An interesting thought occurred to me going over your “Nintendo’s Shield” article.

In summary of it, Nintendo’s shield is mainly what sets them apart of MS and Sony.  This circulates around their values, goals, and driving forces being very different.  As an example, Sony and MS will try to push the “motion idea” onto their current consumer base in the same fashion of how they go about developing and producing software today. This means they will, for all intents and purposes, not change their development strategy or approach except to add in “some motion”. They will run into the same wall (or not even reach it more likely) that all 3rd party developers have run into and been unable to pass.  The right software.

They’ll tack on such camera/motion controls in very predictable ways (Natal will likely be very limited to single-player and “taking turns” applications).

Now here’s the idea that came to my mind and maybe I should send this to Nintendo if they don’t already have it.  How would Nintendo intend to stay out of the Red Ocean? (Maybe I’m writing what you already know)  Sustaining innovation again and again is extremely hard to do from top to bottom (think GC to Wii revolution) for many reasons.  Some reasons are that:

• You may run out of ideas of how to effectively tackle new markets (or the technology/path is not yet feasible to do so)
• “Revolutionizing” too often and you will run the risk of alienating your new market (by not giving it time, disruption is not overnight)

You alluded to that Nintendo will stay at the low tier, not allowing anyone to enter or adapt their platform below theirs.

What would you say about a strategy where Nintendo:

• Continues to stay at it’s core of arcade game-play for software (NSMBW, Wii-titles, MK: Wii, likely new Zelda: Wii, etc.)
• Stay at the low-tier from generation to the next, staying in the Blue Ocean (no SNES, N64, GC etc. decline into the Red Ocean)
• Continue to provide “Bridge Titles” like MK:Wii, likely Zelda Wii to help draw consumers down-market
• Provide incremental evolutions (peripherals like M+, Balance Board, Vitality Sensor) or “mini-revolutions” over time (something that would integrally enhance the Wiimote like projection display or something)

I can see the last one being on point since Iwata listed as they plan to come out with a “new proposal” every 1-2yrs when speaking in reference to more peripherals like the Vitality Sensor at the investor Q&A this Spring.

Iwata has altered the processes within Nintendo so that it becomes a Wheel of Disruption. Remember the bongos? Iwata sent like three developers out to go make a bunch of different controllers and at the end they chose the bongos. Maybe the bongos were a little ridiculous, but the creation of such a process resulted in the Wii-Remote.

Iwata wants to present these new controllers every one or two years is a fruit of this process, of this Wheel. Many of these new devices will not catch on. But that is not the point. The point is that some of them will. And that changes everything.

One of the ‘rules’ I’ve heard of people very successful in business is that although they fail many, many times, they manage it so their failures are *small* and their success is *big*. Putting out these devices minimizes the risk. If the Balance Board failed, oh well. But it caught on big time. If the Wii had failed, Nintendo would not have been broken. But it did succeed.

You can see a pattern that when Nintendo is wrong, they are wrong small. When they are right, they are right big time. This is correctly managed.

Contrast this to the PS3 that bet everything on the “HD Revolution”. If Sony was right, it would have been right big time. But if Sony was wrong, it would be wrong big time. Well, Sony was wrong and the losses are massive.

Curiously, Christensen applies the Wheel of Disruption in a macro-context, and he uses it to demonstrate the rise and fall of the Japanese economy. He cites the rise of Japan was precisely because of wheels of Disruption occurring within Japanese companies. For example, the most famous disruptive company in the world is (believe it or not) Sony. Sony used the micro-transistor and created a whole new sort of disruptive products such as the walkman. Japanese car companies disrupted American car companies. History of post-WW2 Japan is a history of many disruptive companies. At the tail end of this would be Nintendo’s Famicom/NES disrupting the video game industry in America and everywhere else.

Japan’s economic decline is due to many reasons, but Christensen cites that the Wheel of Disruption is no longer turning in that country. Disruptive companies there are no longer disruptive. Christensen defines this macro Wheel of Disruption in a way where employees are free to exit and found their own companies and all. He cites differences in Japan and America in why the Japanese economy stopped.

Note that even though the Japanese economy was in decline, Nintendo doing its disruptive dance with the Wii shot the company’s value almost higher than any other in Japan. So clearly there is a big correlation between a disruptive company and its growth with Japan. Yamauchi, in his last interview, said that he hoped the ‘Revolution’ would not only save gaming but would reinvigorate all of Japan. Nintendo was certainly shooting for the moon.

This is why I believe the Wii, in Japan, is trying to help jumpstart certain anime companies and other media. They used to be huge Japanese cultural exports like video games.

But back to Nintendo, a sustaining move would be for Nintendo to compete with Natal or the Wand. Nintendo has no intention of doing that. Motion Plus was a move to make sure Sony and Microsoft didn’t get outside their shrinking Core Box.

Nintendo thought User Generated Content would be the next big disruptive thing. Well, you know how that went.

If Vitality Sensor performs well, I bet Nintendo will include such sensors with the successor to the Wii. Nintendo loves sensors. However, they likely won’t be like how the Vitality Sensor is. Have you ever imagined, when holding the Wii-Mote, that it could sense your heartbeat or other things through your hands? Exercise machines obviously have such sensors in their handles. Why not game controllers?

I laugh at all these people saying Nintendo will put out a Wii HD, meaning a what we know as the Wii but with HD output. How little they know Nintendo. As Reggie said, “It wouldn’t just be HD output…”, Reggie is trying to politely hint to our disruption-ignorant “game journalist” at Nintendo’s Wheel of Disruption.

Nintendo knows that in order for the next console to be successful, Nintendo has to disrupt the Wii. Nintendo will not make a Wii 2 with HD and better motion controls. That would be a path to irrelevance. No surprise there.

Nintendo fully expects the competition to copy them. However, Nintendo has to be surprised at how poorly Microsoft and Sony are copying them. Natal? The Wand? Good grief. And the software they are showing… Yuck!

One of the best things about disruption is that tons of money, which is Microsoft and Sony’s advantage, ends up being bad to the disruptive process. It is considered “bad money”. Christensen advises the disruptive segment of the company to be ’starved’. This is why Iwata likes to talk about how he chose a few developers, gave them no time and no money, and talk about what they made. It is not because, as some “game journalists” say, that Iwata enjoys torturing his employees. It is because it is a disruptive process. Less money equals better products. Who knew!?

The business of video games is very, very tough. Not only is a company faced with the daunting challenge of penetrating non-gamers, the company is faced with keeping the fire of interest burning for current consumers. It is pretty funny how Nintendo is doing this. Their greatest successes end up being their biggest problems and they must be thrown out the window! What created the Wii must be abandoned. What created the DS must be gone. In the same way, the DS came about because Nintendo threw out the old Gameboy thinking. Wii came about because Nintendo threw out the old console way of thinking.

I believe the long view picture is for Nintendo to create “Endless Revolutions”. The Wii is just the *first* ‘revolution’. The next console should be the *second* revolution. So on and so forth.

Meanwhile, Sony and Microsoft, so used to wielding their blunt strength and money in a sustaining move, end up being like big slow bears unable to catch the swift fox.

New innovations and new ventures based on new innovations are changing, shaping and developing economies. Therefore, innovations are stressed by international, national and regional innovation policies. Commercialization of new inventions (=innovation ? ) has been named as one of the greatest challenges in business economics. In knowledge intensive sectors, new business competence is needed together with technology added with open innovation ideology. The need for today’s learners is to learn how to start up a new (technology-based) venture. Harnessing business competence to manage an innovation or a new venture, including IPR issues, tools for business decisions, financing the venture, managing a small company and marketing of new venture are crucial.

Sales without understanding consumers is futile. Therefore the knowledge in these areas such as contemporary theoretical and methodological approaches to consumer research and consumer marketing, their theoretical legacies, and main applications and critique are important. Different streams of interpretive and cultural consumer research are equally important for a global or international venture. Contemporary research methods for consumer inquiry (e.g., online research, market oriented ethnography) are some of the recent additions brought by the technological and academic development. Global markets and the changing consumer culture is a new phenomenon happening as all we know.

The knowledge in decision science and choice behavior such as Rational decision making under uncertainty, utility theory, behavioral decision theory, Bayesian theory, quantification of uncertainty, preference estimation, non-cooperative game theory, fair division in cooperative games, and economic applications help in crucial stages of innovation decision.

On the business model side– economic, organizational and technological foundations of customer services, distribution channels, supply networks and inventive cooperation are key areas of focus. The approach to train oneself in this arena is to see the problems and cases ranging from the development of strategic capabilities of corporations and quality of customer relationships to the evaluation of opportunities offered by the communication infrastructures to the service markets.

Sales is the major hurdle for any start-ups. Therefore, entrepreneurs must have a basic understanding of the area of B2B sales. This includes developing an interest in the area of sales, understanding basic sales skills, theories, rules, regulations and practices. The needed thrust is to perform basic sales processes from planning, preparation, presentation, negotiation to closing deals. The emphasis must be heavily on business-to-business situations. Typical areas range from negotiation skills, presentation, contacting, pitching and writing a tender offer and negotiating a deal…

Digital marketing is replacing the traditional marketing and this requires an open mind to different types of rationalizations of digital marketing tools and techniques. Creating basic understanding of internet and mobile marketing together with pertinent issues in the Web 2.0 e.g. social media, virtual worlds, blogs and viral marketing is becoming crucial as well.

Without strategy we are left like a rudderless boat– therefore, research-based and practically grounded understanding of how strategy work is carried out in firms that operate across national borders is crucial. Attention is sought to questions related to balancing global strategical and local adaptation / translation. Case examples on strategy work in transnational firms need to be digested. Forming a substantiated view of strategy work in global context, and to critically scrutinizing the notions of strategy and strategic management will drive any entrepreneurs to the helm of success to create blue oceans and leaving the red oceans. Go and INNOVATE!

A month ago, I did an interview with a Brazilian website called “Loading Time” . I’ve waited until now to put it up on this site. (translated version can be found here).  None of the hype for Super Mario Brothers 5 had occurred yet. The dedicated servers fiasco for Modern Warfare 2 hadn’t occurred yet.

The interviewer was surprised that I returned a twenty seven page document back to him (haha). The reason why I talk more is because of the medium. In newspapers or print, space is at a premium. But on the Internet, there is no physical space. So why not say more? If you are going to err, err on the side of more content rather than less.

Remember, this interview occurred a month ago.
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Do you think that New Super Mario Bros Wii will be a mass market hit like Mario Kart, Wii, Sports Resort or Wii Fit?

Definately. However, I expect the game to be declared a failure by the forum dwellers when it doesn’t move as many units as Modern Warfare 2 for the first couple of months it is out. If Miyamoto and his team do their jobs right, NSMB Wii will be haunting the best seller’s lists until 2029. The other 2d Mario games still sell strongly even today. I don’t think it will outsell NSMB DS though due to multiple NSMB DS games in the household which NSMB Wii will not have.

NSMB Wii is the first 2d Mario on the main consoles since 1995. In your opinion, what will be the impact of this game over the younger ones and the expanded audience?

Lately, Reggie Fils-Aime has curiously been suggesting a third entity existing outside the Core Market and Expanded Market. From what little he has said about it, he seems to be calling these people as those who have “Nintendo blood in them” but left the Nintendo consoles for whatever reason. These are not exactly the Expanded Market as they could be current HD console gamers. Fils-Aime sees them responding to NSMB Wii and even Punchout Wii. It appears Nintendo sees this group as the next area for Nintendo to expand in.

NSMB Wii will do well with the Expanded Market. It is a game females will play. It is also a ‘couple game’ where husband and wife can together (strangely, there aren’t too many of these games).

With the younger generation, this will be their childhood. 2d Mario isn’t so much a game as it is a childhood. Every generation should be allowed to grow up with 2d Mario as the NES and SNES generations did.

I saw a Hispanic couple purchasing a pink DS in a store. In the cart was a cute little girl around five or six years of age. The couple had the store employee unlock the glass, and it appeared the couple was trying to choose a certain game but were not sure which. They ended up in a toss-up between the Mario and Sonic Olympics game and NSMB DS. I believe the couple, who were not gamers, was trying to find NSMB DS based on a recommendation from a friend and remembered only ‘Mario’ in the title. They settled on NSMB DS. So the little girl with the new pink DS was about to grow up on NSMB DS as her first video game.

I think the same thing will occur with NSMB Wii. NSMB Wii is an obvious game to get for one’s child. The NES generation, who now has kids, will definitely be getting the game for their kids (and for themselves!).

Still talking about NSMB Wii, the game isn’t receiving much hype and even is been seen with some skepticism. In general, due to the strong of Mario’s name, could be considered as an overlooked game. Why do you think this is happening? Do you think that this lack of hype can be positive to the game?

I’ve seen many games come and go. Games that become classics never blatantly appear so at the time. Games that everyone talks about rarely become classics mostly because those games are relying too much on sizzle. NSMB Wii looks like a game that will age extremely well, and its multiplayer nature will keep people playing it many, many years from now. The lack of hype coming from the “Game Industry” on NSMB Wii is an indication to me of how promising the game’s strength will be.

I remember when Super Mario Kart was released. Many people thought it was lame, that it was going to be another ‘Mario game’ as Mario was becoming overused and kept appearing in various titles. But something in me persuaded me to not listen to the naysayers, and I got the game at launch. The game was just endless fun, something people did not want to stop playing. It sold and sold and sold. My Super Mario Kart was the most requested game to be borrowed by the neighborhood kids. The game had no real hype. Strangely, classics are games people do not think too much about at the time. They just keep playing them.

NSMB DS, while hyped before it was released, likely disappointed those who expected a Super Mario Brothers 5. But the game moved past the Nintendo fans and didn’t stop selling. I suspect the big reason why was the multiplayer. NSMB DS is one of the top DS multiplayer games.

No classic game was ever hyped before it was released (with the lone exception of SMB 3 or some Zeldas). The great games always come from right field, and no one expects them to be big. No one expected Wii Sports to be so big for example. No one expected NSMB DS to sell 20 million units. NSMB Wii was downplayed by the ‘journalists’ after E3 2009 and, despite no one in the “game industry” talking about it, excitement is building for the game.

At the 2009 edition of Tokyo Game Show, Metal Gear Solid 4 and Mario Kart Wii were chosen as the best games of 2008. Aside from their platforms, they are very different games. Do you agree with the TGS’s choices? What do you think about it?

They certainly epitomize the strengths of the platforms and what those consumers wish for that platform’s games to be. Metal Gear Solid 4 is the cinema type game which PS3 buyers largely would like. Mario Kart Wii is the arcade type game which is what Wii buyers want. If the games switched platforms, they would not be voted as the best! A cinema game is not what Wii owners want, and arcade gaming is not what PS3 owners are looking for.

From everything that I’ve read on the internet, you were the one who most criticize Nintendo for the Wii’s price cut. In your view, why this was such a bad decision by Nintendo?

Wii’s price was not the constraint on the sales. Cutting the price is just throwing away millions of dollars. A year ago, the Wii was sold out in America. A couple of years earlier, Wii was selling higher than its retail price. At one point, people were willing to pay $600 for a Wii off Ebay. You could sell a used Wii for higher than the retail price of a new Wii!

The price of the system is not what is holding back Wii sales.

What perhaps would have been a better idea might have been to cut the price on the Wii remotes. The sales of the Wii moved due to friends playing the Wii multiplayer. Nintendo should aim to have every Wii owner have four Wii-motes. $40 per controller, and this excludes the nunchuck and motion-plus, makes people not want to buy more controllers.

People hate buying hardware. In Nintendo’s situation, I see the constraint not on the console price but on the accessory price. When people buy more controllers, they play more multiplayer games, and that leads to more Wii purchases.

In your opinion, what’s the real reason behind the Wii’s price cut? The lack of games or investors/third party companies pressure?

