In the December 2003 issue of Harvard Business Review, Frederick F. Reichheld published his seminal article
The One Number You Need To Grow.
In the article Reichheld demonstrates that in an industry, those companies that have the largest proportion of customers recommend the company and its products, over time, outgrow the competition.
I immediately thought of Reichheld and his famous article when I read
an article in today’s Independent. The article reports that the market capitalisation (total market value of all outstanding stocks) of Nintendo is now bigger than that of Sony, even given the fact that Sony’s turnover is 8 times that of Nintendo.
The article reports that the phenomenal results of Nintendo are largely due to the fact that Nintendo’s Wii is outselling Sony’s PS3 by at factor of 2 or 3, depending on the geographical region.
Add to this that Nintendo’s profitability on the Wii is much better than Sony’s profitability on the PS3.
At Onalytica we track the games console market on an ongoing basis and the sentiment analysis clearly shows that consumers talk much more positive about Wii than PS3.
Figure 1 below shows the distribution of sentiment among online posts about six leading game console brands.
The posts analysed are those who have been cited by others and can therefore be regarded as recommendations (although not necessarily positive recommendations).
Figure 1 shows that Wii has the largest percentage of positive posts as well as the smallest percentage of negative posts (when combining negative and very negative posts). 20.3% of the posts mentioning Wii are positive whereas only 10.2% of the posts mentioning PS3 are either positive (9.6%) or very positive (0.6%).
Figure 2 (below) shows the same information but here each post is adjusted with the topical influence of writer. Example: A mention on the site Engadget.com counts one third more than a mention on cnn.com.
In figure 2 the difference in sentiment between Wii and PS3 is even more impressive. A full 28.5% of the influence (or impact) adjusted mentions of Wii are positive whereas the similar number for PS3 is only 4.9%.
The takeaway is, that of those who are cited (referenced by others) about Wii and PS3, Wii has by far the most positive proportion of mentions and among those with higher influence on the topic of “games consoles” the sentiment towards Wii is even more positive.
It is no surprise to me that Nintendo's profitability on Wii is greater than that of Sony's on PS3. Nintendo have a huge group of satisfied cusomers and influencers promoting their product for them.