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Wii U Marks the End of Nintendo’s Era of Disruption

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As technology advances, we’ve seen games become more and more sophisticated – but there’s a caveat: as things become more and more sophisticated, they start to cater to a crowd that becomes more and more specialized. We saw this with the progression of the first few generations of super-popular game consoles. NES got off to a great start, but as the graphics and technology improved with SNES, N64, and GameCube, fewer and fewer people came along for the ride.

What’s going on? Surely “bigger and better” should be the formula for even greater success, right? That’s what Sony and Microsoft thought when they came up with their PlayStation 3 and Xbox 360 models in the mid-2000s. Higher power, better graphics, higher-capacity storage media, what amounts to basically a nearly-complete computer and media center built into the system. Among game consoles, they were practically super-computers.

At the end of the day, though, it was Wii that pulled ahead to sell almost 100 million units over the course of its lifetime. How? Through a strategy known as “disruptive innovation.”

The central principle of “disruptive innovation” (as coined by businessman and writer Clayon Christensen) is simple. Typically we think of products as meeting a demand. There will always be demand, for example, for various modes of transportation, whether we’re talking about a horse-drawn carriage or a modern car – so we can always expect people to try to create things that satisfy this demand.

The usual way of going about satisfying demand is to keep making better and better products. This is called “sustaining innovation,” and it can take on two forms: evolutionary innovation, which involves improving something that already exists, and revolutionary innovation, which involves creating something “new” but that nonetheless does not actually meet a new kind of demand. The common thread is, again, that new products that appear are created to be “better” than the products that came before them and thus that they “sustain” the demand for those kinds of products.

Inevitably, however, there comes a point where making things “better,” for example by adding tons of features, actually impedes a product’s ability to sustain demand. For PlayStation 3 and Xbox 360, this manifested via the high costs of the systems as a result of their “bigger and better” hardware. Both saw relatively slow starts, since the market for $400 game consoles has historically always been very small. This is called “overshooting the market.”

But there is another kind of innovation: disruptive innovation. The central principle of disruptive innovation is to examine the value systems that drive sustaining innovation and to find new values that the current path of innovation do not fulfill. It’s called “disruption” because these strategies “disrupt” the usual understanding of innovation – and because disruption often winds up breaking down the original market as well.

This is the path that was taken by the people behind Wii. Instead of pushing the “expected” next-gen innovation of graphics and hardware power, Nintendo focused on “getting people playing” by introducing a less intimidating controller than what was currently on the market and using that controller effectively to build simple fun.

Central to the disruptive mission is managing to do things in a way that’s more cost-efficient than the traditional progression path… so Wii focused on making itself as affordable as possible. Not only did this help put it into more people’s hands, but it gave Nintendo some wiggle room in terms of price that allowed them to enjoy pretty significant profits.

It worked like a charm. People bought Wii who would never have bought a game system otherwise, and Nintendo saw hardware and software sales that exceeded those of GameCube more than four times over. It was largely regarded as a “last-gen” system by the gaming specialists, but that certainly didn’t get in its way with the people that matter most: the mainstream market.

Wii U, however, seems to be taking a different road. Asymmetric gameplay, while it changes up the dynamic between players, will not create a new market of gamers in the way that Wii created a new market of Wii Sports and Wii Fit players. Touch screen gaming has already been done on the DS and smart devices, making Wii U’s incorporation of a touch screen in the home console space an evolutionary innovation at best, not a disruptive one.

What’s more, the GamePad – Wii U’s primary innovation – gets in the way of cost-efficiency. By all accounts it appears that without the GamePad, Wii U is actually put together in a way that’s very cost-effective. It uses a lot of technologies that reduce power consumption and boost the hardware power without gigantic increases in cost. In that regard, it’s still very much like Wii.