Nintendo has vastly miscalculated the economic downturn and remained too optimistic about American sales. I remember a Nintendo investor telling me how at the last minute Nintendo revised their sales projections down. The investor seemed angry not over the sales projections being moved down but how Nintendo was changing things at the last minute. It showed that Nintendo was shell-shocked to the turn of events and not sure what the future is. This is not what investors want to hear. I expect the next Iwata conference with Nintendo investors to be very interesting.

I think Nintendo felt that the price cut would be a stimulating effect. But it won’t stimulate Wii sales long-term. I hope it is just a response to their ‘adventures in User Generated Content’ which hasn’t helped drive Wii demand.

In some of your blog posts, you’ve mentioned that Nintendo is fighting against disinterest on gaming. For you, after some of their recent mistakes, is it possible to Nintendo win this battle? Is it possible to regain their momentum?

Nintendo has to be going through some internal struggles. Here is one very interesting example. Nintendo started this generation (and apparently previous generations) believing that people bought and enjoyed Mario games because of Mario. Iwata wanted a “Mario game” at launch, but Super Mario Galaxy was delayed but eventually did come out.

Miyamoto has been haunted by the question of why the 3d Marios have never sold nearly as well as the 2d Marios. Nintendo’s reasoning is that 3d Marios are simply not as accessible as 2d Marios which is why their sales are so much lower. This has been Nintendo’s attitude this entire generation: accessibility. The Wii-mote was to cut down the barrier between gamer and non-gamer, for example. So Miyamoto designed Super Mario Galaxy in a way to be the most accessible 3d platformer ever. A fishbowl lens is used so the player can somewhat see what is coming around corners, the game often reverts to 2d form, and the game strives to be very giving in advice to the players.

Super Mario Galaxy’s failure to sell as a 2d Mario had to be stinging to Miyamoto. Within Nintendo, they love making 3d Marios. There was much creative interest about even making a new 3d Mario for the DS. You can divide Nintendo up between the older developers like Miyamoto and all versus the younger developers who grew up on Famicom games. The younger developers want to make games like what they grew up with such as 2d Mario and all. The older developers keep nixing this idea and say, “We have already lived through that time period. We want to make something new.”

What game developers want to do versus what consumers want to do is the biggest divide in the gaming world. While we see this present in most of the ‘hardcore games’, it is there within Nintendo as well. A great example of it is Zelda: Wind Waker and its cell-shaded cartoon style. While Nintendo developers were excited about this style, it was deeply divided in the West where all the sales were. This is why Nintendo resorted to a very different style in Twilight Princess. Yet, like all developers, they revert back to what they want to do. They returned to the cartoon style of graphics in the Zelda DS games.

NSMB DS has sold twenty million units and keeps selling. Miyamoto, when asked at E3 2008 why Nintendo doesn’t make another one since everyone wants it, he replied that the sales guys at Nintendo are demanding another one. Note that it was the sales guys, not the creative interest at Nintendo (aside from the younger developers there). Sales numbers cannot be denied. The massive, massive sales of NSMB DS cannot be excused. There was a massive demand for the game that spread well beyond Nintendo fans.

So in E3 2009, we witnessed something quite remarkable: Nintendo recognized 2d Mario and 3d Mario as separate series and not just “Mario”. But note how Nintendo’s creative interest was still with 3d Mario. They made Super Mario Galaxy 2 in great part because it is what the developers wanted to do. The first Super Mario Galaxy didn’t drive Wii hardware especially in Japan, so there was no reason to make it. Yet, game developers prefer doing what they want to do… even Nintendo developers.

The trainwreck has been the user-generated content Nintendo adopted for recent games such as Wii Music. In Nintendo’s view, they believed they were providing a new experience because they want people to feel the ‘joy of creation’ that they do when making games. This user-generated content direction, and Iwata and Miyamoto’s expressed excitement at this direction, reveals their distaste for creating game content and how they did not believe gaming was in the content business. They believed that increasing accessibility to ‘creation’ would be large sellers.

As bizarre as it might sound, Nintendo didn’t know what business games were in. Consumers do look at games in the context of content. And by content, I mean the ideas and imagination of fireworks the game is causing to explode in your mind. A very good game still has the fireworks exploding in the mind when the game is turned off.

Increasing accessibility is only one part of the equation. The Wii was sold out in America for years not because of Wii Sports but on the potential of games to come. Wii Sports was simply a showcase of that potential of a new context of gaming that motion controllers can do. By going the user-generated content route, the potential for the Wii evaporated. Consumers saw no content coming. And consumer interest isn’t going to last forever. Wii was launched three years ago. People expected some more interesting motion controlled games by now.

Mario Kart DS and Mario Kart Wii show how momentum can be reversed. The Mario Kart games this generation are massive sellers. They are bringing in the older fans as well as selling to the Expanded Market. Interestingly, the games are quite beefy in terms of value. There are many ways to play Mario Kart from time trials to single player races to multiplayer to battle mode (as well as online).

NSMB Wii and Zelda Wii with Wii Sports Resort controls are the right direction. Metroid: Other M and Galaxy 2 are going to fizzle and not drive Wii hardware.

One thing is for sure, Nintendo needs to stop making Gamecube Plus titles. Gamecube Plus titles would be a Gamecube game that isn’t fundamentally changed on the Wii. I don’t see any excitement over such titles like Animal Crossing Wii.

Imagine that when the FX chip was made during the SNES era, that Nintendo put Mario, Luigi, Toad, and Peach in Arwings and called the game Mario Starship! You would have the same basic game, same gameplay, same levels, but it is clear the game would not have been as successful as Starfox which carved out a new fictional universe. In the NES and SNES eras, Nintendo would not just present new gameplay but also completely new content. Not all the new content survived to future generations of course. Mach Rider and Star Tropics didn’t.

While Nintendo is clearly beginning to go back and revive some old series like Punch-Out!! or Kid Icarus, I think Nintendo needs to present new content propositions to customers even if on a very small scale. It is extremely risky to keep putting all the eggs in Mario, Zelda, and Metroid baskets.

Several of your blog posts have criticized Metroid Other M, mainly because is a Samus directed game, just like GBA´s Metroid Fusion. On the posts you stated that despite all other players, only the diehard fans cares about Samus and her motivations. Why do you think this will happen? Do you really think that Other M will be a commercial failure?

(offtopic/personal note: I´m not a Metroid fan, I´ve just played Metroid Prime 1, 3 and Hunters)

Allow me a Mario analogy. Nintendo not releasing a new 2d Mario in practically decades has been one of the craziest moves for the company. However, from Nintendo’s perspective, they thought people bought 2d Mario because of Mario. When Mario 64 and other 3d Mario games failed to bring in the numbers of 2d Mario, Nintendo believed the constraint was accessibility. 2d Mario was more accessible than 3d Mario so that is why it sold better, in their view. But consumers just loved platforming. This is why consumers flocked to Sonic the Hedgehog or Donkey Kong Country. NSMB DS sales versus Super Mario Galaxy reveal that Mario, as a character, is not the main feature that sells.

It is even more so with Metroid. No one buys Metroid games because of Samus. I still know people who have not yet realized that Samus is a girl. After all, one has to beat the original Metroid at the best speed to find that out and many people did not do that. When you ask a consumer what the Metroid experience is, they will not mention Samus Aran at all. They will talk about the creepy maze like environments, the isolation, and the feelings of exploration. Samus Aran’s suit is more interesting than she is. The last thing people will care about is a soap opera with Samus Aran.

The cutscene approach to Metroid is not going to light any fires. It certainly didn’t with Fusion or Zero Mission.

Sakamoto, as well as most game developers, need to understand a maxim understood by great artists: the imagination of the audience is superior to the imagination of the poet/playwright/director. Shakespeare was very adamant on this, and this maxim appears in all his plays. The reason why the audience’s imagination is greater than the developers is because Nature, herself, is far more shocking and interesting in imagination than Humans will ever be. Stimulating the audience’s imagination is the key. Blatant cutscenes aren’t going to achieve this.

And talking about that, do you still bet your money that “Metroid Dread” will be released around November 2010?

Sure. Nintendo tends to put out a major game on both the Wii and DS for their holiday season. For 2009, it will be Zelda: Spirit Tracks, the second Zelda DS game. For 2010, the Nintendo DS title for the holiday clearly won’t be another Zelda. It won’t be a new 2d Mario game since the NSMB team is busy working on NSMB Wii. There has been talk about making a brand new 3d Mario game for the DS. However, with Galaxy 2 coming out in 2010, I do not think Nintendo would put out another 3d Mario then. The only big hole left would be a 2d Metroid and that would tie in well if there is a consumer backlash against Other M.

While Nintendo has a pattern of risk with their franchises, they wisely protect their series by releasing a traditional title at the same time. It is their contingency plan. When Metroid Prime was released, which was very risky, it was coupled with Metroid Fusion (2d Metroid) as a contingency plan in case the market rejected Prime. When Donkey Kong Country was released, which was a major reboot to the Donkey Kong franchise, Donkey Kong ’94 was released as a contingency plan. I suspect that even Galaxy 2 was made and showed off at E3 2009 in case there was a backlash against NSMB Wii, in case consumers rejected a 2d Mario game on the home consoles.

Now, I may end up being very wrong. However, I don’t think this prediction is absurd in the way Pachter’s Loch Ness “Wii HD” to come out in 2010 is.

About Malstrom:

So, let´s talk about you as a gamer.

You have mentioned sometimes in your blog that you were a PC hardcore gamer at the 80’s. And then the Japanese grey box called NES appeared. Can you describe how the impact of the NES was over you as a gamer?

The console market crash in America gave rise to a belief that all gaming would be on the PC. The PC revolution was truly on. As the commercials would say, why buy a video game console that could do nothing but play games whereas you could buy a computer and do more things than play games? Strangely, this type of advertising I am seeing replicated with the PlayStation 3 and Xbox 360 as they are trying to be more of a ‘living room computer’ instead of a straight game machine.

People complain that PC gaming is tough because there are so many different hardware configurations for games. And this lead to constant headaches and game crashes. But remember back then, there was the PC as a game platform. The Commodore 64 was just the Commodore 64. There were accessories such as the disk drive and all, but the hardware was all the same.

PC gaming innovated in two main ways. The user interface allowed brand new types of games to be made thanks to a keyboard and, later, the mouse. Since the computer is not an arcade machine, games tended to be much longer. They were far more cerebral than games today. Think of the adventure games of the past. Games really strived to stimulate one’s mind rather than one’s senses. The second major innovation was that PC gaming allowed anyone to make and sell a game which opened the doors to new developers. Some of the best selling games such as Montezuma’s Revenge were made by 16 year old kids. The Oliver Twins are a great example of that phenomenon. The ‘game developers’ then did not see themselves any differently from other gamers. To them, gamers were their friends, and they saw game creation as making games to entertain their friends. A computer game industry began to develop with the major company being Electronic Arts. Electronic Arts was wildly innovative back then with games ranging from Archon to M.U.L.E.

Despite the rapid success of computer gaming, there was a group of gamers being overlooked since the Atari Crash: children. Children did play computer games because they had no where else to play them. But computers are not designed for children. Children do not understand all the things about computers. They had difficulty in many of the complex games. Computers were used for work, not play. Children wanted to play. And since there was only one computer in a house back then, a parent couldn’t have a child hogging the computer playing games when work needed to be done.

The only other place video games were at was in the arcades. And children cannot drive themselves to the arcades.

Nintendo must have seen this back then. The success of the NES was entirely due to children and their parents. I just saw the ‘Family Gaming’ on it and went “Phhht, that thing is never going to sell,” and went back to my computer games. When I first saw the thing in person, I thought its Japanese controller that had no stick was insane. How in the heck do you play with something you cannot grab on to?

The light gun attracted me. You cannot play with a light gun on a computer after all. So I shot some ducks, and I said to the kid holding up the gun, “This is what is going to big!” “No,” he replied and put in Super Mario Brothers. “This is what is going to be big.” And Super Mario Brothers made no sense to me probably because I kept dying at it. The weird Japanese controller took getting used to (and is why NES Advantages, which was the closest thing to an NES arcade stick, sold so well).

Super Mario Brothers was a game everyone was obsessed about. Back then, since the game came with almost all NES systems, Super Mario Brothers became a communal experience. Children could talk to each other about the game. I recall being obsessed trying to explore all its secrets, and rumors persisted that Minus World led somewhere. These same rumors persisted about a secret world in Metroid as well.

When I first played Legend of Zelda, I didn’t know what to put in as my name. I had never heard of “Link” and didn’t feel like putting in my name. So I entered the name “Zelda”. Putting in “Zelda” starts you on the Second Quest, but I did not know this. All I knew was that the game was ferociously hard, and none of the Zelda maps or hints matched what was in the game. I gave up on it, and I found Zelda II to be far more fun likely due to the hints and maps actually fit what I was playing. I didn’t realize I had been playing the Second Quest to Zelda until years later.

Most game playing back then would today be called a ‘party experience’. Everyone wanted to see what new game you were playing. There were many multiplayer games to play. But most importantly, it seemed everyone was trying to show how superior they were through their ‘mad skills’ at the game in front of their friends. The video game console allowed these gatherings where the PC did not. I fondly remember playing Life Force for the first time and dying, over and over again, on the first stage where walls and arms grew from the oddest of places. Co-op games were not common so games like Double Dragon II or Contra or Teenage Mutant Ninja Turtles II were very popular.

One important thing back then was that even the bad games were fun. Everyone knew they were bad games, yet they were still fun to clown around in. Today, bad games are massive wastes of time. But since games were short back then, a bad game could be fun to play with for a little while.

The rise of the NES is very interesting. While the console was brought in by kids, their parents did play it too. They played the sports games such as RBI Baseball, they even played through Legend of Zelda and tough games like Solomon’s Key. As games got more complicated and larger, they were left behind. They just lacked the fast fingers necessary for the newer games.

As the NES sales accelerated, complaints came in from three different areas. One was United States politicians trying to use the fact that Nintendo was a Japanese company to say that the Japanese, who had taken over electronics and cars, were now mind controlling your children. These politicians made things very difficult for Nintendo and helped prop up Atari’s bogus lawsuit claims.

Another group was the analysts who expected the game console market to crash like Atari did. Every year, they said, “This is Nintendo’s last good year.”

And the third group would be computer gamers and computer game companies. The President of EA, Trip Hawkins, resisted investors’ demands that he make games for the NES. He insisted that the NES would implode, and gaming would return to computers. Hawkins relented when the investors threatened to remove him. So 1990 was a major, major year when it was announced that Electronic Arts would make games on the NES. It was the original ‘betrayal’ as many computer gamers looked at the NES as a kid’s toy and NES games as the hardcore do today with ‘casual gaming’.

But they also had a point. An RPG like Dragon Quest or Final Fantasy was like a cruel joke to them. Why would anyone sit in front of their TV for hours in a mediocre RPG? With a PC RPG, such as Ultima, one had the entire keyboard, could easily write notes, and it was a much larger world. The Japanese RPGs felt ‘dumb down’ to them.

One mainstay of gaming back then was that it was expected for the gamer to make notes and maps on their own. The first time I saw a game that drew the map in detail as you played was Ultima Underworld and that was the late 80s. Games such as Metroid and Zelda had the expectation that the gamer would draw maps and notes on their own.

For gaming as a whole, there was a type of music revolution that went on that no one has noticed. While the PC platforms such as the Commodore 64 were spinning nice little tunes, Super Mario Brothers single handedly popularized background game music. There is a reason why almost all games prior to Super Mario Brothers did not have any continuous background music.

The NES became popular due to very young non-gamers, kept being declared doomed all the time by analysts, was a generation behind in graphics to the computers at the time, had a bizarre new controller that went away from the traditional controller, sold out everywhere with constant shortages, had many controllers such as a gun, and a pad you stood and walked on. What a quirky console!

