Video gaming is a cyclical industry in which new consoles are launched every five or six years. In the last cycle, which began in 2000, Sony’s PlayStation 2 emerged as the clear victor, far outselling Microsoft’s Xbox and Nintendo’s GameCube. The next cycle will pitch Microsoft’s Xbox 360, launched last year, against the PS3 and the Wii. With each cycle the power of the hardware increases, making possible better graphics and more complex games. But Mr Iwata believes the industry has reached a crossroads: by designing products for existing gamers and neglecting non-gamers, it undermines the prospects for future growth. There have even been signs in Japan that the market was starting to shrink. “We need something radical to change the situation,” says Mr Iwata.
More on Nintendo’s radical change at Economist