Nintendo caused quite a stir when it announced its partnership with Japanese mobile firm DeNA and that it was working on its next hardware platform, dubbed "Nintendo NX". This double-whammy of news was greeted with a positive reaction, not only from the industry but from the stock market.
Many industry experts feel that Nintendo has joined forces with DeNA so it can finally benefit from the potential cash-cow that is free-to-play smartphone gaming. However, video game consultant Nicholas Lovell - who has worked with companies like Rovio, Square Enix and Google - thinks that people are underestimating Nintendo, and that the veteran firm is looking to create another "Blue Ocean" market, rather than enter a "Red Ocean" already populated by many competitors:
The thing we all know about Nintendo is that it doesn't follow the herd. It makes surprising announcements that make the industry shake its collective head and mutter, "that will never work." Analysts of the video game industry have a secret motto we all whisper to each other when Nintendo announces something that doesn't make sense: "No sane analyst ever bet against Nintendo."
But this time, no one is saying it doesn't make sense. The market applauded Nintendo's move into games on smart devices and free-to-play with a huge surge in the share price. Dr Serkan Toto, a respected observer of the Japanese games market, described the deal as "an earthquake that will change the entire games industry."
I don't buy it.
Lovell argues that Nintendo's "Blue Ocean strategy" approach - which gave them successes such as the Wii and Nintendo DS - doesn't tally up with its deal with DeNA. He feels that Nintendo isn't looking to jump into smart phone gaming, but is instead aiming to create another "Blue Ocean" which might not be apparent yet:
My belief is that Nintendo is looking for a blue ocean. It hasn't told anyone what the Blue Ocean is yet, and I am about to make my best current guess. It is only a guess, and it is driven by my instinct that Nintendo doesn't jump into red oceans. So we are all framing the question wrong. What do we know about Nintendo:
- Nintendo targets empty markets that no-one owns
- Nintendo obsesses about how humans interact with machines. It has always wanted to control the hardware to make the interaction between software, hardware and human as delightful as possible
- Nintendo has invested heavily in wearables and sensors as part of its health and wellbeing initiative that has failed (to date) to excite the stock market
- Nintendo has partnered with a leading operator of free-to-play and smart device games, a segment of games that Nintendo does not really understand
- Nintendo has announced that it is working on a new hardware platform, the NX, that will be announced in 2016
Lovell's guess - and we should point out that this is just a guess at the moment - is that Nintendo NX is a controller for smart devices, rather than a fully-fledged console:
Nintendo will harness the wearable/sensor research that comes out of its health and wellbeing division to create a new type of controller. My current guess is a glove of some sort, but it could be a smart watch and a couple of rings, or something like that.
The NX device will be a relatively low-powered box that sits under the television screen in the living room. It will interface with the controller to allow players to interact with their games using gestures, perhaps touching a smart watch, or tapping your thumb and forefinger together, or some other movement that combines gestures and wearables.
At a stroke, Nintendo has created a Blue Ocean. It is not trying to become another gaming platform sandwiched between the core gamer world of PlayStations and Xboxes and the mass-market world of smartphones and tablets. Instead, it has an instant addressable market of over a billion devices. Third party developers will fall over themselves to support the NX, because whether or not the NX set-top box makes inroads into consumer markets does not matter: Nintendo has invented the de facto standard for how humans can interact with smart devices without using the touch screen.
That is a Blue Ocean worthy of Nintendo. It ties together the wearables research, Nintendo's historic approach to product development, its ambition for new markets and its desire to delight its fans with something they have never seen before.
It's certainly an interesting idea, if a little outlandish. But then people thought the same thing about the DS and the Wii. Could this be Nintendo's play for an entirely new market? Let us know what you think by posting a comment below.
Photo credit: Maurizio Pesce