For someone used to play games like Ultima, M.U.L.E. or Lode Runner, how was the experience to face for the first time games like Super Mario Bros or Mega Man? Is it possible to describe it?

People were fans of individual games back then, not of companies. There was no chatter of the ‘industry’ then or a hype industry (at least, not among the gamers). Everyone loved Donkey Kong and Popeye. I did not know what Nintendo was. The first I heard of Miyamoto was that Nintendo Power interview of him when Super Mario Brothers 3 was being made.

The best way to describe the rise of the NES was Japanese invasion. In the 80s, Japanese products were invading everywhere from Sony’s music products to Japanese cars. When Robotech first aired, people were shocked. This paved the road to the rise of anime in the West.

Americans weren’t unfamiliar with Japanese games. Space Invaders, Donkey Kong, Pac-Man, and Zaxxon were all Japanese made. But arcade games and Atari Era games were mixed with many Western titles such as Pitfall or Asteroids or Pong.

NES was all Japanese. It had to be since the home console market had crashed in the early 80s. Japanese games were very different from Western titles. The content and ideas of the games were so zany and wild that no Western publisher would have touched them. At that time, the West could not have made Super Mario Brothers or Mega Man or Gradius.

Japanese like linearity in their games while the Western mind takes a more open-ended approach. Take the shmup. Games like Gradius are very linear, and the game is very tunnel like as the screen scrolls on its own. The Western shmups were more arena based. In Uridium, the player could fly back and forth and the screen scrolled whichever way the player went. Star Control and its ancestor, Space War, were arena based as the space ships were defined more to an arena. This difference is even felt today as Western RPGs are more open ended while JRPGs are more linear. While Final Fantasy 1 and Dragon Quest 1 may have seemed open ended, they used items or monster levels to move the player through the game. In games like Ultima, the world is not restrictive at all. This is why games like Oblivion are open ended today. It is why Grand Theft Auto could not have been made by the Japanese.

The linearity allowed supreme polish of the game’s content since the developers knew where the player would be at a certain moment. Western games, while they were often open ended, were nowhere near as polished at certain moments. The Japanese games oozed an arcade like quality that was missing on the computer games. This is what attracted many computer players to the NES. This is also probably why the Japanese games have aged better than Western games made at the same time.

I think I rented the entire NES library! Games were so much fun to rent back then (unlike today when you have to learn new controls, plod through boring tutorials, and watch nauseating long-winded intros). You knew you found a good game when you just couldn’t stop playing it. I remember renting the first Mega Man and being frustrated. I could kill Bomb Man, but I don’t think I got too far anywhere else (if anyone laughs at my lack of progress, remember that games were still graduating from their arcade simpleness. A game liked Mega Man required skills many people had difficulty playing with at the time like the platforms on Guts Man stage or the disappearing platforms in Ice Man’s stage).

When I rented Mega Man 2, I fell in love. The game was just so much fun. I didn’t know why it was fun, but I couldn’t stop playing it. I think I got up to the last stage in Wily’s castle (and died for some reason), but that didn’t stop me from buying the game. I bought Mega Man 3 the day it was released. It was really something playing that game the day it came out (you never recognize the classics when they come out, you are too busy having fun with them). I did buy Mega Man 4 but was somewhat disappointed with it as I didn’t buy Mega Man 5 or 6 (though I rented them).

Super Mario Brothers was madness as everyone knows now as was Zelda. I get very annoyed when ‘journalists’ write that Zelda II or Super Mario Brothers 2 were ‘disappointments’. The games were consistently sold out and parents were driving to different states to get the game. There was a massive cartridge shortage in 1988 I believe.

Super Mario Brothers 3’s launch was something. It is the only game that has ever matched the hype. And the game had massive hype such as the Wizard movie. It was one of those games you didn’t stop playing. As expected, the game was constantly sold out.

The way how people responded to the games that would spawn vast franchises down in time are nothing like conventional wisdom. For example, while today people might say Zelda is about the story or about the Zelda universe or something like that, no one played the first Zeldas because of ‘story’ or ‘Zelda universe’. Zelda II had a very different overworld than Zelda 1 (Zelda 1 had two overworlds with the second quest). And no one played the early Zeldas because of “puzzles”. There were no puzzles in Zelda I or II beyond moving a block or bombing a wall. Unlike the later Zeldas which would focus on story, puzzles, and consist mostly of an obstacle course dressed up as a dungeon, the early Zeldas were about the maps and exploration of that map. The early Zelda games felt *very big* as if a gigantic world was placed onto a cartridge. The golden cartridge was absolutely perfect for the Zeldas. Remember that the original Zelda was one of the first home console games to have a battery. Since console gaming was very arcade centric, the original Zelda was like a massive, epic arcade game that never ended. No one had ever seen anything like that. Computer games could save, but those type of computer games were not arcade centric.

The response to Super Mario Brothers was not due to Mario so much as due to the craziness of the Mushroom Kingdom and Subcon Land. Consider that Mario must run on the ceiling in the underground which takes him to Warp Zone. It doesn’t make any sense to run on the ceiling in the underground. There are beanstalks that go to the sky where Mario jumps on gigantic mushrooms. Mario must dodge flying turtles. The game had a very trippy experience to it which was replicated well enough in SMB 2 and SMB 3 (come on, Mario touches a leaf and turns into a raccoon and then flies to a bunch of clouds with happy faces on them???). This response also occurred in the first Super Mario Kart where it made no sense why racing go-carts one could launch shells at one another especially go-kart seeking red shells. It was fantastical.

Metroid attracted a similar trippy response. The audio of the game is very haunting, and the game makes no sense. How could Samus turn into a ball? Why are there so many vertical corridors? Where the heck do you go? The villains made no sense. Why is the last boss a giant brain? What is with those metroids? The big thing was that there were so many hidden places, so many walls you could pass through. Metroid was more like a transdimensional experience rather than the ‘isolated and alone with alien atmosphere’ as people describe it these days.

I have too many NES memories, more than I should talk about. One very revealing way to illustrate the gamer experience of that time is to take an NES emulator and its games and to separate the games by year. Make separate folders of 1985, 1986, 1987 and so on. Then play the games folder by folder. You will see the most rapid and massive progression of console gaming in the shortest amount of time. The early 1986 type games were stuck on one screen (Wrecking Crew) while a few could scroll one way (Super Mario Brothers, Excitebike). 1987 and 1988 games began to all be scrolling one way at least (Gradius) with some scrolling both ways (Super Mario Brothers 2). There was also the addition of passwords that allowed games to be larger (Mega Man 2, Metroid, Kid Icarus). The Zelda games used a battery that made them more expensive to make, but it allowed a very epic experience (Dragon Quest, Final Fantasy). After 1988, most games were scrolling back and forth and up and down and had batteries or, at least, passwords.

There was a Virtual Console back then. They were called ‘arcade games’ and their ports attracted many people. Gyruss, Pac-Man, BurgerTime- all of these were snapped up people who played them in the arcades or on older systems.

The box art for the American NES games was all over the place. There was no standard box design. NES games came in all sorts of shapes and designs! However, in America the cartridges were standardized and all appeared the same (except for the unlicensed Nintendo games). In Japan, cartridge design wasn’t even standardized so the Famicom games have wildly different cartridges. I recall it disappointing in the SNES era remembering how boring game boxes looked since they all appeared the same.

While the SNES was very much adventure and RPG game centric, the NES did not have many of those type of games. It was simply the times. Then as now, game companies copied whatever were the best selling titles. The two dominant types of games were platformers, thanks to Super Mario Brothers, and shmups, thanks to Xevious and Gradius. The shmup was the equivalent then of what FPS is today.

There was no such thing as ‘franchise’ or even ‘genre’ described of games back then. If you look at the NES library, you will find a wild range of games that cannot be pinned in any ‘genre’. Game companies made sequels to games that sold well, but ‘franchise’ is what people described to them starting in the 16-bit Era.

In your blog you´ve talked a lot about NES games, but writed almost nothing about SNES or N64 games. Did you overlooked these generations? In case of affirmative answer, what was the reason?

It is a mistake to write about something you do not know.

I stopped being a console gamer during the SNES Era. The beginning of the SNES Era was very interesting and probably had the best launch games of any console ever made. Super Mario World, F-Zero, and Pilotwings. Then you had games soon following like Super Castlevania IV, Contra 3, Gradius 3, and Final Fantasy 2 (IV). I grew disinterested when Nintendo began going after Sega (who was doing a phenomenal job at that time). The “console war” and its putrid advertising were not fun to me. This was the time where gaming was going more the “Mortal Kombat” direction which I found boring and not for me. Nintendo had stopped making 2d Mario games. Yoshi’s Island had a huge backlash due to its art style at the time. Oh yeah, and there was the Virtual Boy. Meanwhile, PC gaming was doing network gaming and beginning to go online. There was also the birth of FPS and RTS gaming. PC gaming was far more exciting then (whereas in the mid 80s to early 90s, console gaming was really exciting).

I didn’t own a N64 or Gamecube. But I played it through friends’ systems. Nothing was ever released on those systems that made me want to buy them (or the PlayStations). I did not like 3d gaming. I had many problems trying to play these games with those insane controllers. This is likely why I could appreciate the Wii-mote prior to Wii’s release when the hardcore kept calling it ‘gimmick’. They did not understand. Moving in 3d environments with analog sticks is very difficult to learn unless you are a kid and don’t know any better.

I talk mostly about the NES because it is the system that has most in common with the Wii. Both the NES and Wii are disruptive. Both the NES and Wii focused on ‘expanding the audience’ instead of inane “console war”. Some people are finding the Wii to be very different and almost enigma like. However, there is a precedent for it. It is the NES. Nintendo is truly getting back to its roots.

I recall telling stories to gamers many years ago about how one used to buy an Atari 2600 and the entire neighborhood would be going through your house, of how a game console once had a prized spot in the living room and was showed off, of how everyone in the family played the thing, and how there was a madness and constant sell-outs of NES games around 1988. They would just roll their eyes at me! I am so happy that many people (at least in America) could witness this phenomena for themselves with the Wii being sold out for years, with the entire neighborhood going to your house to play the Wii and be in awe of it, and of the entire family playing the console.

Gaming now belongs to the New Generation. I want them to have the similar wonder and enjoyment that I did. I want children to grow up with 2d Mario again and to look at the Mushroom Kingdom as fantastical. I want them to grow up with a console that is not stuck in a kid’s room. The best games children will play are going to be those that they play with their family.

Recently, you´ve written a post about the retro games magazines and you seemed kind a worried about this movement. What´s your opinion a bout this? Is favorable or against it?

I don’t recall being worried. Do only new games fight for the attention of gamers’ playing time? Of course not. All games existing fight for the attention of a gamers’ playing time. I do wish game companies, including Nintendo, realize their biggest competition is not the games currently on the market or other entertainment mediums but older games off the market. I’d rather play Asteroids or Joust than most new games. I think the ‘Retro movement’ is indicative of this.

When games compete against the past, their sales have broken out. Mario Kart DS was designed to “beat” SNES Super Mario Kart. Wii Sports was designed to “beat” the NES sports games and look what happened there.

I think the ‘retro game movement’ is an indicator that the market expects the classics to be competed against. Gamers are flocking to the retro banner because the “game industry” is not putting out anything that can hold a candle to those games despite the increase in production quality.

Do you play the current gen games? About them, what do you think they miss compared to the 80’s and 90’s classics?

Do you mean Next Gen type games of the ‘hardcore vein’? The answer is no. Aside from DS and Wii, and a few PC games (mostly RTS), I don’t play any games.

It is not what I miss about the classics so much as I hate about the present. And you know what I hate? I hate how game developers have no respect for the customer’s imagination. They do not allow their games to be seen by the customer’s imagination. No, they must force their imagination down our throats. The current games’ obsession of story, cut scenes, trying to be like Hollywood, are all obsessions over the game developers’ imagination. But, surprise, the game developers’ imagination doesn’t matter in gaming. It is the player’s imagination where the magic happens. Anything that adds more fireworks to the player’s imagination is good. Anything that forces the developer’s imagination onto the game is bad.

Games are not just interactive experiences for the player. They are also imagination experiences. Taking away the imaginary control of the game is as bad as taking away the interactive control. The classics cannot be beat, no matter what the technology is, because the imagination the classics caused will be better than anything a developer ever puts into a game. Games should trust the player’s imagination more and the game developer’s imagination less.

Let me give an example of this. Miyamoto is a very smart guy for being able to make Super Mario Brothers. But it was not Miyamoto’s imagination that made the game magical. It was your imagination. Miyamoto does not fully understand the consumer experience of Super Mario Brothers. In fact, no game developer can fully understand the consumer experience of their games. They cannot look at the consumer’s imagination. In the same way, a writer or a radio guy cannot fully understand their audience’s imagination. Theater, despite more elaborate props and sophisticated realism, declined while Shakespeare makes up at least 50% of all produced plays in America. Why is Shakespeare so good? His plays have no main props and certainly no realistic sets. It is because Shakespeare intentionally tweaked and sparked people’s imagination. The magic of Shakespeare is not from him but from the imagination of the audience. Shakespeare even admits this blatantly with having Falstaff declare that the source of wit is only half from him but the other half comes from the audience.

What I despise is the creation of “Game Gods” who are seen as the source of the imagination and magic of the game. They aren’t. The magic and imagination is coming from the player. It is the game developer’s job to properly excite it.

Star Control 2 is considered a classic game. The designer (who also worked on Archon and Mail Order Monsters) revealed in an interview that the reason why players hold the “story” and “universe” in such high regard is because he intentionally excited their imaginations often by referencing things that happen off game. For example, what is Frungy, the “Sport of Kings”? No one knows. But the player imagines it. The dialogue and story is written in such a way to point outside the game and to force the player to imagine it. All the talk about extinct races, the Sentient Mileu, the Precursors, all these exist in the imagination of the player. The Arilou and the Orz were crafted to talk about events off screen in ways the player has to imagine. All the races’ back stories point in that direction.

Today, games are designed to illustrate the events in the game engine or in cursed cinematics. To reverse the writing axiom, games need to TELL and not SHOW. Tell me that the princess has been kidnapped, I do not need it to be shown. The writing axiom of showing and not telling was made solely to excite the reader’s mind as showing it, and doing things like writing in present tense, will do. However, this can go too far as if an author takes a chapter to describe a flower.

I miss the focus on imagination most of all. I also miss the spirit of rock-and-roll that was once in gaming. Is it any coincidence that Capcom and Blizzard rose to prominence based on games called “Rock Man” and “Rock and Roll Racing”? And people wondered why music games such as ‘Guitar Hero’ or ‘Rock Band’ became so popular.

From the past to nowadays, generation after generation, the videogames in general have moved from its arcade roots to become more and more a cinematic experience. What do you think is the reason behind it? It was a natural and gradual shift or was by the vanity of game designers and producers?

It is caused by not understanding the medium correctly. When television was invented, television news was a bunch of radio guys sitting around and talking about the news. This made sense for radio but not television. Television news would eventually be realized in actually showing footage of the events they were being talked about.

The medium of gaming is being misunderstood as a feast for the senses be it the eyes, the ears, or the hands. But gaming is really a Theater of the Mind. The imagination of the developer is irrelevant. It is all about the imagination of the player.

All the cut scenes and story are all the poisoned fruit growing on the belief that the game developer is the source of imagination that goes into games. The imagination required by a game developer is utilized more in guessing how a player will act or how a player will feel and think at certain moments. It seems the game developer does not like using their imagination in this way and believe they feel it ‘proper’ to use it in the way of crafting their ‘vision’ not unlike a movie director.

You should know that you are mostly hated by the majority of the game forum dwellers, like those from Neogaf. Do you realize what is the reason why they hate your game articles?

It is because the articles were influential.

There are many game journalists who hate N’gai Croal because, despite him beginning to play games when the Dreamcast came out, he has had more influence and done more things than they ever will.

