Sitting, fully clothed, in his swish Santa Monica hotel room, Satoru Iwata gleefully tells The Times that he is swimming in a clear sea teeming with women, pensioners and repentant couch potatoes.

The Nintendo president, a man in the throes of reinventing the $30 billion video games industry, hasn't just cracked under the pressure.

(He relaxes at home, he earnestly explains, by playing Nintendo's new "cookery game", a typically left-field title that teaches how to prepare Japanese food).

Rather, he is explaining his belief in the "Blue Ocean" theory of business, which says that to succeed you must reach markets (blue oceans) that are free from competitors. Venturing into "bloody red oceans", where packs of rivals fight tooth and nail, can only lead to failure. The central premise – that it is best to zig when others zag – sums Mr Iwata up perfectly.

In 2002, the Harry-Potterish game engineer, 47, became only the fourth Nintendo president in 118 years. "I was the youngest man on the board. It was a big surprise," he says.

Before long, he was convinced that the biggest blue ocean lay in making video games for "people who generally don't play video games". Women are the most prized targets but this untapped market spans a vast swath of the population – everybody, actually, bar fast-thumbed teenaged boys.

"Intellectually, yes, this sounds obvious," Mr Iwata says. "But within Nintendo, among the shareholders, everywhere, there was resistance. When I first raised the idea, in 2003, nobody believed it was possible to broaden the games market."

Four years on, thanks to Mr Iwata, plenty of people believe it is.

"Differentiation is everything" was, he says, the most important lesson passed to him by his predecessor, Hiroshi Yamauchi, who had led Nintendo for more than 50 years. True, there had been a few wrong calls – the toy vacuum cleaner that never caught on; the 1960s foray into taxis, and love hotels that fell flat. But against those, the group had been transformed from a playing cards company to a pioneer of arcade games and 3-D graphics.

Advancing that legacy, in 2005 Mr Iwata launched the handheld DS.

Touch screen and voice recognition technology made for a style of play unlike anything else on the market – and at a much lower price than its main rival, Sony's PSP. Nintendogs, a virtual pet game, was rolled out and snapped up by girls. Brain Training, billed as a cerebral workout, was launched for game-averse grown-ups. Each has since sold more than 10 million copies. The DS itself has sold more than 40 million units – twice as many as the PSP – making it Nintendo's best-ever seller.

It is not only on the playing side that Mr Iwata is challenging the conventional wisdom. Blue Ocean thinking says that "having a unique product is more important than an attractive price point", he insists.

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