How did Nintendo compete? Could Nintendo sustain a competitive advantage?

In 2017 Nintendo launched its newest gaming console, Nintendo Switch, designed to allow users to play on a TV and also on-the-go. Although consumers reacted positively, so much so that demand had led to stock shortages, industry experts were cautious. Did this new Nintendo console define the “next generation” of gaming? Would it allow Nintendo to leap ahead of its competition? The investors certainly didn’t think so. As of 2017, Nintendo’s income was off from previous years.

In 2006, Nintendo had introduced its next generation video game console – the Wii. This console introduced an innovative motion sensor game controller that enabled a user to swing it in the air when playing video games, for example to mimic the motions of a tennis player, or boxer. No other gaming console had ever provided the user this much interaction. The Wii had created a new gaming experience that its rivals, the Microsoft Xbox and Sony Play Station, initially had difficulty competing with. But by 2010 both Sony and Microsoft had caught up – with the Move and Kinect motion-sensing controllers respectively.

Subsequently Nintendo released the Wii U game controller/console, and while it did bring some intriguing improvements to the table, it didn’t appear to be innovative enough to once again allow Nintendo to leap ahead of its competition the way it did with the Wii. One problem that had plagued the Wii U also seemed to create issues for the Switch: any games developed for the Xbox or PlayStation could not be easily modified to incorporate the code needed to work with the special features of Switch’s Joy-Con controller. This limited the selection of games immediately available to the Nintendo Switch’s audience.

Nintendo had been a very successful company. Yet Nintendo sat in the midst of two potentially dominating firms: Sony with its PlayStation and Microsoft with Xbox. Nintendo Wii had been the market leader of its generation, but by 2013 both Microsoft and Sony had not only copied the motion-sensing technology, but they had started to invade Nintendo’s key casual family-user market.

Now that the motion-sensing technology was widespread among all competitors, it was much more difficult for Nintendo to set itself apart and portray itself as the “family favorite,” as it did in its early days with the Wii. As of February 2017, the Sony PlayStation 4 was the most successful video game console in the gaming industry. Even though Nintendo had a better profit margin, it might need to find a new leg to stand on. Could Nintendo regain its position as the eminent player in the interactive gaming market?