Video game message forums are like a video game themselves where the posters compete to be the ‘superior’ poster there either in ‘smarts’ or ‘wit’. Often, it ends up imploding into retard rodeo.

Another factor, in big part I think it is because most forums, especially NeoGaf, are crawling with viral messengers. And people like me are a major obstacle to these viral messengers. What can a viral messenger say to the Blue Ocean Strategy or disruption? They can’t. It is beyond them and cannot be argued against. The viral messengers tend to focus on something other than the facts. The pattern is to put a wedge between the console company and its fans. For example, they go around everywhere saying that Nintendo is “abandoning the hardcore” or “abandoning their fans”. While there is much stupid on the Internet, the repetitious comments and forum posts are not a coincidence. Blue Ocean Strategy and disruption have totally de-railed the viral marketers attacks on the Wii. All they can do is attack me. Since I have no personal information up on myself, all they are left with is, “He is just a Nintendo fanboy!”

Another reason perhaps is that I’m a fan of gaming but not of the “Game Industry”. Places like NeoGaf and other forums are a little too worshipful of people in the “Game Industry”, and they talk about who is moving to which company or what someone said very seriously. I don’t take the “Industry” seriously at all. To me, the “Game Industry” is a big fat joke, and we, the consumers, are the punch line. I do not believe looking at people in the “Game Industry” as ‘rock stars’ is proper and is very harmful to the mission of gaming. If anyone joined the “Game Industry” to become a rock star, they are in gaming for the wrong reasons and should leave.

I think it comes to gaming forums losing influence and alternatives contexts of information gaining influence is the cause of their distemper.

Just for curiosity, what’s the reason behind the Malstrom character? Why Malstrom was created?

Ego is a poison to learning and taking risks. I want to talk about gaming, not talk about myself. Besides, why should I matter? My personal self is entirely irrelevant.

It is Human Nature to imprison ourselves by thinking how other people will see us. Malstrom frees me to not care how other people see me. It also forces people to look at the message instead of the messenger. The lack of personal self has frustrated the viral marketers who cannot target a shadow. Anonymous on the Internet does not only mean people acting mean. It can also be used for good. Benjamin Franklin wrote anonymously. The Federalist Papers were anonymous. And recent research shows that Shakespeare was likely a pseudonym.

About Sony and Microsoft:

In your blog you call the Microsoft Natal as “prenatal” and even have made jokes of it. In your opinion why Natal will be an epic fail?

Microsoft is a marketing company, not a technology or software company. Decisions in the company come from the marketing side. For example, Vista was an absolute failure and greatly harmed the Microsoft brand. Windows 7 is actually Windows 6.1, and is known as 6.1 within the company, but it is being marketed as Windows 7. The mediocrity and problems that plague Microsoft software is due to the company’s focus being not on the consumer experience (as Microsoft does not have to sell to consumers, their products are bundled with generic PC hardware).

Microsoft has been very successful in their marketing, so successful that their marketing positions are taking as the ‘premise’ by many people. For example, the belief that computer viruses are like biological viruses, that they are everywhere, and simply part of the world and cannot be avoided, is a brilliant marketing move. When someone gets a virus, they do not blame Windows’ shoddy construction, they blame themselves as if they didn’t wear a coat in the cold. Another premise is that Windows has 95% (or whatever) marketshare. This isn’t true because Windows is bundled with generic PCs, there is no OS market because the OS is bundled. It is like saying the Wii remote dominates the “controller market” when it is ridiculous to say there is a “controller market” since they are bundled with all the consoles. It has to be seen as the ‘computer market’. Companies like Apple do not compete against Microsoft, Apple competes against Dell, Asus, HP, and other computer companies. Another premise is that Microsoft “saved” Apple by buying their stock in the late 90s. What really happened is that Microsoft was caught red-handed stealing code from Quicktime and the U.S. courts forced Microsoft to purchase Apple stock as well as put Office on the Mac. But you never hear about this. Much of the PC tech magazines and all are very much extensions of Microsoft marketing.

Investors are demanding that Microsoft expand as there is no future growth in selling OS and Office. So Microsoft is putting out different products in the consumer market. All these products keep bombing. One high profile case was Microsoft making PlayForSure which was a coalition of different companies to make music products for Microsoft, and, unprecedented in business, Microsoft dumped them unceremoniously to make the Zune (which also bombed) to go after Apple’s rising iPod.

There is only one *bright* spot. It is the Xbox Division. Despite the Xbox blowing up billions of dollars, it is the closest thing to ‘success’ Microsoft has had in the consumer market. Microsoft actually thought they had this generation in the bag. They thought their main competition was the PlayStation 3 and were dismissive of Nintendo. However, Microsoft began to get worried when Nintendo kept talking about disruption. In 2006, Microsoft even began trying to copy Nintendo with their talk on disruption by calling XNA as ‘disruptive’. They clearly began seeing Nintendo as a major threat but wouldn’t do so publicly. The Xbox 360 was designed to destroy the PS3. So they need something to destroy Wii.

Natal, as a business strategy, is to co-opt the Wii revolution. This is one of the three choices a disrupted company can take, and it is the most aggressive one. This is why Microsoft is now suddenly saying that they want to “spread gaming to the masses”. Microsoft’s business strategy response to the Wii is sound.

However, the Natal as product is a very different story. I don’t believe Microsoft understands the Wii audience and likely believes it is all about ‘casual gaming’. At GDC 2007, people were wowed about a company making motion controlled games with a camera. IGN even went to Reggie Fils-Aime and asked if he saw it. I think the marketing department of Microsoft saw it, thought it would be cool, and that was the seed that became Natal.

When Natal was introduced, we saw laser beams shooting from the console to scan a skateboard, we saw the ‘video game magazines’, online or print, immediately proclaim how Natal is the greatest thing ever made, and viral marketers sprung from nowhere and invaded all the message forums trying to push opinions on how ‘amazing’ Natal is. Microsoft even began going on other shows after E3 to demonstrate Natal.

Microsoft’s marketing push didn’t work. Gaming is not like the computer industry. It is in entertainment, not “technology”. Gamers are a cynical bunch. We have to be since every game is paraded in hype and often ends up being mediocre.

The Wii’s success did not come from hype or slick marketing. It came from putting the controller in people’s hands. At E3 2006, normal people played with the Wii. Word of mouth is what gamers trust. They don’t trust what “journalists” say. Microsoft not putting Natal before regular gamers but only a selected bunch (with Non-Disclosure Agreements or whatever else) is a major red flag.

At TGS 2009, Microsoft did another Natal stunt where it had prominent Japanese developers talk about how Natal will change the world. No one is buying this marketing stunt. Microsoft can only convince with the games and letting gamers play the games.

All this Natal marketing with no product, no release date, no price, no games, should reveal Microsoft for who they are: as a marketing company.

The first Xbox was the second place on its generation. Now the Xbox 360 is still the second place, even tough gathered a bigger installed base than its predecessor. What Microsoft should do to change this situation and shift its position?

Microsoft needs to stop focusing on “platforms” and start focusing on “products”. Microsoft will never do this. Microsoft wants to create platforms like Windows and obtain revenue that way. A product that isn’t trying to be a ‘platform’ is not in Microsoft’s DNA.

People buy game consoles for games. They don’t buy them for “platform”. To the consumer, the purpose of the game console is to play fun games. But to companies like Microsoft, the purpose, and the only reason why they are in the market in the first place, is to drive tentacles into consumers to make them intertwined with the console for all their entertainment needs. That is the mission of Xbox Live as an example.

I think there are three things Microsoft can specifically do to help itself:

1) Make Xbox Live free. The company should not be adding features but decreasing them or letting the falling console part prices pay for the service. However, Xbox Live is supposed to become a ‘platform’ so Microsoft will never do this.

2) Make brand new Xbox 360 hardware that has greater reliability. I think people choosing the PS3 over Xbox 360 in America currently is due to the reliability problems of the 360.

3) Fix the Xbox 360 controller with a better D-Pad. All these Xbox Live Arcade games aren’t worth much if the controller doesn’t work well with them.

In his article about the three red lights, Dean Takahashi said that “Microsoft has to move beyond its mentality of being a software company that can launch fast and fix later”. What are your thoughts about that?

I agree. Microsoft created a major reputation problem with hardware that is going to be expensive to reverse both in reality and in perception. Many people will not line up for the next Xbox on day one because of those concerns.

Microsoft has already lost billions of dollars with their Xbox division. For you, why they still are in this business?

The Xbox division is nothing more than a bribe to game developers to keep their games on Microsoft’s API.

About Sony, you’ve said that they could fill the gap left behind by Nintendo’s mistakes, but after the TGS presentation, you‘ve said they have screwed up. Why?

There were some indications of impressive moves on Sony’s part. The biggest one was focusing the PlayStation 3 as a video-game machine instead of the media hub. Large game libraries are what sell consoles. There were also indications that Sony was going to flood the PS3 with older games (similar to the Virtual Console) from the PS1 and PS2. Most interesting was putting Dreamcast games up on the service. Just because games are slightly old doesn’t mean they cease to be fun or their content becomes invalid. The reason why the lack of PS3 backwards compatibility keeps coming up is because the PS3 game library is very uninteresting. Putting up, say, the Dreamcast library to be available would definitely help.

But Sony resorted to being the E3 2006 Sony at TGS 2009. Their show was pitiful. I think the bump of the PS3 price cut must have rekindled the old arrogance. Sony began talking of the PS3 as a media hub, showed off the Sony’s motion controller that one had to hold a DualShock 3 to simulate the Wii’s nunchuck, and the indications of a larger game library hitting the PSN didn’t fully materialize.

Do you think that Sony Wand will follow Natal’s path and fail, or do you think that Sony have a weapon to improve their position in the market?

The question isn’t whether the Sony Wand or Natal will succeed, it is whether the software designed for the Sony Wand and Natal will succeed. I don’t believe it will. The game companies that make games for the Sony or Microsoft platforms were never interested in motion controls in the first place. They are not interested in the new customers the Wii made. They want to make the games they want to make or that the company is structured to make.

It is not about motion controls so much as the new values that motion controls bring. The new audience that Wii is appealing to is not so much grandmas or former gamers but women. In order to have the Wii’s success, they must make games women want to buy. Most game companies do not know how to do this. And they do not want to know how to sell to women.

After all the recent years criticizing the motion controllers, do you think that the hardcore players will fully support Sony and Microsoft’s shift to that direction?

The hardcore are not happy with the Natal or Sony Wand. They might think the Sony Wand will be about ‘technology’ which might have impressed them at E3 2006, but they are already disappointed that the ‘nunchuck’ is one hand on the standard PS3 controller.

The viral marketers, who pose as hardcore gamers on message forums, of course are delighted because they are paid to be delighted. It was amazing all those mysterious posters that appeared after E3 2009 saying how incredible Natal was.

You also have those ‘fanboy’ type people who like what their chosen console company does no matter what. You can tell them apart from the viral messengers because the ‘fanboys’ aren’t trying to persuade people but will say it is good because “Sony made it”.

I think the hardcore are going to rebel. Microsoft entered the gaming market entirely with ‘hardcore’ marketing. They made people think the company cared about them, about hardcore games in general. So much money was spent on casting Nintendo as “non-hardcore”, as the ‘kiddy’ company, as a company who doesn’t make ‘mature’ titles. In order for Natal to co-opt the Wii, Microsoft has to totally change its marketing. This is why a re-brand and reboot of the Xbox 360 console will likely come. (Microsoft has already adopted the Nintendo marketing of showing people being happy on the couch.)

Nintendo received hell with constant accusations that it was abandoning the ‘core’. Nintendo weathered that storm because the company didn’t build its prior success on what is perceived to be ‘hardcore gaming’ (violent, ‘mature’ games). People who say the Gamecube was a ‘hardcore’ game console forget that its best selling games were Super Mario Sunshine and Mario Kart: Double Dash. Nintendo also achieved great success with the DS as well which definitely was not based on ‘hardcore gaming’.

So Microsoft is facing a very difficult problem. How do they rebrand the Xbox 360 without losing their ‘hardcore’ fans?

About games in general:

You are clearly against the game industry, stating several times that it have to die in order to the survive of the gaming. Could you explain better your position?

The game industry is a very different beast than gaming is. It is similar to how the music industry is a very different beast than music is. The music industry manufactures ‘stars’ and marches to formulas that generated revenue in the past. They fought against consumer wishes of digital distribution because that would harm their revenue. Music fans will tell you how the ‘music industry’ has harmed the business of music in general.

The same is true with gaming. The “Game Industry” repeats a formula for each franchise. The “Game Industry” sees only the revenue, not the gamers, and is interested in maximizing as much revenue as possible (instead of maximizing the number of customers). This is why prices keep going up. This is why more ‘collector’s editions’ keep appearing. It is also why the “Game Industry” is pushing for digital distribution despite what consumers say or want, in a complete reverse situation of the Music Industry. They see digital distribution only in terms of increased revenue. People say that Sony’s desire for more revenue due to the high cost of the PSP Go will do harm to the movement of ‘digital distribution’. These people need to realize that the movement of ‘digital distribution’ is nothing more than the desire for ‘increased revenue’. It is not based on consumers. Consumers may respond to digital distribution, but not when it is used as a digital rights management.

If you have read or seen Willy Wonka and the Chocolate Factory, you see this magical type factory that creates so much joy and happiness in their products. You don’t know how the chocolate is made, and it doesn’t really matter, but the end product makes childhoods happy.

The opposite of the Chocolate Factory is the Sausage Factory. The sausages are all pretty much the same. The sausage is made by a formula. It is then branded, packaged, and marketed to chase a demographic group here, another group there. It is soul-less. After eating many Vienna sausages, many people get sick of them and stop eating sausage forever.

Gaming, at its best, is like the Chocolate Factory. It is made by people who love games and, most importantly, love gamers. They want to create as many gamers as possible. They want to spread the love of chocolate, or gaming in this case, to as many people as possible. The chocolate comes across as a ‘magical moment’. Games we today call ‘classics’ were those ‘magical moments’.

Gaming, at its worst, is like the Sausage Factory. There is no magic in them. You can instantly detect the formula. Sausage games are constantly hyped so people will buy it on day one before news breaks out how poor the product is. Since people wise up on the sausage games, they then say, “We now have high definition sausage”, and the hype bait-and-switch game goes on again.

There are “industries” in all entertainment fields: movies, books, music, comics, and so on. The “movie industry” is not trying to make a ‘magical’ movie or to make more movie watchers. The same is true with the “book industry” as they are not trying to make more book readers but focus entirely on the revenue part. These industries are populated by untalented folk who are very interested in preserving their own lifestyles. It is Human nature to not wish to work. This is why they fall into the habit of formulas.

These “industries” tend to coalesce around product types that are being propelled heavily by sector performance. Sector performance is very different than industry performance. For example, the long-term real estate industry is down in Japan and up in the United States because Japan’s population is shrinking while the United States population is increasing. The “Game Industry” was growing not because of business wizards at the game companies but because of population increase and multiple console ownership (likely due to consumers getting older and having more money to spend on gaming).

The DS and Wii were designed to counter the sector performance decline that we are all witnessing in Japan and, recently, in America. Iwata said that if Nintendo just put out a more powerful machine with better graphics, all we can do is watch gaming slowly die. HD consoles are not increasing interest in gaming.

The “Game Industry” is defined in terms of revenue. Meanwhile, gaming is defined by the number of gamers. The “Game Industry” aiming for revenue will only decrease the number of gamers. This is how the “Game Industry” (or any industry) will accelerate rapidly before entering the valley of decline. The decline is happening due to less number of gamers.

You will never, ever see any ‘analyst’ talk about the number of gamers.

