The Nintendo Labo

The latest in a tradition of innovation


The Nintendo Labo: The latest in a tradition of innovation
The Nintendo Labo
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I. The Nintendo Labo is announced to great fanfare

Nintendo has announced the Labo, an innovative new video game console add-on made out of cardboard which is garnering massive worldwide attention.

  • Expensive add-ons frustrate both gamers and video game companies: Many people who grew up playing video games can remember going to the arcade and playing racing games using add-on steering wheels and gas pedals. Playing racing games at home with standard controllers just does not feel the same, but the prohibitively expensive cost of add-ons means that most people will not be able to play racing games and shooting games at home using add-on steering wheels and add-on guns. The high price of the add-ons are a point of frustration for not only gamers, but also video game companies as well, who would sell more video games if gamers were able to enjoy a more immersive and satisfying gaming experience using add-ons. The expensive price of add-ons have long been an obstacle for the gaming industry for both the consumers and the producers.
  • Nintendo’s groundbreaking solution: As an answer to this problem, Nintendo has introduced the Nintendo Labo – an add-on made with cardboard that gamers around the world have been clamoring to purchase. Users can build various things out of cardboard to use as add-ons compatible with video games, such as a motorcycle handlebar to use in motorcycle racing games and a fishing rod for fishing games. The Labo Variety Kit, which includes various Labo configurations such as a piano, fishing rod, motorcycle handle, and RC cars, has an (1)MSRP of $69.99, just 5~10% of the cost of standard add-ons.
  • Nintendo Labo introduction:

Nintendo has been praised for providing young gamers with a valuable learning opportunity as well as helping parents to save money.

  • First benefit offered by the Nintendo Labo: The Nintendo Labo has the chance to revolutionize gaming by making it possible for many people to play games using a wide variety of add-ons. Kids who were disappointed about not being able to purchase expensive add-ons now have a great new option, and parents no longer have to feel guilty about not being able to buy expensive add-ons for their children.
  • Second benefit offered by the Nintendo Labo: Parents who decided to (2)bite the bullet and purchase expensive add-ons for their children ran the risk of the kids losing interest in the add-on or breaking it. Because the Labo is made with cardboard and therefore much cheaper than most other add-ons, parents no longer have to worry about wasting money, as they can simply purchase a new Labo set if needed.
  • Third benefit offered by the Nintendo Labo: The Labo offers kids an opportunity to build things. The process of building something can help kids to learn more about science and foster creativity.

Why didn’t other video game companies think of something like this before? What inspired Nintendo to create the Labo?

II. The Nintendo Tradition

Nintendo has always been a company with a unique philosophy on video games.

  • Major video game companies (e.g. Sony, Blizzard, NCSoft): Most major video game companies focus on hardcore gamers in their 20s and 30s and strive to create addictive video games.
  • Nintendo: Nintendo focuses on making video games for the whole family that everyone can enjoy.

Unlike most other major video game developers and publishers, Nintendo focused on family-friendly games such as Super Mario and brain-training games.

  • Video game software developed and published by Sony: Sony’s business model is centered on getting gamers hooked by creating highly immersive and addictive (3)AAA games which feature themes geared towards adults. By getting gamers hooked, Sony leads those gamers to spend more money on various additional features and products related to the game. The Final Fantasy series, one of the most successful video game brands released on Sony’s Playstation consoles, is famous for its amazing graphics and (4)genre-defining gameplay. The series has a huge fan base that has remained loyal to the series for many years – a true testament to the highly addictive nature of Final Fantasy games. The Pro Evolution soccer game brand features realistic graphics and integration with real world players and leagues made possible by their FIFA/UEFA licenses. The games make players feel as if they have actually become the players themselves and encourage them to spend long hours playing the games.
  • Video game software developed and published by Nintendo: Unlike their competitors who focus on developing games for hardcore gamers, Nintendo focuses on developing and publishing games with mass appeal. Many of Nintendo’s games are games that can be enjoyed casually without investing too much time into it, whereas many games published by Nintendo’s competitors feature hardcore and/or difficult RPG or PVP (Role Playing Game / Player vs. Player) elements. For example, the Super Mario series is at its core a simple platformer, and most of Nintendo’s sports games are casual games that feature intuitive motion controls that players of various skill levels can enjoy over 1~2 hours.

