Innovation can have radical or drastic effects. Usually innovation is seen as the method of applying technical or specific progress to the market. Innovation in this sense can be in relation to processes (ie a new way of making something cheaper or better or both) or products (ie a new or significantly better product of some sort), or may be a mixture of the two. Process innovation can affect the competitive balance in existing markets while product innovation can create new markets or alter the segmentation of existing markets.
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Innovation brings productivity gains, product diversity and better quality product at fewer prices. With such clear consumer benefits, It also brings competitive advantage to the innovator by giving the ability to offer entirely new products or processes or greater efficiency in existing techniques; and the threat of innovation is a check on the development of protected markets. It is not necessary for such competitive advantage to be permanent and one of the consequences of innovation is to encourage competitors for further innovation. And the benefits may be widespread, arising from their distribution through networks. In other words, competition may increase the incremental profits from innovating, and thereby encourage R&D investments aimed at “escaping competition”.
Since 70’s the gaming industry being a factor only in a short time period. It took them only few years to make their place in the market and people started to know who companies like Nintendo were. The types of games where we stomped turtles and ate mushrooms are gone now. That time gaming industry was going really successful, popular and became a billion dollar industry, those were the days when Nintendo started launching games every month. In the early 1980’s their use to be a huge increase in demand for video games and has continued with stable increases in the following years. And then in 2000’s, the gaming industries supported US market of nearly $13 billion  and worldwide market of almost $24.5 billion. Right now, the gaming industry tries to improve by releasing new games one after the other. To increase the sales and beat the competition every firm in the industry is trying to improve marketing techniques and games. They launch more powerful consoles with bigger game worlds, new graphics and better soundtracks. There is a direct connection between the introduction of next-generation video game hardware and the rise in demand over the last couple of years. Through technological upgrading, Video game console manufacturers have progressively moved from 8-bit to 16-bit to 32-bit to 64-bit platforms, resulting in continuous improvement in performance and quality of games. As Sony and Microsoft concentrated on improving their consoles, Nintendo came up with new technology that allows the player to play physically with proper moves unlike the other consoles, where the player has to deal with the joy stick and buttons while sitting. The introduction of new product by Nintendo that is Nintendo Wii, game console is an easier to use interface that targets at current non-gamers where as Microsoft’s Xbox 360, another console is introduced as high definition gaming. So Microsoft’s behavior is accelerating the technology treadmill and when the new feature has an alternate presentation aspect to attract new customers as in Nintendo’s case, so this is referred as stepping off the technology treadmill. So, to alter the terms of competition in the gaming industry, Nintendo came up with technology innovation and launched Nintendo Wii, console in which a motion sensitive controller is used. In video game industry, in every new generation not only the graphics and CPU speed was enhanced but also the controllers became sophisticated with every new innovation. But Nintendo Wii has adopted totally different strategy and with its technology innovation altered the terms of competition in the global industry. Nintendo instead of targeting at high-end consumers like all others firms in the industry specifically targeted at non-gamers. Sales and marketing vice-president of Nintendo described the strategy of his firm by citing two popular managerial books, the Blue Ocean Strategy (Kim and Mauborgne 2005) and The Innovator’s Dilemma (Cristensen 1997): “Looking at the current state of the video game market, we believe there is a strong argument for expanding the audience beyond the current core players, attracting players by rethinking what a videogame means, and delivering our entertaining in a more convenient and affordable fashion” (Casamassina 2005).The gaming market comprises an complicated variety of participants from a wide range of businesses, including major computer software publishing firms, video game hardware and software companies, publishing houses, motion picture companies, television production companies and education content providers. These participants are constantly attempting to combine their talents and strong points, to mix and match their offerings and achieve an optimum blend of profit-making activities. The end result is that the video game market is highly dynamic and strongly subject to changes and technology development collaborations. Naturally occurring cycles are enhanced and magnified as the interactive entertainment industry rapidly evolves producing and releasing new and improved gaming devices.
THE 3 GIANTS:
The gaming industry is dominated and contested by 3 giant players, namely:
SONY Play Station
Once the undisputed global leader of the video game category, Nintendo now competes with Sony for the number-one spot in the industry. Nintendo manufactures and markets hardware and software for its home video game systems, including the hand-held Nintendo DS, which controlled roughly 90% of the U.S. hand-held market in 2003, the 16-bit Super Nintendo. Entertainment System (SNES), and the performance-driven Game Cube was the fastest-selling video game system in history. The Game Cube’s superior 3-D graphics and well-known games (50% of Nintendo’s profits derive from software) have enabled it to remain in the thick of the video game competition. Sony is currently leading in market share of US gaming consoles with 56.4% share followed by Microsoft with 24.9% share and then Nintendo in third with 18.7%.