Commonsense says that the number of gamers would be very important to talk about when discussing the health of the industry. But the “Game Industry” is not concerned about the number of gamers but only the amount of revenue obtained. This is how the “Game Industry” destroys gaming because they push lower revenue gamers away as they focus entirely on the higher revenue gamers. What else would explain a console come out at $600, and the “game industry” thinks it would become the most popular system?

Keiji Inafune said at the TGS that the japanese game industry is finished. And what about the west? Do you think that will die too?

On the Core Market, yes. The Core Market is defined entirely by software of enormous production costs. It just isn’t sustainable.

In the internet, I’ve read several complaints by gamers saying that actual generation is the most expensive ever, or is the “DLC generation” and keeps on. Could this be considered a reflex of a business mentality from game companies execs like Bobby Kotick or Ian Livingstone?

Gamers are sensing that the “Game Industry” is not about them.

Here in Brazil, the first of your articles that became mostly known was that about the birdmen. Some years after it was written, do you think that the birdmen have learned something?

No. The “Game Industry” is filled with ‘birdmen’. They all flock together.

I think it is important to note that these ‘suits’ in the “Game Industry” aren’t half as smart as they think they are. The copycat syndrome has been in effect ever since the Atari days. When Super Mario Brothers came out, many thought it was just about a side scroller with power-ups. The flood of platform games ended up with many being mediocre. Only a few games, made by talented developers, could make a game like Sonic the Hedgehog. Today, many made Wii Sports clones because they thought it was about motion controls and mini-games.

Talent is extremely rare in gaming. I wish the gaming business was orientated more towards cultivating such talent rather than piggybacking off of the few quality games.

Let’s see if there are any four player 2d platformers that will try to copy NSMB Wii’s success. The pattern of history says they will be made.

Still talking about Brazil, here we don’t have a game industry, instead, we have just a sketch of a market, shattered mainly by the piracy. Even tough, many people here (myself included) struggle to maintain the gaming on and prevent it to fall into ostracism. Do you think that such passion is suppressed by the industry?

This is an interesting question. There is one thing to have a customer. It is another thing to have a passionate customer. Passionate customers will make communities, will evangelize the product on their own, and are the best salesmen for it.

The “Game Industry” is not passionate about gaming as they are passionate about revenue. This is probably why so many people get bored. They think that if they hire young wild eyed developers who are passionate about gaming that they will end up with passionate customers. What happens is that the young wild eyed developers become middle aged jaded developers due to business side not being interested in gamers.

You can’t split the business side and the creative side and think the passion will come from the creative side. It needs to come from both. Take Apple as an example. When Steve Jobs was fired, the people running the company thought they were business geniuses and were interested in revenue. They did not like Jobs’ ideas that would become NExT because it would hurt the revenue of the top line Apple computers. They didn’t even want to put out any product that might interrupt the sales of the Apple II computer! (The equivalent would be if Apple nixed the iPhone because it might interrupt sales of the iPod. But if Apple doesn’t cannibalize the iPod’s sales, someone else would.)

How much developer passion can there be if the business side sees only revenue? Mega Man II was a project on the side made entirely by the passion of the young developers. Capcom only agreed to put it out if they made some generic zombie game (or something). And once Mega Man II went out and became a hit, the sequel was pretty good with Mega Man III, but a distinct and felt decline in the series occurred. Mega Man IV. Mega Man V. Mega Man VI. The passion was clearly fading away with each new game and the customer passion went with it. Those games were clearly being guided by the business side looking only at the revenue. This example is an example that occurs with every hit game. The “Game Industry” destroys gaming with its ‘Scorched Earth Franchise’ way of dealing with it.

Of course, the ‘developers’ cannot just do whatever they want. There are game companies that keep making interesting games while increasing their business influence. Nintendo and Blizzard are the two primary examples that come to my mind.

When you hear people from the “Game Industry” say that Nintendo ‘just cares about money’ or is ‘swimming in money’ or that they are all about ‘marketing’, the “Game Industry” is projecting itself onto Nintendo.

There has been no serious effort, or even a half-hearted effort, to understand Nintendo’s business mentality by anyone in the “Game Industry”. All the talk about ‘disruption’ and ‘Blue Ocean Strategy’ that Nintendo did, prior to the Wii launch, was ignored or dismissed as ‘Nintendo propaganda’.

Speaking of projection, when they kept saying that “Nintendo is doomed!”, it was really the “Industry is doomed!”. This generation is Nintendo on the ascendancy while the “Game Industry” suffers decline. But for some reason, the “Game Industry” is *never* doomed and any decline is spun. Yet, Nintendo is *always* doomed and even when its console was sold out for years, it was spun as ‘bad’ for Nintendo.

Just to finish, do you want to left a message to the brazilian gamers?

The mod work that is being done in countries in South America or even Eastern Europe is very similar to what was being done in the late 70s and 80s. You are the seeds for the new Game Industry.

PlayStation 2 117.8K
PlayStation 3 320.6K
PSP 174.6K
Xbox 360 249.7K
Wii 506.9K
Nintendo DS 457.6K

PSP Go has bombed! Hurray! A great day for all gamers! Let us celebrate, reader. Musicians, a little fiesta music please…

What we are seeing with the PS3 and Xbox 360 is the see-saw of Red Ocean. As PS3 sales rise, Xbox 360 sales decrease and vice versa.

Above: Don’t let the southern accent fool you. This is a good, precise and simple talk of the Blue Ocean.

Above: The “Game Industry” as it struggles in the waters of the Red Ocean.


Above: The Great White Shark of Disinterest.

Wii is in its ‘price drop’ bump. I still don’t like the ‘price drop’, since ‘price drops’ are nothing more than a “stim pack” like a needle shooting into the console’s arm for a temporary boost. However, with the macro environment being what it is (and God help Japan), it was perhaps necessary to re-align costs due to that vast change in the macro economy.

If Nintendo wants a controller in everyone’s hands, wouldn’t it be advisable to slash the price on the Wii-motes? $40 per controller is awfully expensive, especially that you need to purchase a nunchucka and other controllers. People hate buying hardware, so they keep holding off on the controllers resulting in many Wiis having like only two controllers. Every Wii should have four controllers.

But there is too  much profit and money made off of the accessories. So Wii-mote price probably will never go down, alas.

Anyway, the big news is that the price cuts for the PS3 and Xbox 360 aren’t sustaining (and neither will the Wii’s price cut). The water levels of “Disinterest” are rising against the HD Twins.

Microsoft is really in a bind. They released a new Halo and their hardware sales aren’t shooting up. Natal isn’t going to save that console.

Why is NSMB Wii hard to predict with its sales? It is because it is a typical “Blue Ocean” type of game. Blue Ocean products do not obey the defined parameters of the industry so analysts have a very difficult time with them. Even Nintendo has a difficult time with them. How can you analyze a market that does not yet exist?

The “Game Industry” is said to have ’shrunk’ again this month. Celebrate, everyone! While everyone blames the “recession”, know that there are companies growing and thriving despite the “recession”. Mostly, they are all disruptors. Disruption is about learning to love the ‘low end’. So a company like Wal-Mart would see an increase in its sales since they love the ‘low end’.

Nintendo, if it does their disruption right, will be growing where the rest of the “Game Industry” fades in a decline.

Nintendo declined lately, but this is more due to an incorrect tactic being deployed a year or two ago. Nintendo’s decline is not due to “casual fad being over, LOL” as everyone was crowing about a few months ago. Wii Music is not in any sales charts, and it was released a year ago. Wii Fit still charts. So the Expanded Audience is still there. But what is the difference between a game like Wii Fit and Wii Music or Animal Crossing Wii? The answer should point out that Nintendo chose a very different tactic for those games. And this tactic did not work.

Consoles are like a train and, just how trains need coal shoved in to keep the fires burning to continue momentum, consoles need software shoved in to keep its sales burning to continue momentum of the console (consoles are powered by software).

Core games are like those ’starter logs’ you throw in the fire. They blaze really fast and really pretty for the first few minutes. But they die very quickly. Large healthy logs, on the other hand, take a while to catch fire, but they stay burning for a long while. Even when the log is out, the embers of that log still provide warmth whereas the starter log has no embers and creates only a chill afterward.

Above: The Nintendo train

Here is what we will see after the holidays (because all sales go up during the holidays, even the PSP! [shocking, I know]). All the consoles will deflate after the holidays as is normal. But the Wii will not deflate as much and will be chugging at a faster momentum before. People will ask, “How is this happening?”

It is because Nintendo threw in some super-long-lasting logs into the fire such as Wii Sports: Resort, Wii Fit Plus, and New Super Mario Brothers Wii. These games should keep selling strongly for at least a year.

“Choo! Choo!” goes the New Generation train while the highly technological twin super trains, attempting to beat one another, only end up running into each other.

Above: The HD Twins

Charged with finding new markets for growth, many Western marketers are eyeing China’s rising middle class and terrific GDP numbers. And while getting Western products and services into the Chinese market is hard enough, the ability to compete and thrive in China takes mastery of specific skills and processes. Success also involves a drastic change in mindset.

As one of the few countries in the world showing positive economic growth, the future of China sure looks promising. And to take advantage of a very large marketplace, Western companies like Pfizer, Astra Zeneca, Goodyear and others have established beachheads in Chinese markets. However, an Economist article titled, “Impenetrable” reminds readers how truly difficult it is to sell foreign goods in China.

To be sure, some companies are thriving in China. The Economist article cites luxury good makers, airplane manufacturers, and commodity producers as successfully penetrating China. Yet, for every success story, there are a dozen works in progress especially in fields such as pharmaceuticals, banking and insurance and telecommunications. In fact, Ronald Schramm, a professor at the Chinese European International Business School says that the impact of Western firms’ total sales in China are little more than a rounding error.

Why all the difficulty? Western firms must deal with the fact that for all the excitement of capitalistic economic zones in China, most of the enterprises in China are state owned. That means Western companies must deal with plenty of costly and unending red tape from protective Chinese authorities. And while China joined the World Trade Organization in 2001, there is much work to be done to level the playing field for Western companies to effectively compete.

Yet, all hope is not lost. Digging a bit deeper for strategies to penetrate and prosper in Chinese markets, I interviewed Globe Trade founder, Laurel Delaney. Ms. Delaney argues that companies doing business in China need to change their mindset and think of China as an investment that will pay off over the long run. She says, “It takes tremendous time, incredible patience and phenomenal preparation to do business in China. Many companies just don’t have the stamina, perseverance or dollars to last — yet, if they hang on and keep working on it, they will eventually find success.”

The path to successfully navigating Chinese markets also involves avoiding the biggest blunders. To that point, Ms. Delaney mentions the number one mistake a Western marketer can make when looking to China for growth is attempting to go it alone. “You need a strong and effective team and good “Guangxi” (relationship) when doing business in China,” she says. “The stronger the team you assemble breaking out of the gate — the greater your likelihood of success in developing business in China.”

Ms. Delaney also mentions the types of local talent, needed “on the ground” to propel success. First, she says, Western companies should set up a peer-to-peer advisory board consisting of legal talent, an individual with M&A knowledge, a transportation and logistics “superstar”, a banker and a governmental contact. It’s these people that can help a Western marketer iron out issues and challenges they’ll likely face.

In addition, outside of setting up a joint venture with a company, consider hiring local talent to help market to Chinese consumers. According to Ms. Delaney, someone on your marketing team, “(needs to know) native tongue languages of China, is smart and masterful at communicating which includes marketing/advertising, has experience with your product or service offering, and has a history of proven success.”

China is an economic giant and is poised—eventually—to be the number one economy in the world. For Western marketers, finding ways to get your products and services into China is definitely worth strong consideration. Success in Chinese markets won’t come easy, and it won’t be cheap. China’s markets hold great promise, but also peril for companies that lack determination and endurance for the long-run.

Questions:

• A Business Week article notes that in many instances the Chinese government has of late, “strengthened its grip on the economy.” Is there any hope for Western companies to sell their wares against state owned companies?
• Green industries are often cited by futurists as an area where the United States and other Western nations can create competitive advantage. And yet, currently, 35% of the world’s solar cells are made in China. Will the next Green revolution take place in China?
• Beijing University professor Michael Pettis says, “There is little real innovation or branding ability in China.” Does this provocative sentence scream “opportunity” for Western marketers and their associated products/services?

“Business” game journalists are not any better than “game journalists” apparently. Take a look at this story.

Despite this shifting of Nintendo’s position on high definition however, Reggie Fils-Aime expressed a conflicting message during a recent interview with GTTV.

“Michael [Pachter] continues to be the only one that believes [Wii HD] is going to happen,” the NoA president told presenter Geoff Keighley.

“I don’t know how forcefully we can say that there is no Wii HD.”

Nintendo’s position has been, since before the Wii launched, that the platform cycle that began after the Gamecube was not appropriate for HD. There wasn’t enough TVs for it. Costs of it were still very high (which is why HD consoles costed so much). You will find Iwata being consistent on this point.

What Reggie is responding to is a Wii HD. That is, the Wii platform that is HD hardware. It isn’t going to happen. Ever. It would split the userbase. HD will come out for the next platform. Nintendo has no interest in splitting up the userbase of the Wii.

In the talk with investors, Nintendo execs are not referring to the Wii. They are, of course, referring to the next platform.

Iwata announced the console after the Wii would be HD. This first occurred not soon after Iwata announced that the “Revolution” would not be in HD.

Does anyone not do any research anymore in the “Game Industry”? Has everyone lost ‘reading comprehension’ lately?

This industry deserves its decline.

Konsep dasar Blue Ocean Strategy adalah Value Innovation. Bagaimana kita mengalihkan diri dari persaingan di Red Ocean yang sangat kompetitive dan berdarah, menuju pada Blue Ocean yang membuat kompetisi jadi tidak relevan lagi.Value Innovation tidak selalu berupa inovasi teknologi, tetapi berupa inovasi untuk peningkatan keuntungan pelanggan yang disesuaikan dengan harga jual dan biaya.Setiap strategi selalu mempunyai resiko yang harus diperhitungkan dengan seksama. Formulasi dan eksekusi BOS haruslah dilakukan dengan tepat dan cermat.

Prinsip Formulasi Strategi:

• Merubah batas market, menciptakan market space baru. (memudahkan pencarian)
• Fokus pada “big picture” (planning)
• Menjangkau diluar market demand yang ada (pengembangan)
• Strategic sequence yang benar (pembentukan business model)

Prinsip Eksekusi:

• Atasi hambatan didalam organisasi
• Satukan eksekusi dalam strategi

The Four Actions Framework

Dalam membentuk Blue Ocean Strategy ada 4 kunci action yang harus dipilih supaya lepas dari persaingan dan memberi nilai tambah luar biasa.

1. Eliminate: Faktor apa yang dianggap umum dalam industry ini yang perlu dihilangkan sama sekali?
2. Reduce: Faktor apa yang menjadi standard industry ini perlu untuk sangat dikurangi sampai dibawah standard?
3. Raise: Faktor apa yang perlu dinaikkan dengan banyak diatas standar industry?
4. Create: Faktor baru apa yang perlu diciptakan untuk menciptakan Value Innovation yang sangat menarik pelanggan dan tidak ada pada standard industry ini?

Dalam menciptakan Blue Ocean Strategy ada 4 urutan yang harus diikuti secara benar:

1. Buyer Utility: Kunci utama dari BOS adalah adanya nilai keuntungan/ kepuasan luar biasa yang diciptakan.
2. Price: Apakah harga yang anda tawarkan dengan adanya nilai tersebut masih dapat dijangkau oleh target pembeli?
3. Cost: Dapatkah kita mencapai target beaya untuk dapat menghasilkan profit pada target harga tersebut?
4. Adoption: Untuk menjalankan strategi ini apakah kita dapat melewati hambatan2 yang ada? Adaptasi apa saja baik internal maupun external yang harus kita lakukan?

Urutan ini harus dimulai dari nomor 1, bila tidak tepat solusinya, jangan masuk dahulu ke nomor berikutnya, dan seterusnya.

