Console Hardware - The Video Game Industry: Formation, Present State, and Future - page 142

of the video game market changes and organizational restructuring taking
place at Nintendo before the development of the Wii. Subsequently, the
chapter provides a case study of the Wii's development. The chapter ends
with a discussion and concluding remarks.
HISTORICAL ORIGIN OF NINTENDO'S COGNITIVE FRAME
Before the development of Nintendo Wii, there was an established, deeply
held, company idiosyncratic cognitive frame of the nature of video games
and how value was created. Some of these infl uences could be traced to the
historical origin of Nintendo as a toy manufacturer, the company's histori-
cal experience in the video game industry and the strong personal views of
the nature and value creation in the video game business held by Nintendo's
long-term president, Hiroshi Yamauchi (president 1949-2002).
From its roots in the hanafuda card business, Nintendo changed course
during the 1960s and started to focus on the uncertain toy industry with
its hit-driven dynamics and constant new innovative concepts (Yoshida
2002). The period marked a shift in the innovation process in the com-
pany. A large number of new graduates were hired from science and
engineering programs, with President Yamauchi emphasizing a non-con-
formist, creative mind-set among employees. Within the company there
was constantly a large number of small explorative projects, a refl ection
of the products premarket uncertainty and varied market acceptance in
the hit-or-miss-driven novelty toy business. Revenues were derived from
unexpected hits like the Ultra Hand (1967), Ultra Machine (1968), Love
Tester (1968) and Laser Pistol (1970)—all toy concepts with new prod-
uct attributes. President Yamauchi's view of the importance of constantly
pursuing products with discontinuous attributes could be traced back to
these early experimentations.
As digital technology started to make inroads into consumer electronics,
Nintendo experimented with the creative potential for new entertainment
concepts at emerging game platforms by entering the arcade game mar-
ket in the late 1970s and the handheld electronic game market in 1980s.
When the company released its Famicom/NES video game console in the
Japanese market in 1983, it was at a time when the video game market
had declined rapidly and the widely held industry view was that the home
computer was the future of games (Ernkvist 2008). Rather than pursuing
the industry-wide migration towards the general-purpose home computer,
Nintendo developed an inexpensive video game console for children that
was completely focused on providing game experiences (FT 1986).
Underlying the innovation strategy was the deeply held view that game
experiences were dif erent from functional products, requiring constant
new entertainment experiences that were dif erent from those at the mar-
ket, a pillar of Nintendo's cognitive frame repeatedly stated by President