1. What internal resources and assets did Nintendo have that gave it a competitive advantage?

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

In 2006, Nintendo had introduced its blockbuster next generation video game console – the Wii. This new 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 batter, bowler, 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, had difficulty competing with. But by 2010 both Sony and Microsoft had caught up – with the Move and Kinect motion-sensing controllers respectively.

In late 2012 Nintendo released its newest game controller/console, the Wii U, and initial sales were not what Nintendo had anticipated. 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 may have been the lack of new games available for the Wii U. Many of the exclusive Nintendo franchise games, such as Super Mario, Mario Kart, and Zelda, had not been released at the time of the product Wii U launch, and third-party game developers seemed reluctant to create new products for the Wii U that would fully take advantage of its unique abilities. This was partly because games created for competitors Xbox 360 or PlayStation 3 were not easily converted to the Wii U, and if the console was not selling, the games wouldn’t sell either, so why would developers invest the time and money?

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. In 2008 Nintendo had been in the lead in video console sales growth and second to Microsoft in overall units sold. Within two years of its 2006 release, Nintendo Wii had become the market leader of the generation. However, 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, and in 2014 Nintendo had had its worst sales season yet. Its revenues had been steadily declining since 2010. Now that new next-generation consoles had come from these competitors, and 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. Even though Nintendo had a better profit margin, and more games than its major competitors, 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?