I imagine that if you took the Wii U GamePad out of the picture, you could probably sell Wii U for $200 and still pull a profit. It wouldn’t exactly create a new market, but a cheaper alternative to today’s HD systems that also has Nintendo all over it would at least have supreme affordability on its side. With the GamePad, however, Nintendo had to set a less-than-profitable price for the system just to avoid the same slow start that we saw for PS3 and Xbox 360 six years ago – and it still ain’t all that cheap.

This is a very different Nintendo than the one we saw in 2006. It’s a Nintendo that’s trying to get away with giving their HD GameCube a touch screen and compatibility with everything Wii, not a Nintendo that’s looking to bring games to more people. Instead, they’re actually overshooting the market they already tapped with Wii by driving up the costs with the GamePad. This kind of push for powerful technology has never worked out for the better for Nintendo in the past, so I have to wonder… do they really think it’s going to work now?

I’m normally not a fan of referencing Wikipedia articles, but in this case the entry is actually rather good – so read more about disruptive innovation by clicking here.

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  • Asnaco

    Well, the Wii U was sold out across the entire US already by mid-October. And that was before the Wii U ad campaign launched. I think they will be fine, especially with all of their universally recognized IP’s. They can always drop the price later once production costs go down.

    Many analysts within the industry are predicting at least 50 million sales in the long-term (and that’s just minimum… they can stretch the life-span and get a lot more out of it). Tablets are here to stay.

    We have a nation with 100 million Wii’s in their household already; many who are probably ignorant about the Wii U. However, eventually they’re going to notice that they’re missing something and will probably pick up a Wii U. And since it’s backward compatible with Wii hardware as well as software, that can only mean good things.

    The Wii lifecycle will continue until 2014 and they just dropped the price to $130, so it’s by far not the end of Wii. They will be selling hardware as well as software at a historical rate.

  • K2L

    The concept of sustain versus disrupt can also relate to software. Mario is an example of Nintendo going for the “sustaining innovation” road, since (Galaxy 1 notwithstanding, which added a new concept that ended improving an existing gameplay) the subsequent games have simply reused the ideas of previous games simply because they work. Up until Ocarina of Time, this was also the case with Zelda, but since then Nintendo has employed several different concepts in terms of gameplay (masks, 3-day cycles, sailing, multiplayer, wolf transformation, train and sky travels), controls (touch and motion controls), visuals (cel-shading, realism, mix of both) and even story (an increase of Gaiden-style games compared to those that center into Ganon and the Triforce) that have made Zelda lose its sense of direction according to fanboys. I never minded this, because I despise playing the same game in multiple formats (I will always remember TP for the new concepts it showed over what I saw before), though I agree that various of the aforementioned ideas could be carried over to future games so the evolution of the series becomes more consistent. I’d love seeing a new game with SS’s RPG-like ideas, motion swordplay and aiming, and dungeon-like overworld. What the series needs is to keep bringing new concepts while keeping the ones shown in past ones.

  • Anon

    This author is a douche. Disruption? Only to Alex Plant’s narrow-minded, arrogant little world.

  • Realist

    You can also make the claim that the Wii controller was a “revolutionary innovation” in that it introduced a new way of playing games therefore making the Wii the console most “sustaining innovation” from this generation. The author chose to narrow the concept of innovation solely on graphics and hardware instead of taking into consideration that those aren’t the only two criteria needed for an innovative console.

    A case can also be made that the author is just a pretentious prick, but I will keep that observation to myself instead of publishing an article about it and coming off as a total jackass.

    • http://www.gengame.net/ Alex Plant

      What makes something “revolutionary” or “evolutionary” has to do with the product itself.

      What makes something “disruptive” versus “sustaining” has to do with WHO THE PRODUCT SELLS TO. Disruptive products are typically not evolutionary, and don’t have to be revolutionary.

      There’s no doubt that Wii was disruptive, because it managed to see a gigantic almost 100 million sales boom, versus GameCube’s flat < 25 million performance. It did things that tapped into a market that GameCube missed. PlayStation 2 and even PlayStation can also be seen to have been disruptive, but their disruptions didn't seem to have as much to do with games.