Summary Blue Ocean

1. Keluar dari persaingan Red Ocean yang ber-darah2 dan pindahlah pada Blue Ocean yang menguntungkan.
2. Fokus pada Value Innovation, peningkatan nilai tambah luar biasa pada pelanggan.
3. Keluar dari kebiasaan berpikir industri tersebut dengan menciptakan Market Space yang baru.
4. Gunakan Strategy Canvas dan 4 Action Framework untuk menciptakan Value dan Lowcost secara bersamaan.
5. Pemikiran haruslah dari Keuntungan pelanggan, baru ke harga, biaya, dan bagaimana mengadaptasikan keadaan yang dihadapi, baik internal maupun external.

One console company at E3 2009 announces a new peripheral, new way of playing, shows off software, plays the software on stage, and goes on TV shows to generate tons of hype for this new way of playing.

Another console company does not show a new console, says there is no new console from the top presidents and executives, has plans for new peripherals which shows there is no new console planned, and the new console would not fit in the strategy at all.

Yet, the latter, despite no evidence, keeps being raised again and again. The former, despite all the hoopla and publicity, is never asked.

I am referring to the non-existent Wii 2 as the latter and Natal as the former. If anything needs an announcement of when it is coming, it would be Natal especially after that hyped marketing campaign Microsoft released. Despite playing it on stage, showing software, even going on other TV shows to demonstrate it, there are no plans for Natal’s release. Not even a rough window! Sony’s Wand, on the other hand, has a release date.

Microsoft has to be getting desperate. They released a new Halo and the Xbox 360 ended up third for last month’s NPD. As the holidays approach, a new wave of “viral marketing” is emerging.

Now, how do I know it is “Viral Marketing”? While I have the advantage of the wordsmith being able to read them easier, the big thing is the agenda they keep driving. You can really get a sense of it in many message posts and comments as they run off and seed the typical sites.

Here are some definite examples of viral messengers at work. With New Super Mario Brothers Wii, the ‘viral messengers’ will keep calling it a DS port even though everything in the world says otherwise. Their mission is not facts, but a market strategy. Another example was one saying that the “Blue Ocean Strategy” is ‘not a book used for business strategy’ when it is the best selling business strategy book out there (I’ve noticed the virals never diss disruption because Microsoft wishes to be a disruptor as well. Note that Microsoft tried to call itself the disruptor of gaming in late 2006 with XNA when the Wii hype continued to build).

More recently, it seems the schtick is that “Nintendo doesn’t make any games.” When you point out Nintendo’s error on making games of “user generated content”, they try to shout you down and repeat like a robot: “Nintendo makes no games!” I grow very suspicious when someone denies the ‘user generated content’ angle Nintendo was going when the facts, once presented in numerous speeches and investor conferences, are shown. Clearly, such a person is not interested in discussing facts but projecting a marketing image.

To my amusement, more and more of the viral messengers’ arrows are aimed at me. “He is just a Nintendo fanboy, blah blah blah.” This is said about anyone who writes about any of Microsoft’s competitors (such as Apple). I’ve been here for years, and I’m a known quantity. I’m an anti-Industry person. I don’t like Nintendo because of their games. I like Nintendo because they are disrupting and dismantling the Game Industry.

With the Loch Ness Wii HD, on what factual source, if there is any, that keeps putting this Loch Ness Console into message boards and comments? There is no factual source. They are all made up. Yet, it keeps being hammered.

Above: “Experts” were sure this existed also.

The source of this is not the gamers. It is most definitely being drummed up by the virals.

This is why a better response is to ask about Natal. Unlike the Loch Ness Wii, Natal does exist. Natal was even announced. Natal was even showcased on E3 and played live on stage. Microsoft already began the Natal marketing campaign as it took the thing to other TV shows. So the real question is when the hell is this Natal going to come out?

The answer is that it is not going to come out anytime soon. Microsoft is not a software company, Microsoft is primarily a marketing company. They will keep marketing Natal, even though you cannot buy it and it has no price or release date, because they have nothing left.

The console that gets hurt when the PS3 rises is the Xbox 360. Some say all Microsoft has to do is put out another Halo and watch momentum go on. But another Halo was released. Do you sense any excitement about the Xbox 360? Microsoft is getting desperate. What else do they have? Just the vacuous “Natal” which mysteriously never has a release date yet is constantly marketed.

Note to the Poor, Unfortunate Nintendo Employee Assigned to Read This Crazy Site: The way how Kaigler answers the question isn’t going to be absorbed the way she intends. She should say something simpler like “HD is a sustaining innovation, we are about disruptive innovations”.

Nintendo once talked about disruption and “Blue Ocean Strategy”. It should resume doing so. No amount of competitor marketing can combat the intellectual rigor of those two books. Every time the viral tries to combat “Blue Ocean” or disruption, the marketer fails. Even Pachter tried to publicly dismiss “Blue Ocean Strategy” and that blew up on him. Nintendo should direct attention back to those two works. Don’t rely on “advocates” on the outside like me. The hardcore fanboy won’t trust people like me anyway.

If Dante was alive now, he would add two additional circles to his Inferno of Hell: one for the software virus makers who have polluted the Internet and the other for viral messengers who pollute people’s natural discussions. Gaming would be so much more fun without the viral messengers trying to hammer a company line into us.

There are three tiers of the Blue Ocean Strategy. The first is soon to be consumers. The second is disinterested consumers. And the third are distant consumers in markets completely different.

Think of gamers who got tired of gaming as part of the first. Think of women who bought Nintendogs and other such games as part of the second. And think of the third as people who had no disinterest to gaming because they don’t even know about gaming.

The DSi is clearly designed for that third tier of Blue Ocean Strategy. The camera, the music fiddling, the teeny tiny games, all of these are to get these people in markets entirely distant.

The DSi LL is exactly what Nintendo states it is: trying to get older people. Apparently, the DSi was not doing this job effectively enough.

That is all there is to the DSi LL. There is no secret strategy behind it. It is actually very straight forward. Just looking at the thing should show this.

With the rapidly aging population of Japan, Europe, and America, it should be clear why Nintendo wants to get these people.

Jonathan Becher of the Manage by Walking Around Blog last week wrote about “Less is More.”  While he starts out with an attack on PowerPoint presentations, he then broadens his commentary to software.   His point is spot on and while I can not think about specific example in software, there have been a couple of interesting technology gadgets that could answer his question.

The most obvious to me is the Flip video camera.  They started with the premise that you don’t need all the special effects, and gadgetry that bloats R&D, wastes battery life, and ultimately increases the cost.  They provided just a video camera with a USB connection to download the film.  No more, no less.  And surprisingly (and telling) in the age of endless features that are rarely used it was an immediate hit.

• In your space, are there customers that are over-served by the functionality of the competitive product suites?  If so, could you use this as a little Blue Ocean styled opportunity to address a new market?
• How much of your product’s features are truly used?
• Are the core functions of your product complicated by the rarely used features?
• Do you run the risk of over complicating your product to its own demise?

I think it will be interesting to watch Flip grow over the next few years.  Will it attempt to morph the product to compete with the more complex video cameras?  Will it lose it’s identity as it does?  Is accessorizing the Flip a step in complexity, or merely a nice personalized touch?

Too Much

If we take Jonathan’s initial question a step in the opposite direction, can you think of a company that got too complex for its own good?

Here I think we can come up with a great many examples.  A clear example is Social Networking.  The initial idea behind LinkedIn was fantastic and it was easy to see why everyone bought in.  Lost former co-workers were easily found, and we could maintain a single repository for our network.  No matter when they changed jobs, everyone updated their profile.  Now, in an attempt to do more, LinkedIn is at risk of losing their audience.  Groups were a great idea, but their were no controls, no rules on how to use them (or not use them).  Now there are groups in every direction and people are using LinkedIn as a database marketing tool for pushing spam.  Facebook is perhaps beginning to fail under a similar complexity.  We all have friends that put their entire lives into Facebook (which may create its own problem) and send out virtual drinks, winks, pokes, games, flair, etc.   I would love to periodically hear what my friends are up to, but I can no longer find that out unless I spend a tremendous amount of time to design and manage the environment.

Blue Ocean Strategy

Blue Ocean Strategy af W. Chan Kim og Renee Maugourgune er en ganske spændende tilgang til strategiformulering. Udgangspunktet er en opdeling af markederne i et blåt ocean og og (blod)rødt ocean.

De røde oceaner er karakteriseret ved at de virksomheder der lever der må kæmpe om marginaler, og ofte på pris. Og grunden er at de ikke har nogen vedvarende unikke konkurrencemæssige fordele.

I modsætning hertil er der det håbefulde blå ocean, hvor virksomheden har valgt en strategi, der bygger på netop unikke fordele, som konkurrenterne netop ikke kan kopiere og marginalisere.

Man kan nemt diskutere om ikke der er tale om en idé mere end om et praktisk koncept, fordi der over en lang horisont nærmest ikke findes vedvarende unikke fordele. Med mindre man sidder inde med en hemmelig formular/recept som Coca-Cola, men alligevel – de har heller ikke deres marked for dem selv.

Kritikere af bogen har også nævnt at de fleste af bogens cases har udviklet sig i præcis netop den retning – at de fremhævede virksomheder har tabt bundlinie eller momentum over tid – på trods af det tilsyneladende blå vand.

Det ændrer nu ikke ved at det konceptuelle udgangspunkt holder. Det er sundt at overveje sit strategiske udgangspunkt, og om man for alvor har noget unikt at tilbyde markedet. I forhold til at differenciere sig fra konkurrenterne er tilgangen faktisk også anvendelig på et mere lavpraktisk niveau.

Læs bogen, den er god inspiration – besøg eventuelt Blue Ocen Strategy.

גילוי נאות + רגע של נחת:
בשנתיים האחרונות העברתי עשרות הרצאות וסדנאות בנושאי חדשנות בכלל ובנושא “אסטרטגיית האוקיינוס הכחול” בפרט, אותן אני נוהג לסיים בהצגת סרטון ההשקה של Wii – קונסולת המשחקים המדהימה של נינטנדו, אשר מהווה דוגמה מצוינת ליישום מבריק של “חדשנות ערך” ושל אסטרטגיית האוקיינוס הכחול על כל מרכיביה.
יתירה מזו, משהו ב- DNA היצירתי של נינטנדו הזכיר לי את ההתרגשות (!) במפגש הראשון שלי עם Apple, אי-שם לפני יותר מ- 20 שנים. אף שהן שונות לחלוטין בנקודת המוצא (Apple באה מעולם ה- Design, ואילו Nintendo מעולם ה-Fun), ניתן למצוא בשתיהן תשוקה אובססיבית לחדשנות טוטאלית שמשלבת טכנולוגיות, מוצרים, הבנה מעמיקה של תהליכים ומאוויים אנושיים וזיהוי פנומנאלי של מגמות שוק עתידיות – הרבה לפני שהן צצות על פני השטח.
בשפת האנליסטים: “המשך מעקב“.

ואכן, נינטנדו לא מאכזבת וממשיכה להפתיע שוב ושוב. במהלך השנתיים האחרונות היא לא רק מזעזעת את שוק קונסולות המשחק בו שלטו בעבר סוני ומיקרוסופט, אלא מפתחת את את משפחת מוצרי ה-DS המיועדים לשיפור היכולות המוחיות, ואת משפחת מוצרי Wii Fit המופנים לחובבי הבריאות והכושר שמעדיפים לעשות את זה על השטיח בבית…
וזה עוד לא הכל – נינטנדו עובדת לפי הספר (אסטרטגיית האוקיינוס הכחול כבר אמרנו?), מחפשת את קהלי היעד החבויים מהעין הנמצאים במעגלי ה- Non-Customers, ומשיקה ממש בימים אלה את Wii Fit Plus שלא רק מרחיב את אופציות האימון, אלא גם מאפשר למשתמש לעקוב אחר נתוני המשקל של חיות המחמד שלו. WOW? האו-האו!!!

החדשנות כובשת את פיסגת העולם
את ההוכחה לכך שחדשנות היא אחד מהמפתחות הקריטיים להובלה בעולם העסקים מספק לנו מגאזין BusinessWeek אשר פירסם בתחילת החודש את רשימת 40 החברות הטובות בעולם, ובראשה מהפך היסטורי:
נינטנדו מזנקת לראש הטבלה כשהיא מקדימה את גוגל ואת Apple שבמקומות השני והשלישי.
נכון, הן גדולות ממנה בהיקפי הפעילות, אך מתקשות לעמוד בקצב שנינטנדו מציגה בתחומי העלייה בשווי השוק (38% מ-2004 עד 2008), ובשיעור המכירות שלה בשווקים הבינלאומיים (בשונה מהשוק המקומי בו פועלת החברה) העומד אצל נינטנדו על 81% לעומת 51% של גוגל ו- 28% בלבד של Apple.
קצת גאווה מקומית: במקום טוב, בדיוק באמצע, תמצאו את טבע.

מבט אופטימי אל העתיד: חדשנות מקצה לקצה
בפיסקה הסוגרת את המאמר מנסח Paul Laudicina יו”ר A.T. Kearny (חברת הייעוץ והמחקר אשר מבצעת את דירוג החברות עבור BusinessWeek) את שני הגורמים המרכזיים אשר יסייעו לצאת בשלום מהמשבר העולמי ולחזור לצמיחה בשנים הבאות: מינוף של טכנולוגיות וחדשנות חוצת-ארגון לשיפור הפרודוקטיביות, והתאמה לשינויים הדמוגרפיים אשר הופכים את קהלי היעד המתבגרים (graying populations) לדומיננטיים יותר ויותר”. מבט נוסף אל סל המוצרים של נינטנדו יראה כי גם כאן היא ידעה לקרוא את המפה הרבה לפני האחרים.

ניצחון הזריזים והרעבים על הגדולים והשבעים
מבט היסטורי על רשימת החברות הנבחרות, בהשוואה לשנים קודמות, חושף תהליך מתמשך בו מאבדות חברות אמריקאיות בעלות מסורת ארוכת שנים את מקומן ברשימה לטובת חברות מהמזרח הרחוק (כמו נינטנדו היפאנית ויונדאי תעשיות הדרום קוריאנית) ומדינות מתפתחות כמו דרום-אפריקה.
שוב ושוב מסתבר כי מורשת היסטורית יש בה הרבה כבוד, אבל מחוייבות לחדשנות + נחישות ניהולית + “רעב” להצלחה הן התכונות הקריטיות להישרדות והצלחה מתמשכת בג’ונגל הגלובאלי.

* תודה לידידי יוסי קורן שהקפיץ אותי לפוסט הזה.

בונוסים למשקיענים: 
המאמר המלא מתוך ביזנסוויק
רשימת החברות הנבחרות + נתוני הביצוע
מצגת קצרה הסוקרת את כל החברות ברשימה

One of the most interesting brand developments in a long time is the Nintendo Wii.  The video game market has been hot for some time now, but the story was the same.  Better graphics, better visuals, better reality and gore filled titles.  How do you break out of the crowd?

Look no further than the Nintendo Wii for a great story.

How about finding a different tact all together?  By starters, let’s take away a barrier to purchase – parents that don’t want their kids just sitting in front of their TV.  Let’s add an element of physical activity into the game.  Then let’s market family styled competition.  This is nothing less than brilliance.

• What can you do to change the market parameters?
• When was the last time you had a meeting of your best minds to challenge status quo?
• Are you playing leap frog with your competition?
• What would happen if you did something radically different?
• When was the last time you came up with a brilliant idea and pushed it forward?

“We currently have no plans to cut the price of Wii. Current talk of price cuts is rumour and speculation. This is rumour and speculation as Nintendo have made no announcements on price. Furthermore this is most likely retailer led much in the same way retailers in the UK offer price promotions on our products.” – Nintendo rep

_______________________________
Anything a nameless ‘rep’ says, it is often a lie. Advertising campaigns are already getting underway.

