Case | HBS Case Collection | January 2009 (Revised January 2010)

Responding to the Wii?

by Andrei Hagiu and Hanna Halaburda

Abstract

After years of gaming console industry leadership, how should Sony respond to the overwhelming success of competitor Nintendo's user-friendly Wii over Sony's high-tech PlayStation 3? It was August 2008 and Kazuo Hirai, chief executive of Sony Computer Entertainment Inc. (SCEI), was contemplating questions from reporters about how Sony planned to respond to Nintendo's Wii console, which was dramatically leading Sony's PlayStation 3 and Microsoft's Xbox 360 consoles in sales. The Wii's supremacy was especially disconcerting to Hirai, given that Sony had dominated the video game industry, and largely defined its course, since 1995. But the tables had turned dramatically in the current generation. Though the Wii was technologically much less advanced than PS3 and Xbox 360, the Wii's ease of use, innovative motion-sensitive controller, and simple but fun games had made the console a hit with all demographics: 9 to 65 years old, male and female. As a result, Nintendo had stolen a march on its two larger rivals by appealing to people who were traditionally not avid video game users. Microsoft's and Sony's more powerful machines remained targeted at the traditional "core gamer" audience: 18 to 34 year old males. Hirai was determined to restore that supremacy, in the current generation or the next. He knew that, whether or not he publicly defined SCEI's strategy as a response to Wii, he had to find a way for his company to deal with the new order of the video game industry that Nintendo had created. In seeking to do so, Hirai might find guidance in the history of the industry, which had been marked by rapid and frequent changes of fortune.

Keywords: Games, Gaming, and Gambling; Two-Sided Platforms; Industry Structures; Competitive Strategy; Electronics Industry; Video Game Industry;

Citation:

Hagiu, Andrei, and Hanna Halaburda. "Responding to the Wii?" Harvard Business School Case 709-448, January 2009. (Revised January 2010.)