Nintendo has released groundbreaking, paradigm-shifting hardware for both the portable and home markets.

  • Game consoles of the past: During the 80s and 90s, Nintendo dominated the gaming industry with the Super Famicom/Super Nintendo console and titles such as Super Mario, Pokemon, and the Legend of Zelda. Sony released the Playstation, which featured massively improved graphics and memory capacity. Microsoft followed suit with the Xbox, which featured excellent graphics that could compete with the graphics of the Playstation 2, Playstation’s successor. Sony and Microsoft’s consoles steered the industry to favor large-scale games with excellent graphics rather than games featuring innovative ideas and well-designed characters. Former Nintendo president Satoru Iwata, recognizing that Nintendo had lost its dominant position in the industry to Sony, led Nintendo to focus on creating games that focused on giving players an intuitively fun experience instead of attempting to wow them with fantastic graphics and console performance. Nintendo began to develop innovative new handheld and home consoles according to this new direction.
  • The release of the Nintendo DS (Handheld): Nintendo recognized that their casual games would work best in the handheld markets. Nintendo began focusing on developing new hardware and software for the handheld market. In the past, handheld consoles featured one screen and multiple buttons. Nintendo revolutionized handheld consoles by introducing the Nintendo DS - a console with two screens, a touchscreen and a stylus. Nintendo DS games like Brain Age and New Super Mario Bros. proved to be a massive hit with gamers as they allowed users to enjoy fun games, both new and classic, using touchscreens. Nintendo sold over 150 million units of the Nintendo DS worldwide.
  • The Nintendo Wii (home console): Building off of their incredible success in the handheld market with the Nintendo DS, Nintendo moved in on the console market to offer a family-friendly home console with games that everyone could enjoy. After introducing dual screens and touchscreens in a handheld console for the first time ever with the Nintendo DS, Nintendo once again shook up the gaming industry by releasing the Wii – the first home console ever with motion sensor capabilities. The Wii featured intuitive motion sensor controls and a controller shaped like a TV remote which encouraged players to move about when playing. Many innovative titles were released on the Wii that utilized its motion sensor capabilities. The Wii was a massive success, selling over 100 million units worldwide.

As a result, Nintendo created a new paradigm for the industry. The industry had been preoccupied with creating highly addictive games for men in their 20s and 30s. Nintendo broke conventions by releasing simple but fun games that people of all demographics could easily enjoy. The result was a massive success, and Nintendo’s consoles enjoyed great success on par with or greater than that of Sony and Microsoft consoles.

Smartphones now take up a large portion of the gaming industry, and many different games in various genres are released on smartphones. Even as the gaming industry continues to change, Nintendo has been able to stay ahead of the game by releasing innovative new hardware and releasing unique mobile games.

  • The Nintendo Switch – a hybrid console: As smartphone games began to rapidly grow in popularity, smartphones began to challenge the dominance of handheld consoles. Instead of caving into the growing dominance of smartphones, Nintendo decided to develop a new portable console to cater to the preferences of modern gamers. The Nintendo Switch is a small console that can be both used on the go and at home. There is a touchscreen and a battery attached to the console itself, and the detachable “joycon” controllers can also be attached directly to the console, allowing users to use the console anywhere. At home, the console can be hooked up to a TV or a monitor, allowing users to play on a bigger screen. The joycons have gyroscopes installed in them which allow for motion controls. Whereas previous handheld consoles only allowed for one player to play on each console, two pairs of joycons are included with each Switch console so that two players can play together immediately. 10 million Switch units were sold within just 9 months since it was launched. The Labo is an add-on to the Switch.
  • Augmented Reality and Pokemon Go: Although Nintendo has not focused on developing games for smartphones, they have influenced the smartphone gaming market by licensing out intellectual property to third party developers and publishing or investing in third party games. While most mobile games have been focusing on virtual reality, MMORPG, or puzzle elements, Nintendo focused on Pokemon Go, a video game featuring Augmented Reality (AR) technology. Augmented Reality video games merges games with the user’s surroundings, and Pokemon Go led users to explore their neighborhoods in search of Pokemon. Pokemon Go gave users an experience that was both unique (AR) and nostalgic (Pokemon intellectual property) and became a massive worldwide hit.