Why Nintendo is going this direction is up to debate. My current hypothesis is that Nintendo is bending over and doing whatever third party companies want. Remember, it was this company that even designed a controller specifically for one game for a third party company which had never been done in the history of the company (and many Nintendo employees were very pissed about this. Iwata just laughs at his employees’ complaints in the “Iwata Asks” interview).

Third parties do not like, and will never like, Nintendo because they see Nintendo as a  primary software competitor. They are hostile to New Generation values. Third parties are pushing Nintendo to turn the Wii into a low tier industry console. What I mean by that is to keep pushing for Wii’s price down to become a post-PS2 system where they make their ‘industry’ products to rake in money so they can spend it on their ‘art’ in the HD systems. They have no interest in taking the Wii seriously outside of its revenue generating creation with the Expanded Audience. In fact, most third parties are actively hostile toward the Expanded Audiences since they won’t be buying the games they really want to make.

Nintendo’s fall didn’t begin with the N64, Virtual Boy, or with the 16-bit generation. It actually began in the 8-bit generation. Nintendo began to overshoot their audience in making games more complicated and more time consuming. The simple joys of the early NES sports games which attracted many people, for example, were never replicated later on in the NES lifecycle let alone in other Nintendo generations. Nintendo had so many problems with Sega in the 16-bit generation not because of Sonic and ‘blood’ but because of the sports game players who were flocking to EA’s Genesis sports games. This is why sports was the launch game for the Wii. Nintendo wanted those people back.

After several years of successful business moves, Nintendo is repeating history just like on the NES. While future historians will write that Nintendo’s fall came from the succeeding generation or sometime in the future, it is actually occurring now. The NES explosion allowed Nintendo to coast to the 16-bit generation. Had it not been the arrival of a 2d platformer (Donkey Kong Country), Sega would have taken the crown for the 16-bit generation.

The Wii price cut appears to be a move of appeasement to the dictates of the “industry” rather than the dictates of the “revolution”. Nintendo would rather throw the “revolution” overboard just to get the “industry” to like them.

Sounds like I’m over-reacting? Take a closer look. After Wii Fit, Nintendo has pretty much stopped doing the “Revolution”. And the “Revolution” is, of course, spreading gaming to the masses. There was a massive campaign and effort to put Wii Fit in front of people. And with that, along with the original Wii launch, it created new gamers. But since then, Nintendo has gotten extremely lazy. More lazy then I have seen any company in recent memory.

They decide to make sequels to the games they have already put out on the Wii. Sequels to Wii Sports, Wii Fit, and even games that didn’t create new gamers like Super Mario Galaxy.

They decide to make many ‘user generated content’ games which are games with no content. This is so lazy. Make the customer provide the content for the game? Give me a break!

Now, instead of putting out interesting new software to increase the sales of the Wii, Nintendo is taking the ‘easy path’ of slashing the price.

To those dorks who say, “This is the fourth holiday season of Wii not having a price cut, it must have one!” Remember that this time, last year, the Wii was still sold out in America which no home console had ever done.

We have never seen what the holiday sales for the Wii is at its regular price when demand had not exceeded supply in America. Of course, now we never will.

There is something about success in the console market that breeds stupidity in executives. Such success makes them believe they are ‘business geniuses’ and all, and then they act with a strut. The success of the Playstation obviously went to Kutaragi’s head, and he made the turkey called ‘Playstation 3′. The success of the DS and Wii clearly has gone to Iwata and Miyamoto’s heads where they enthusiastically created the turkey of ‘user generated content’ games (which, interestingly, occurred with Will Wright as the success of the Sims poisoned him to make the turkey known as ‘Spore’).

The price cut indicates a strategy move that is moving AWAY from what made the Wii and DS successful in the first place. When the DS was being outsold by the PSP, Nintendo didn’t keep dropping the price. They put out Nintendogs, Mario Kart DS, and other games which caused the DS to eventually become sold out in Japan. When the DS stopped being sold out in Japan, Nintendo didn’t cut the price. But imagine if they did. It would have been a dumb move then. It parallels the situation with the Wii in America.

The difference is that third parties are not embracing the Wii as they did the DS. This is why I suspect the price cut could be in the vein of ‘third party appeasement’.

However, there is another difference: the Wii is disruptive, the DS is only merely innovative. The new generation values of the Wii are greeted with hostility by the “industry” because it seeks to disrupt the “core market”. The only third party response for the Wii will be in making “industry” games (i.e. games designed to maximize revenue and not to maximize customers, big difference between the two) which means to use the Expanded Audience as some sort of money pie. It is like Hollywood putting out a few kids movies to make money to spend that money on their ‘art’ movies that don’t make any money.

Iwata also has a major credibility problem now. He says one thing to investors and then does another. The lack of strategic consistency to the company and its business mission has to be extremely alarming. I wouldn’t trust anything Iwata says from here on out.

In history, most revolutions are disappointing because the ‘revolutionary’ ends up not truly interested in changing the structure. To the contrary, the ‘revolutionary’ only wants to be the king and to keep the old structure in place. And this is what we’re witnessing happen with Nintendo. They have no interest in truly dismantling or disrupting the “Game Industry”, they only want to be on top of it.

Ausführlich wurde heute schon über die Kulturflatrate geredet – leider in der Session “Neue Erlösmodelle für die Musikindustrie”. Dieses Thema hat natürlich noch viel mehr zu bieten. Statt flacher “früher war alles besser”-Rhetorik möchten wir darüber diskutieren wie man die ständig wandelnden Bedingungen nutzt und auf die Zukunft vorbereitet ist.

- Zeitvorschlag: 10:45, raum 1 - #WSMusik

Dabei soll aufbauend auf Konzepten wie

• 360°-Modell
• Long-Tail
• Blue Ocean
• Groundswell
• N=1
• Netzwerk
• Co-Creation

konkrete Anwendungsmöglicheiten für Musiker, Labels und Musikbegeisterte aufgezeigt und produktiv diskutiert werden. Wir möchten zusammen Erfahrungen, Entdeckungen und Strategien austauschen, die der Musik eine Zukunft sichern.

Wir freuen uns auf  Teilnehmer aus den verschiedensten Bereichen!

André Luce & Daniel Reinke

danke fürs Bild: Doublep1

Sheer business incompetence. This isn’t going to increase Wii sales longterm.

Wii sales were already going back up and steady due to Wii Sports Resort. Now every ‘forum dweller’ and ‘analyst’ are going to say it is going up due to ‘price cut’.

And Wii will always be perceived to be in the ‘Red Ocean’ now.

If a price cut were to come, it should have occurred after the holidays.

Nintendo has really been making some piss poor business mistakes since 2008 (which is why there have been no new articles). First, there was the user generated content ‘direction’ the company decided to embark on. Now, there is the price cut which isn’t going to boost interest in the system.

What is going to happen is people are going to sit back and wait for more price cuts.

A good question for a journalist to ask a Nintendo exec next time is why Nintendo is diverting from the Blue Ocean Strategy. Do they still intend to follow it? Another question to ask is how is this price cut supposed to increase value in a declining core market?

Why doesn’t Nintendo cut the price of the DS? It makes as much sense as cutting the price of the Wii.

The difference between ignorance and stupidity is that ignorance is not knowing something while stupidity is not knowing something while you think you do.

What consistently separated winners from losers in creating blue oceans was their approach to strategy. The companies caught in the red ocean followed a conventional approach, racing to beat the competition by building a defensible position within the existing industry order. The creators of blue oceans, surprisingly, didn’t use the competition as their benchmark. Instead, they followed a different strategic logic that we call value innovation.

-Blue Ocean Strategy, Page 12

Value innovation is a new way of thinking about and executing strategy that results in the creation of a blue ocean and a break from the competition. Importantly, value innovation defies one of the most commonly accepted dogmas of competition-based strategy: the value-cost trade-off. It is conventionally believed that companies can either create greater value to customers at a higher cost or create reasonable value at a lower cost. Here strategy is seen as making a choice between differentiation and low cost. In contrast, those that seek to create blue oceans pursue differentiation and low cost simultaneously.

-Blue Ocean Strategy, Page 13.

Let’s return to the example of Cirque du Soleil. Pursuing differentiation and low cost simultaneously lies at the heart of the entertainment experience it created. AT the time of its debut, other circuses focused on benchmarking one another and maximizing their share of already shrinking demand by tweaking traditional circus acts. This included trying to secure more famous clowns and lion tamers, a strategy that raised circuses’ cost structure without substantially altering the circus experience. The result was rising costs without rising revenues, and a downward spiral of overall circus demand.

These efforts were made irrelevant when Cirque du Soleil appeared. Neither an ordinary circus nor a classic theater production, Cirque du Soleil paid no heed to what the competition did. Instead of following the conventional logic of outpacing the competition by offering a better solution to the given problem- creating a circus with even greater fun and thrills- it sought to offer people the fun and thrill of the circus and the intellectual sophistication and artistic richness of the theater at the same time; hence, it redefined the problem, itself. By breaking the market boundaries of theater and circus, Cirque du Soleil gained a new understanding not only of circus customers but also of circus noncustomers: adult theater customers.

This led to a whole new circus concept that broke the value-cost trade-off and created a blue ocean of new market space. Consider the differences. Whereas other circuses focused on offering animal shows, hiring star performers, presenting multiple show arenas in the form of three rings, and pushing aisle concession sales, Cirque du Soleil did away with all these factors. These factors had long been taken for granted in the traditional circus industry, which never questioned their ongoing relevance. However, there was increasing public discomfort with the use of animals. Moreover, animal acts were one of the most expensive elements, including not only the cost of the animals but also their training, medical care, housing, insurance, and transportation.

[The book goes on into more detail of how Cirque du Soleil didn't follow the traditional circus industry pattern of getting famous 'circus stars' and changed the techniques of clowns from slapstick to humor more sophisticated.]

By looking across the market boundary of theater, Cirque du Soleil also offered new noncircus factors, such as a story line and, with it, intellectual richness, artistic music and dance, and multiple productions. These factors, entirely new creations for the circus industry, are drawn from the alternative live entertainment industry of theater.

-Blue Ocean Strategy, Pages 14-15

This example in the book’s opening chapter clearly blows up the notion that Blue Ocean Strategy means ‘dumbed down products’ or ‘targeting new demographics’ or simple and raw ‘expansion’.

Blue Ocean Strategy means ‘differentiation’. It means a new context of use. This is why the Birdman and the Casual Fallacy exist because these companies do not wish to understand the new context of gaming. They think that by mimicking the most surface details, such as mini-games or Mii like characters or a ’simple experience, their games will sell like a Wii Sports. Companies that are finding their way into this new context for games, like EA and Majesco, still have bumps in the road, but they are getting there.

So let’s get to the stupidity (people who think they know what Blue Ocean Strategy is but actually don’t and play the role of Internet clowns):

Of course the “Blue Ocean Strategy” is nothing but a flawed theory made up of several preexisting economic principles wrapped in a PR bullshit and a marketable story. But hey, if Nintendo references it, it must be golden! It surely wasn’t just a credibility move by Reggie/Iwata at a time when the “strategy” was immensely popular. And the fact that they’ve done things “counter to the blue ocean strategy” is surely not because the strategy doesn’t actually help anyone with running a company. Surely!

The last time Iwata referenced the “Blue Ocean Strategy” was at E3 2009 which is quite recent. The clown can’t even get basic facts right.

I guess the “Blue Ocean Strategy” being an ‘international best seller’ and being one of the best selling and most influential business book this decade means nothing.

When teaching a complicated subject, say law, math, or Shakespeare, it is not uncommon for students, who are unable to raise themselves up to understand the concepts, to only seek to tear them down. “Law is gay.” “Math is stupid.” “Shakespeare is dumb.” People don’t like to admit they have difficulty understanding something. But education can only begin when one admits he doesn’t understand something. Business is just as complicated and difficult to absorb as law, math, and Shakespeare.

Attacking and trying to tear down the “Blue Ocean Strategy” only reveals the failure of the attacker in understanding it. It is not like any of the attackers of “Blue Ocean Strategy” can coherently quote or explain what Blue Ocean is about in the first place.

I am very ignorant of advanced physics. But if I said that “Advanced Physics is a waste of time, it is nothing new, etc,” I’d be guilty of stupidity. There is no shame in ignorance.

The next clown comes by the name of charlequin. He says, responding to someone else:

You’re right that they’d be “giving up on” that, because “that” was a dumb idea that never had anything beyond a tenuous relationship to reality. Consoles drop in price over time; Nintendo wasn’t going to be able to avoid that reality just by wishing really hard.

Apparently, Charlequin doesn’t have much of a relationship to reality. The DS, aside from the early price drop after its launch, hasn’t had a price drop in almost half a decade. The DSi is effectively giving the DS a price increase.

Waiting longer than any previous system ever to make their first price drop is not “submitting to defeat.”

Dropping the price as a way to prop up the value of the system means Nintendo has failed to increase value on their own through content.

Not dropping the price has nothing the fuck whatsoever to do with the Blue Ocean strategy.
Oh really?

“While supply is on the rise as global competition intensifies, there is no clear evidence of an increase in demand worldwide, and statistics even point to declining populations in many developed markets.

“The result has been accelerated commoditization of products and services, increasing price wars, and shrinking profit margins. Recent industrywide studies on major American brands confirm this trend. They reveal that for major product and service categories, brands are generally becoming more similar, and as they are becoming more similar people increasingly select based on price. People no longer insist, as in the past, that their laundry detergent be Tide. Nore will they necessarily stick to Colgate when Crest is on sale, and vice versa. In overcrowded industries, differentiating brands becomes harder in both economic upturns and downturns.

“All this suggests that the business environment in which most strategy and management approaches of the twentieth century evolved is increasingly disappearing.”

-Blue Ocean Strategy, page 8.

From the smorgasbord of ‘tactics’ suggested in various message forums to analysts quoted as if their words had value, these are all ‘thoughts’ from the twentieth century and various ideas of management practices that are rapidly becoming obsolete in this new century. Probably what analysts were taught, when they were young, all worked. But today, those ways apply less and less.

Just as every other industry evolves and becomes better, why would management practices not evolve as well?

The Blue Ocean Strategy, at its core idea, is not allowing your product to become a commodity. As the quote above said, pricing was the only differentiation customers saw in products. Cutting price is the fast road to becoming a commodity.

The Blue Ocean strategy centers around the prospect of entering into an untargeted market and thereby attracting a broad array of customers who are not currently under heavy competition from other competing brands. There is no part to this whereby once you have entered this market you are required to avoid altering your price.

He clearly doesn’t know what the hell Blue Ocean Strategy is at all. It has nothing to do with ‘targeting other markets’. This is what the ‘casual fallacy’ is all about. How the hell do you target a market that does not yet exist? Durr…

Here is another joker named “Eat Children”:

You keep using the word ‘value’, but value is totally relative to the buyer. People who found the Wii valuable at its current price already own one. Huge sales dips tend to indicate that the market of people who agree the system has value is dwindling. Dropping the price = potentially larger audience, ie; those who felt the system was overpriced to begin with.

How is this a sign they are defeated? It’s a consumer market. Your object is to sell your product to as many people as possible, and when one market is extinguished alter your product/marketing/price in some way to appeal to another market.

People who already own a Wii don’t matter. They already paid for the system. How they feel about a price drop is irrelevant. It’s the people who don’t own a Wii that matter, and if they don’t own one due to competitive pricing from other systems, or simply because they think the Wii is too expensive, then dropping the price and/or bundling with more content (essentially the same thing) is the best way to hook them in.

The fact the Wii has stayed at full price for all this time does not show they are defeated. It shows they outlasted both Sony and Microsoft. If they drop the price now, they’re still the last to do so. Wouldn’t that mean they ‘won’?