NINTENDO’s INNOVATION: Motion Controller
Because of the introduction of the innovative motion controller, The Wii has been on fire since it hit the market and US unit sales have surpassed 20 million, making it the fastest-selling video game console in history and ushering in unprecedented family gameplay with titles such as Mario Kart Wii and WiiPlay. As Microsoft and Sony keep improving their games, Nintendo tries to change the technology behind their games. They decided that rather than boost their cars, they would rather build a new vehicle, which would revolutionize the industry. Microsoft and Sony target the older player demographics with their games and consoles, but the game industry was built on the base of the young people. Nintendo instead tries to bring new technologies to the table and win over the young generations, which are the future. Nintendo now tries to get a console on the market that will make parents think that it’s cool and buy it for their kids. The success of the Nintendo Wii console is due to the fact that it’s a cool technology and because parents want to see their kids exercise. Basically Nintendo did not go HDTV with the Wii whilst their competitors did with their latest consoles. This looks relatively sensible as the vast majority of homes do not have HDTV and the adoption rate will be relatively slow because non HD TVs do a perfectly good job. The fact that the Wii makes exercising fun can only help with the sales. Even older players like this console, especially if they want to change their sedentary lifestyle, or if they want to lose some weight.This is why Nintendo has the advantage when it comes to the race between them and their two other competitors, Microsoft and Sony. They will probably come up with their own innovations
in time, but for now, Nintendo has the advantage when it comes to the console technology. Some companies like Sony rely mostly on their reputation, but the ones that win the race in the long run are the ones that innovate. The advantages to Nintendo are firstly that it makes their console cheaper to manufacture. This means that they can sell the base console at a profit whilst their competitors have to subsidise the retail price. It also gives Nintendo far more room to manoevre when it comes to using the price mechanism to take on that competition. The second advantage is that games are a lot easier, quicker and cheaper to develop. This, obviously, has a massive effect on what appears on the game shop shelf and when it appears. Quite simply, it should be far easier for a publisher to make a profit on Wii, which explains why so much development resource has been directed at it.
The company sold 2 million Wii players in November 2008- more than twice the number of Xbox 36Os and PlayStation 3s combined, according to the NPD Group. And that’s not counting the 700,000-plus Wii Fit exercise boards it sold in the same month. But Nintendo’s success isn’t limited to the Wii. Its portable DS system is the top seller in its category too- and the No. 2 device overall (second only to the Wii). Nintendo sold 601,000 Wii consoles in the U.S. in March, more machines than Microsoft and Sony Corp. combined, according to NPD Group, which tracks retail sales.
The couch-potato world of video gamers was shaken up when the Wii, with its motion-sensitive remote control. Users can play Wii Golf, for instance, by swinging the remote like a golf club. In September, Nintendo added to its lineup a $20 remote-control accessory called Wii Motion Plus that was designed to add more precision to game motions. I tested this snap-on piece and found that it did make the Wii’s motions feel more realistic. But it works only with Wii Motion Plus games — and there are only six of them; 10 more are planned for 2010. Wii encourages users to move around in more ways than just waving a remote: Its Wii Balance Board, which comes with the Wii Fit Plus game in a $100 bundle, works like a digital exercise step. It records the body’s weight shifts and movements for activities from yoga to wake boarding.
The Wii accesses the Internet and lets users compete online against others. About 655 packaged games are available for between $30 and $50. Also, you can use pre-purchased Nintendo Points to buy and download about 150 WiiWare games and over 325 titles from the older Virtual Console library.
MICROSOFT PROJECT NATAL:
Microsoft Corp. has developed the world’s first sensor to combine an RGB camera, multi-array microphone and custom processor that allows players to control games with the movement of their bodies, people familiar with the matter said, an effort to attract the casual players who have fueled Nintendo Co.’s recent success.
The Microsoft device is a twist on Nintendo’s blockbuster Wii game console, which allows users to swing a tennis racket or other equipment in games by holding a plastic wand in their hands. Unlike the Wii, the Microsoft camera doesn’t require users to hold any hardware to control on-screen action, the people familiar with the matter said. The camera sits near the television and captures when players move their hands, legs or head.
The camera represents another effort by the games industry to reach out to consumers with more intuitive playing methods than traditional game controllers, with their array of joysticks and buttons. Microsoft’s camera uses 3-D technology, which gives players more accurate control over games than earlier game cameras did, the people said.
SONY PS-3 MOTION CONTROL:
Sony Computer Entertainment, on the other hand, will be competing with Nintendo head-on via a new PS3 motion-control technology set to launch in spring 2010. Sony previewed prototypes of the new wand-like controller topped with a glowing orb at its E3 press conference to demonstrate its ber-precise tracking movements. The PlayStation Eye, Sony’s proprietary digital camera that detects the slightest hand gesture, reads signals from the device. On-screen, the controller can then become anything from a novelty baseball bat to a bow and arrow, which opens up a wealth of possibilities for PS3 game designers. Sony is also going head-to-head with the current tween handheld device of choice, the Nintendo DS. Sony Corp. plans to upgrade its PlayStation 3 console for 3-D games with a free software upgrade, but consumers will have to buy a new TV and glasses.
Nintendo Co. plans to sell a new 3-D gaming device that won’t require special glasses. The device will succeed the DS, the best-selling hand-held videogame system to date, with more than 125 million units sold since its launch in late 2004.
Smart phones such as Apple Inc.’s iPhone have started to emerge as a threat to gaming devices such as the DS, especially among casual videogame fans.The new system will also play current Nintendo DS games. From TV sets to digital cameras, electronics companies are turning to 3-D as a way to revamp products. Nintendo 3-D is suitable for gaming but everyone might not want to wear glasses to play.
The new 3DS comes as existing DS sales are starting to slow.
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