generation has proved that the market is fickle, if Nintendo doesn't invest in new technology the blue ocean turns into a brown puddle? :P

http://www.fudzilla.com/index.php?option=com_content&task=view&id=9096&Itemid=65

http://www.fudzilla.com/index.php?option=com_content&task=view&id=9133&Itemid=65

Virtual 3d all the way to virtual reality. :)

This happens with markets all the time, actually. Blue Ocean Strategies are commonplace, not well understood, but very important. Volatile markets follow a simple pattern of growth and decline:

Value Innovation -> Market Growth -> Segmentation -> Decline -> Crash

To break what happens down at each stage...

Value Innovation - A Blue Ocean product is introduced that changes the market. It makes the market more appealing to people inside, outside, and/or on the fringe of the market.

Market Growth - The market, revitalized, grows rapidly. New, returning, and/or existing customers take new interest in it, and sales surge.

Segmentation - Products begin to specialize to match the tastes of sub-groups within the market. The values that drive the market are ugraded incrementally in the process to suit those differing tastes. As segmentation occurs, parts of the market are alienated and move to the fringes or depart entirely.

Decline - As segmentation grows heavier, costs of pandering to specific tastes increase. The expense of producing goods versus the revenue they earn begin to approach zero, and the market begins to shrink. Prices of products tend to rise and quality tends to drop as this happens, further scaring off customers.

Crash - If no Blue Ocean Strategy revitalizes the market, the segmentation eventually leads to a market crash. This happens when expenses outweigh revenues for the vast majority of players, resulting in mass market exodus. Many customers also depart the market when this happens.


The pattern for a non-volatile market (such as tea kettles, which tend to be built to last and are difficult to make sustaining innovations to), goes more like this:

Value Innovation -> Market Growth -> Market Saturation -> Crash

Market Saturation is basically when the product is owned by as many people as are going to buy it. The resulting crash is from no new customers.

If I can chime in on this one, and correct me if I'm wrong Sky:

Nintendo uses the term "bridge title" to explain games like Mario Kart Wii. The purpose of games like this is to bring the newer players to these higher tiers of gaming. So you get someone who bought the Wii for Wii Sports or Wii Fit who sees this game and it's non-threatening Wii Wheel and decides to give it a shot.

Well, now instead of the old fart playing Wii Bowling all day and being a "non-gamer" playing "non-games" you now officially have a gamer, playing a real game.  If they don't like it they'll go back to the old non-gamer pasture and if they do like it, chances are good they'll keep crossing bridges.

"Gateway drug" isn't the right word, but it's the first word that comes to mind.

If anything, this strategy is bringing in new people who will cross those bridges and check out the higher end titles.

*GASP* Maybe even buy a PS3 or 360

I imagine Super Mario Galaxy and other such games will have unusually strong legs (like the DS counterparts) not because of old Nintendo hands that continue to buy them but because this new market of gamers who are moving across those bridges and discovering these titles for the first time.

I know anecdotal evidence sucks, but I can tell you for a fact that this is the case for my neice, my 32 year old sister, my 35 year old brother, his wife, her husband, my 54 year old mom who is now going through Legend of Zelda: Twilight Princess, and my wife who beat Gears of War with me.  That's just my immediate family. But all of them are somewhere in the gaming lands and have crossed a bridge or 2.

It will strengthen the market, obviously. It's just that the dumb and weak companies will be gone. Adapt or perish in the business world.

I wish you would have said more directly that the DS isn't/wasn't/hasn't/won't choke PSP.

Nice explanation: succinct but thorough.

My question is Why is Nintendogs considered a Blue Ocean product, but earlier products such as Petz (on the GBA) and other games targeted towards girls are NOT widely considered Blue Ocean, despite their feeding an underserved market? If it's the (undisputed) fact that Nintendogs was a much higher quality product, does that not just make it a sustaining product? Or does the fact that Nintendogs was much more aggressive and ambitious in this regard mean that it was reaching beyond the small subset of girls already had a minimal interest in games, and onto a much broader range?

Will the Wii break out of the Blue Ocean?


What I'm trying to say is, will the Wii turn the Blue Ocean.....into a BLUE HURRICANE?!

So many questions while I was away...

Bridge titles work both ways, as some here have surmised. In Blue Ocean terms, a bridge product is a tool to bring users of the new market up to a higher level of participation, while it helps the old market adapt to the new market's values. They're not "gateway drug" products; that would be what Wii Sports, Wii Fit, and Wii Play act as. Tools to get people into the market. Bridge titles act as stepping stones to get people higher up into the market.

The DS isn't actually cannibalizing the PSP's market that much; they appeal to a few of the same values, but a lot of different ones. The PSP's performance would not have been much different had there been no DS, in other words. More software, but about as much hardware.

As for what makes a product Blue Ocean, it's simple: they pioneer values. Nintendogs pioneered the values inherent in a pick-up-and-play, risk-free, user-focused, and interaction-oriented pet simulation. Petz (which was around a good decade before Nintendogs on PC as Dogz and Catz) met only a few of those values.

Before Nintendogs, the underserved market was not people who wanted pet simulators; of course not, there were tons of those. The underserved market was people who wanted pet simulators that were really about them, not about the pet. When you play Nintendogs, you're interacting with the puppy, and the goal is to make you, the user, happy. In Petz games before Nintendogs, the goal was to keep the dog or cat happy. The difference was ground-breaking.

You should never look at a product based on what it does on the surface alone. A Blue Ocean product often bears a great resemblance to non-Blue Ocean products when you do that. It's what the product does for the user that sets a Blue Ocean product apart. Without a value innovation that changes what the product means to the user, it's just a sustaining upgrade.

As for breaking out of the Blue Ocean, that's not how it works. If a Blue Ocean product is compatible with an older market, it ABSORBS the non-Blue Ocean market to some degree. In other words, the Wii isn't going to go back to the values of the old market. The old market is going to take up the values of the Wii's market within 2 generations (more likely within 1).

Interesting perspective. Thanks for answering my question: I'll need some time to fully digest it, and if I have any other questions you'll be the one I ask.