In 2004 Nintendo saw somewhat of a failure with its GameCube. The industry saw rising costs and reduced margins. It was the beginning of the era of costly games and big, high-tech consoles. Fast forward to 2024 and layoffs in the video game sectors are massive (since 2023). One market player seems to be exempt from this recent trend, however: Nintendo.
Why? Because it adopted a differentiation strategy in 2004 that chose to create a new market instead of competing in one (red ocean). It saw that the competitor was focused on large video game projects for big consoles. Nintendo focused on keeping independent developers involved, attracting adult players and making a platform that would simply be different than one where you have to be next to your console and screen.
The solution was the Nintendo DS and the Nintendo 3DS. It has led the market in handheld video games since day 1. It was nimble, it could be carried anywhere, it had a lot of games, and was affordable. During this time, Sony tried to capture some market shares with its PSP platform, which saw some success (almost 30% of market shares) and with the Vita, but it was largely considered a failure. The real success of Nintendo was with the eventual release of the Switch in 2017. As of 2024, 141 million units had been sold.
Result: Nintendo sales were even compared to full console sales. In 2017 it doubled the stock price after 7 years of stagnation. Sales between 2017 and 2020 saw solid growth (and profits as well).
Lessons: Nintendo respected its history, focused on its strengths and dared to challenge giant companies that came to control an industry that it once dominated. It focused on margins while offering an affordable product that could be used anywhere.
Sources:
https://en.wikipedia.org/wiki/Nintendo_Switch#Reception Sources: https://www.digitec.ch/fr/page/en-creant-la-switch-nintendo-a-fait-un-sans-faute-33681 https://en.wikipedia.org/wiki/Nintendo_Switch#Reception
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