How has Nintendo been able to create such unique products? Where does Nintendo’s creativity stem from?

III. Nintendo’s founding principles and the successful changing of the guard

After the 1970s, Nintendo began focusing on developing fun video games for the masses. They constructed the company’s vision and culture around making fun and accessible video games.

  • Founding principle: Nintendo must focus on providing a fundamentally fun experience. Something that is fundamentally fun should not be something that only a specific demographic of people can enjoy. It should be something that everyone can enjoy easily and intuitively.
  • Nintendo’s vision today: Nintendo wants to evolve from a video game company into a company that enhances the quality of life (QOL) of the people who use their products.
  • End goal: Nintendo strives to make video games that people of all ages and backgrounds can enjoy in a healthy way.

Nintendo sincerely strives to follow these principles and develop games in accordance to this vision. Nintendo’s passion for this vision was realized as creativity in product development.

  • Nintendo’s first principle of game development: Games should be easy, simple, and intuitive so that everyone can play them. Games should offer something more than just fun, such as learning or physical activity.
  • Nintendo’s second principle of game development: Nintendo must produce its own hardware in order to be able to produce the software that the company wants. Nintendo cannot be dependent on other companies such as Sony or devices such as smartphones.

⇒ 1990s: Nintendo dominates the world market with the Super Famicom and top tier franchises such as Super Mario and the Legend of Zelda.
⇒ Early 2000s: Nintendo falters due to the rise of the Playstation and the Xbox, but recovers with the Nintendo DS and the Nintendo Wii. Nintendo’s games remain popular. Nintendo maintains its reputation as one of the leaders of the global video game industry.
⇒ 2010 and onward: Although the Nintendo DS and Wii falter in popularity due to the rise of smartphone gaming, Nintendo roars back with the Nintendo Switch, Labo, and Pokemon Go. Nintendo reaches a new level of popularity with the modern audience.

The next generation of Nintendo developers and executives continues to strive to follow Nintendo’s core principles and knowhow. These young developers and executives are attempting to systemize Nintendo’s values and principles.

  • Tradition: “The company cannot survive without developing groundbreaking products that can give people something that they have never experienced before. Do not follow trends – make something that has never been made before.”
  • Role Model: Satoru Iwata, who worked for Nintendo for over thirty years and eventually became the company president, was a role model of creativity for Nintendo’s development team.
  • Systems and processes based on perfectionism and craftsmanship: Fitting for a company based in Kyoto, the traditional mecca of Japanese craftsmanship and one of the most important cities in Japanese history, Nintendo obsesses over making their products as perfect as possible. Nintendo prioritizes releasing a finished product rather than trying to make deadlines. Instead of hiring companies to make as many products as possible, Nintendo only releases finished, well-made products and spends a lot of time and effort on quality control.

IV. Lessons learned

After examining Nintendo’s passion for creating great products and their creative problem solving approaches, it was possible to learn a few important lessons about business.

  • Startups should first think about what is the fundamental nature of the industry they participate in. That should come before trying to develop the best technology or the flashiest designs.
  • When the company has run into problems, it is important to stay composed, stick to the company’s core values, and respond in the best way possible instead of trying to respond as quickly as possible. When industry trends change, it is better to drive the change yourself rather than following trends set by others.
  • The service should be as easy, simple, and intuitive as possible. The service should improve the user’s quality of life. That is the best way to win the hearts of the masses.

Please discuss Nintendo’s history and strengths and the game industry with your Ringle tutor.

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