Nintendo's Innovation-Based Business Strategy

There's a great piece over at Lost Garden describing Nintendo's historic focus on genre innovation as a way to maintain high profit margins. While most publishers focus on refining gameplay genres, Nintendo's strategy has and continues to be controlling new ones and controlling them through hardware. The article discusses how this has been achieved in the past, why it is likely to continue especially with the unveiling of the Revolution contoller, and why it's beneficial for everybody in the industry, including Nintendo's competitors.

People often look at Nintendo's releases of a half dozen Mario games a year and assume that they are all clones. In fact, they are typically radically different games across a wide variety of genres. Nintendo gains their value from the Mario brand, not ownership of a specific genre. Brand-based companies rely on the creation of new genres since they can take that brand into the genre for a low risk profit opportunity. ... Nintendo makes the majority of their money by leveraging their brand recognition during the early to mid-stages of a genre's life cycle. The power of the Mario character can establish a Nintendo game as an early genre king and help tap into a new market segment for great profit. However, as they get later into the life cycle, the standardization of the genre mechanics and the intense demands of the hardcore population reduces the power of the brand.