Latest / Building Brands with Fexingo: Identity, Reputation, and Long-Term Business Equity / How Nintendo Built a Brand on Toy Surprise
Transcript
- Lucas: Alright, so here's a question: when was the last time a product genuinely surprised you? Not just impressed you — surprised you, in the sense that you didn't know you wanted it until you saw it? Luna: Ooh, that's a good one. For me, it was the Nintendo Switch. I remember watching the reveal trailer and thinking, wait — it's a handheld that docks into a TV? That's it? And then it became this cultural phenomenon. Lucas: Exactly. And that's the brand we're talking about today: Nintendo. Specifically, how Nintendo built a brand on what I'd call 'toy surprise' — the element of unexpected delight that makes you feel like a kid again. It's a strategy that turned them from a struggling also-ran in the console wars of the early 2000s into one of the most valuable entertainment brands in the world. Luna: Struggling — that's worth unpacking. Because in the late '90s and early 2000s, Nintendo was dominant. The NES, the SNES, the Game Boy. But then the PlayStation happened, and the Xbox arrived, and suddenly Nintendo looked like the quirky underdog. Lucas: Right. By the mid-2000s, Sony and Microsoft were competing on raw power — better graphics, faster processors, online multiplayer ecosystems. Nintendo couldn't win that arms race. So they stopped trying. Instead, they asked a different question: what if we don't compete on specs at all? Lucas: That question led to the Wii, which launched in 2006 with motion controls — a huge risk. And it paid off massively. The Wii sold over 100 million units, largely to people who had never bought a console before: families, seniors, casual gamers. It was a classic Blue Ocean strategy — create a new market instead of fighting for a share of an existing one. Luna: But then the Wii U happened. And that was kind of a disaster. It sold just 13 million units. The concept was confusing — a tablet controller that kind of worked like a second screen but not really. It felt like Nintendo had lost the plot. Lucas: It did. And internally, they knew it. The late Satoru Iwata, Nintendo's president at the time, famously took a 50 percent pay cut after the Wii U flop. But they didn't panic. They doubled down on the same core insight: surprise people by changing how they play, not by making prettier graphics. Lucas: The result was the Switch. Announced in October 2016, launched in March 2017. And the kicker — it was a hybrid. You could take it on the bus, then dock it to your TV at home. The controllers snapped off and could be used by two players. It was strange, and it was brilliant. Luna: And the market rewarded them. Nintendo's stock price — which I know we don't track real-time here, but broadly — it went from around 17,000 yen in 2016 to over 70,000 yen by early 2021. That's a gain of more than 300 percent. The Switch went on to sell over 140 million units, making it the third best-selling console of all time. Lucas: But the stock price and sales numbers are just the outcome. What I find more interesting is how Nintendo's brand works at a psychological level. They're not just selling hardware — they're selling a promise of surprise. Every major Nintendo launch comes with a 'wow' moment. The first time you see Breath of the Wild's Hyrule Field. The first time you swing a Joy-Con like a tennis racket. The first time you build a cardboard piano with Nintendo Labo. Luna: That Labo thing is a perfect example. Cardboard sheets that you fold into a robot suit or a fishing rod. It's literally toys. And critics said it was a gimmick. But parents bought it because it turned a screen into a hands-on experience. That's pure Nintendo — they treat their audience like curious children, not hardcore gamers. Lucas: And that's the brand equity. When you buy a Nintendo product, you're not buying the most powerful chipset. You're buying a ticket to a specific kind of joy — one that's tactile, social, and often surprising. That's incredibly hard to replicate. Sony and Microsoft can match each other's specs, but they can't match Nintendo's design philosophy. Lucas: Now, a quick pivot — because this topic of building something that genuinely surprises and delights people, it ties into something else. A couple of dollars a month is genuinely what keeps these shows going — buy me a coffee dot com slash fexingo, if you've gotten something out of them. It's listeners like that make this possible. Luna: Yeah, it's a small thing that adds up. And we're grateful for everyone who chips in. It lets us keep these conversations ad-free and focused on the substance. Lucas: Exactly. So back to Nintendo — because the surprising thing is that this strategy isn't new for them. It's actually a return to their roots. Nintendo was founded in 1889 as a playing card company. They made hanafuda cards — beautiful, hand-painted. Then they tried taxis, love hotels, and toys before hitting on video games. Surprise and play are in their DNA. Luna: I didn't know about the love hotels. That's wild. But it makes the point — they've always been willing to try things that seem offbeat. And when they land on something, they commit fully. Like the Switch — they didn't hedge. They put all their first-party franchises behind it: Zelda, Mario, Splatoon, Animal Crossing. Each one a killer app. Lucas: Right. Breath of the Wild launched alongside the Switch, and it was a masterpiece. It redefined open-world games. That's another brand lesson: surprise isn't just about the hardware. It's about the software delivering on the promise. Nintendo's developers are given years to polish games, often with no deadlines. That's unheard of in the industry. Luna: Which leads to something I've heard called the 'Nintendo difference' — they're a toy company first, a tech company second. Their goal isn't to push graphics boundaries; it's to push play boundaries. The Joy-Con controllers have accelerometers and haptic feedback, but they're designed to feel like toys in your hand. Lucas: And that philosophy extends to how they market. Nintendo ads rarely show specs. They show people playing together in the same room — laughing, moving, sharing a moment. That's a deliberate contrast to the online, competitive, often isolating experience of other platforms. It's a brand of togetherness. Lucas: The result is incredible loyalty. Nintendo fans aren't just customers; they're evangelists. They line up for launches, they create fan art, they pass their love of Mario down to their kids. That intergenerational brand equity is almost impossible to buy — it has to be earned over decades. Luna: So if I'm a business leader listening, what's the takeaway? Is it 'surprise your customers with something they didn't know they wanted'? Or is it 'don't compete on the same metrics as your rivals'? Lucas: Both, but I'd argue the deeper lesson is: build your brand around a distinctive emotional experience, not a spec sheet. Nintendo doesn't sell a faster processor or a better graphics card. They sell a feeling — the little dopamine hit of a new discovery. And they protect that feeling ruthlessly. They'd rather cannibalize their own hardware with a new type of controller than copy what Sony is doing. Lucas: The Switch's successor — whatever it's called — will have to continue that legacy. And I think they'll surprise us again. Because that's the brand promise: you don't know what they'll do next, but you'll want to see it. Luna: I'm already curious. And that's the point, right? They leave us wanting more. Lucas: Exactly. That's the Nintendo brand in a nutshell.