Eat Children is citing the old traditional view of product management. Note how the DS is somehow mysteriously absent from the discussion. Nintendo didn’t cut the price on the DS (except soon after it launched) and even the PSP began outselling it. Nintendo just released Nintendogs and other content and the rest is history.

Cutting the price would be allowing the Wii to march on to become a commodity. It is definitely not the Blue Ocean way.

The next clown, doomed, says:

except that you fail to understand that consumer electronics work in a way different than you understand the Blue Ocean strategy. even Apple dropped the price of their iPod eventually, and prices of similar entertainment devices such as DVD players go down in time as well. the Wii is a piece of consumer electronics. lowering price with time is a natural progression in the life of the product, Blue Ocean or not, because quite simply, some people won’t even think of purchasing an entertainment device until it drops to a lower price, the Wii included.

Again, no mention of the DS! But a rush to bring up the iPod who doesn’t exactly qualify for the “Blue Ocean Strategy”. Apple’s history is more on the ‘Red Ocean’ side. All the new iPhones are clearly competing and targeting other smartphones. Apple does see its competition as a benchmark. For example, the ‘PC vs Mac’ ads are something that would never come from ‘Blue Ocean’.

But here is a non-message forum board example of Blue Ocean Strategy stupidity. Not ignorance, but sheer stupidity.

When Nintendo announced the existence of the Wii a few years ago, terms like “blue ocean” and “innovative” were thrown around. Since the game console’s launch, the Wii has become a huge success, appealing to both Nintendo fanboys and to casual-gamer families.

Nintendo is playing by its own rules and profiting well. But I think the company has alienated the hardcore fans and followers of the industry. By not lowering the price of the Wii, the company is breaking the usual practice of incremental pricedrops that occur across the lifetime of a console. These pricedrops usually increase sales and make a system more widely adopted. And while it is true that Nintendo’s sales do not need increasing and have already found mainstream adoption rates, this move bothers many hardcore fans who were waiting for a pricedrop to increase the value of the Wii.

To that writer, Blue Ocean is just a *term*. Perhaps if he learned what Blue Ocean Strategy was all about, he wouldn’t speak such nonsense.

I bolded the above. Yes, it is true a price drop does increase the value of the Wii. However, this is very temporary and is contrary to what the Blue Ocean Strategy is about. Blue Ocean is about ‘value innovation’. Cutting the price does not innovate the value. It slides the product on the road to irrelevance. A declining value can mean nothing but the product becoming irrelevance.

It is clear that the decline in Wii sales are coming not due to price, but due to lack of software. Iwata aiming the Nintendo ship at the illusion called ‘user generated content’ certainly didn’t help.

If Nintendo does cut the price, it would be the second big strategic mistake Nintendo has done with the Wii. The first mistake was ‘user generated content’. After the first price cut, people are going to expect more and more.

It is also becoming apparent that the “Game Industry” is going absolute bonkers that the Wii hasn’t lowered its price. They are still stuck in the ‘old context’. There very well could be third party pressure for Nintendo to act against their interests.

However, one thing that is certain this generation is that third parties do not pick the winner (and boy, are they furious about that). It has been quite entertaining to watch the Wii, in that it has no high profile third party games, consistently outsell the HD Twins. It is third party pressure that did get Reggie to make the public comments about how bad ‘used games are’ (which Iwata slapped down rather fast).

It is incredible that despite how often “Blue Ocean” is mentioned by Nintendo execs, no one is reading it. Not even our brilliant analysts where it is their job to know these things. We should make it a practice that if you wish to discuss Blue Ocean Strategy, you should be able to quote it rather than just rely on make believe stereotypes and “assumptions”. There is no shame in being ‘ignorant’. But at least we will have less of the ’stupid’.

Blue Ocean

blue ocean

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PlayStation 2 105.9K
PlayStation 3 210.0K
PSP 140.3K
Xbox 360 215.4K
Wii 277.4K
Nintendo DS 552.9K

MADDEN NFL 10 (360; Aug-09) 928,000
WII SPORTS RESORT W/ WII MOTION PLUS (WII; Jul-09) 754,000
MADDEN NFL 10 (PS3; Aug-09) 665,000
BATMAN: ARKHAM ASYLUM* (360; Aug-09) 303,000
BATMAN: ARKHAM ASYLUM* PS3; Aug-09) 290,000
MADDEN NFL 10 (PS2; Aug-09) 160,000
DISSIDIA: FINAL FANTASY (PSP; Aug-09) 130,000
WII FIT* (WII; May-08) 128,000
MARIO KART W/WHEEL (WII; Apr-08) 120,000
FOSSIL FIGHTERS (NDS; Aug-09) 92,000

(*includes CE, GOTY editions, bundles, etc. but not those bundled with hardware)

And now for a word from Anita Fraizer….

The industry realized its sixth consecutive month-over-month decline, and while improved over the last several months, it’s still a notable decline. The back four months of the year would have to be up 14% in aggregate for 2009 to come in flat in comparison to 2008 sales.

Accessories was the only category to experience an increase for the month of August over last year’s sales. The uptick in hardware sales helps to spur sales of additional controllers and other peripherals which help consumers enjoy their new system(s).

Note that Fraizer didn’t call for Wii to have a price cut. Why should it have a price cut when it is still selling around PS2 levels?

When did the PS2 first have a price cut? I forget the time, but I believe the PS2 did have one within its first three years.

What Iwata is trying to do with the Wii is quite unprecedented. Nintendo really does believe they are in a way against disinterest in gaming. In other words, Nintendo is in a war to create and maintain value of gaming. Constant price cuts on both software and hardware signal declining value. If Nintendo can keep the ship steady at the same price, it considers it winning in the war against disinterest.

No console has gone as long as the Wii without a price-cut. It is unprecedented.

For all the talk about sales numbers, we shouldn’t forget about the issue of price drops. It is better to sell a million units at $50 than two million units at $20. Not only is it more revenue, but it means it is maintaining its value.

Blue Ocean Strategy is about value innovation. Red Ocean Strategy is to increase value by undercutting your opponents (such as through price drops and having more ‘features’ like faster processors).

I love seeing Wii Fit and Mario Kart Wii still up in the top ten. I can’t wait for New Super Mario Brothers Wii to join them. And Wii Sports Resort is quite a monster. When will Resort stop selling? It may never leave the top ten list. Note that Wii software tends to ‘hang out’ in the top ten year after year. The ‘core’ games say ‘hi’ in the top ten and then vanish a month or two later. If I was a publisher, I’d much rather have my game hang out in the top ten to get all the sales at the first few weeks.

Fossil Fighters being on the list is no surprise to me. Around me, kids were talking much about it. Apparently, there had to have been good advertising on the shows kids watched and all. How else could they all know about it?

Interesting to note how the PS3 software is shooting up. This is likely due to the increased PS3 purchases.

PS3 and 360, since they share much of the same software library, are going to be seeing their software sales cannibalized from one another. If you own both consoles, why buy Madden for both of them? I wonder how many of the PS3 sales are coming from multi-platform gamers, from 360 owners primarily.

Alas for our brilliant analysts, there is no “Nintendo doomed!!!” today. But stay tuned for next week/month/day. No ‘doom’ today. But always a ‘doom’ tomorrow. There is always a ‘doom’ tomorrow.

Check out what Apple said:

“Games are expensive — $25-35 per title. Worse isn’t the price, it’s the buying experience, going to a store is just not a lot of fun. Built into every iPod touch is the App Store… you’ll see a big difference.”

Someone does not understand gamers. $25-35 is not considered expensive, not by hardcore standards, not by Expanded Market standards. $50-60 might be considered expensive. But $25-35? No way.

But he is referring to, of course, handheld games. Check this out:

“It’s a great portable game player as well. … when the PSP and DS came out, they seemed so cool. But once you play on the iPod touch, they don’t stack up anymore!”

Now, what’s wrong here? What is wrong is that Apple isn’t using sales numbers. Using number of software isn’t impressive because DS and PSP are largely closed systems. If I was a Microsoft Marketer, I could just add a fourth bar on that chart that read “PC” and showed 3454398693 software.

I’ve told you before I’ve gotten into heated arguments with a very well known Apple blogger. He was convinced that the iPod Touch meant that the DS was dead solely because Touch was ‘better’ in that it had better graphics and multi-touch screen. I told him he didn’t know a damn thing about games or gamers and should realize that the gaming market is nothing like the computer market. Apple is not in the entertainment business even though they make computers that do play entertainment. Apple does not create its own games as Nintendo or Sony owned companies do. And the strategy Nintendo uses inoculates it from traditional competition.

DS is not dying. The DS is still thriving. The Apple guys are frustrated to hell over this. After all, the DS is just a game player. Shouldn’t the iPod Touch kill the DS (and PSP) just like how Apple music players killed portable music players? Why isn’t it working?

So I can only sit back and laugh. The game business is very, very different from other entertainment mediums. You can tell that the people at Apple do not know gaming. People say the video game market is very tricky and notorious for its twists and turns. But this is said only by people who do not take the video game market seriously as a market but as some mutated offshoot from movies and music. Music and movies are really nothing compared to games which is why games will end up becoming the dominant medium within time.  I suspect, a century looking forward, that music and ‘movies’ will be cannibalized by games.

Apple is wasting their time making the iPhone or iPod Touch attempt to compete with the DS and PSP. A much better angle would be to greatly expand the iPhone and iPod Touch’s PC functionality. We need to get that mobile PC revolution underway. I want to be able to carry my computer in my pocket no matter where I go. And then we can just plug it in to monitors and keyboards sitting around.

The big reason why games are not like music and movies is the difference between players and instruments. Music is only played on players such as CD, cassette, MP3, vinyl, whatever. No one cares how it is played. However, music is ‘innovated’ with new instruments. A CD player is not an instrument. An iPod is not an instrument. A tuba is an instrument as is a clarinet.

The DS and PSP and all are not just video-game players. They are video-game instruments. Each game system has new features, be it new interfaces or even greater processors and graphics, that make games play differently.

Apple cannot possibly understand this because Apple does not create games. Video game creators, such as Nintendo, understand this very well: the hardware does not just ‘play’ games, the hardware ‘innovates’ games. The hardware becomes a new instrument to allow new types of gaming.

To put forth my instrument and player analogy further, you could say that the Wii is an instrument that allows Wii games, such as Wii Sports, to be made. But the Virtual Console or the Gamecube mode is little more than a player. The original NES would be the 8-bit instrument while the Virtual Console or emulation would be the players.

And just like real music, it is one thing to hear it from a player. It is an entirely different thing to hear it from instruments.

I thought it was practice for games to sell a million at least before they got ‘re-issued’. Perhaps I was wrong.

Resistance, Motorstorm, and others for $20? And Grand Theft Auto 4 for $20?

DS games are more expensive than that.

And Nintendo’s Wii launch games are still $50 if they are still in stock.

This leak in value on the software side on the HD Twins parallels their hardware. It shows that eventually, the HD consoles will both become cheaper than the Wii. The Wii will remain at full price, just as its software remains at full price, while the HD Twins continue to decline.

The thought of Wii and its software at a higher price outselling or selling at the same rate as the HD Twins and their games is a delicious thought. Oh, the forums will go nuclear. The market will be saying that the Wii is of more value than the HD Twins. And there is no possible way to spin that.

I can’t think of a time when such different prices were evident among game consoles. This is clearly the result of Nintendo following the “Blue Ocean Strategy” and competing against disinterest and not their competitors.

蓝海战略认为，聚焦于红海等于接受了商战的限制性因素，即在有限的土地上求胜，却否认了商业世界开创新市场的可能。运用蓝海战略，视线将超越竞争对手移向买方需求，跨越现有竞争边界，将不同市场的买方价值元素筛选并重新排序，从给定结构下的定位选择向改变市场结构本身转变。

English description:

Red Oceans are all the industries in existence today—the known market space. In the red oceans, industry boundaries are clearly defined, and the competitive rules of the game are known. Here, companies try to outperform their rivals to grab a greater share of product or service demand. As the market space gets crowded, prospects for profits and growth are reduced. This may even mean selling below cost price. Products become commodities or niche, and cutthroat competition turns the ocean bloody. Hence, the term red oceans.

Blue Oceans, in contrast, denote all the industries not in existence today— referring to the unknown market space, untainted by competition. In blue oceans, demand is created rather than fought over. There is ample opportunity for growth that is both profitable and rapid. In blue oceans, competition is irrelevant as the rules of the game are waiting to be set. Blue ocean is an analogy to describe the wider, deeper potential of market space that is not yet been explored.

Check out Rob Fahey’s latest column.

My contention would be that while it isn’t a hardware platform, World of Warcraft is every bit as much a disruptive product as anything that Nintendo has created.

It’s not hard to see the parallels between WoW and products like the Wii or the iPod. It’s certainly low-tech – which allows it to run happily on old hardware, lowering the bar to entry significantly – but it makes up for that with stunning polish and design. While not being amazingly innovative (its designers happily confess to the extent to which they were influenced by games such as Ultima Online, Everquest and Dark Age of Camelot), it took pre-existing ideas and polished, honed and (in some cases) simplified them into a much more marketable state. This is, in many ways, the essence of a disruptive product.

With disruption, there is a disruptor and a disruptee (an incumbent). With console companies, Nintendo is the disruptor and Sony (as well as Microsot) is the incumbent. Normally, I don’t apply disruption to software because it is a fuzzier picture. I think of WoW, and Blizzard games in general, as using the ‘Blue Ocean Strategy’ even if Blizzard didn’t know what the Blue Ocean Strategy is.

But Fahey is absolutely correct in that WoW’s success is due to loving the low end. Blizzard employees apparently liked Everquest, but they felt it was broken. “How do we fix this?” they asked. WoW wasn’t designed around the hardcore raiders. WoW was designed more around the low end. One could even say that WoW was *gasp* the CASUAL MMORPG.

Here are some of the things WoW *fixed*. First, rest experience was given to those to aid those who can’t play the game all the time. Second, quests were made to be very easy to follow, very straight-forward. The tutorial areas were cleverly set aside from the rest of the game so the noobs can learn at their leisure. The quests would keep pulling the player to new others so they would have new things to explore and do. WoW was also released with considerable content already made. Most MMORPGs come to the market with very little content. But WoW took four years of development time (the Manhatten Project took three).

I recall Richard Garriott commenting about how impressed he was with Diablo when Origin was still around. He said something like how Diablo cleverly kept people playing due to early levels moving so fast. In WoW, it takes like a few hours to get to level 10. From level 10 to 20, it takes maybe a day. 20 to 30 takes maybe a couple of days. It really slows down once you get into the level 40s and 50s. At least, it used to when I played (I stopped playing before the first ‘Honor System’ appeared).

Blizzard was entirely unprepared when WoW was released. They never imagined it could be so big so fast.

What I believe will take over WoW will be a MMORPG that simplifies even more. The most common complaint about WoW is that it still eats away too much time. That is an opportunity for someone to exploit.

King Kotick believes WoW is “invincible” because no one can make a ‘better’ game. But the successor to WoW will not be ‘better’ in traditional terms. It will be simpler and less time consuming. The only true defense against disruption is paranoia which King Kotick apparently does not have.

If Blizzard plays their cards right, their next MMORPG should cannibalize WoW. Suit guys at Blizzard will say, “What! Cannibalize WoW!? No!” If Blizzard doesn’t cannibalize WoW, someone else will. That is what Steve Jobs says about the iPod: If we don’t cannibalize iPod sales, someone else will.

The games business has talked a lot in recent years about “disruptive” products, largely due to the success of the DS and the Wii – low-tech, financially accessible systems which marry a certain degree of innovation with extremely polished design and desirable content.

Where is this discussion!? No one seems anxious to talk about disruption. I know Chris Kohler from Wired has and, of course, Fahey is doing it now. But, sadly, Blue Ocean Strategy and disruption are largely being ignored.