Why I Write These Articles

Context is the key to wealth. Like many others, I realized that I wanted to become modestly wealthy and climbing the corporate ladder makes it impossible to obtain true wealth (it is because you are in another person’s financial system. You also are the most heavily taxed due to the American Income Tax. Wealthy people do not obtain their wealth primarily through income which is why there is no ‘wealth tax’ but always an ‘income tax’. Elites got their money but don’t want us low-lives becoming rich. Check out the financial portfolios of the wealthiest Senators and you will find not one of them earned their wealth through income like you or I do).

For my own educational purposes, I needed to observe an example of a company exploding in wealth. I kept beating myself up for missing the iPod explosion and other tech explosions. Emerson said: “Enthusiasm is the key to learning.” So whatever company I studied, if it was fun then I would learn more.

In the end, I chose Nintendo for various reasons. First, Nintendo consistently makes impressive profits in a highly competitive industry where, aside from Sony, every former competitor has exited the market. Second, Nintendo is a highly artistic and creative company. I wanted to see how a company could combine business genius without losing their artistic soul. Third, no one in the business community seriously studies Nintendo. The video game business is still not taken seriously. It is studied only now because non-game centric companies, Sony and Microsoft, are in it. And what Wall Street is interested in is how the new game consoles will affect the movie, music, television, and advertising industries. Fourth, Nintendo appears very mysterious to outsiders. It would be interesting to pluck out the heart of their mystery. Fifth, Nintendo’s competitors were Sony, who has a vertical monopoly in the form of owning factories, computer research labs, movie industries, music industries, and other consumer electronics, and Microsoft, who is leveraging the entire PC platform (Direct X) to their product and is not bound by the profit-loss rules everyone (aside from governments) is. There is no tougher competition than that so I wondered what Nintendo could possibly do.  Sixth, since Nintendo was a distant number three in console sales at this time period, no one took the company seriously. As I will show below, not even analysts, whose job is to study the company, bothered to do so.

I began studying Nintendo in the middle of 2005 knowing nothing of the game industry (aside from my experiences as a gamer and occasional developer). When the DS began erupting in Japan and other areas, I realized I made a lucky choice. To repay fate, I write about some of what I’ve found. Writing also cements information in my head and helps improve communication skills.

What will I do with this information? Apply it to other industries. Did you know how similar the game industry is to the book industry, for example? And since most major investors agree that, while the Internet has been used primarily for information, the next big boom will come with using the Internet for entertainment. Apple has made strides in this area. Sony and Microsoft are using their consoles to try to get a foot in. It is also why Nintendo designed the Wii from the ground up to be always online. It is one thing to study industry change in textbooks. Studying it as it actually happens shows details that textbooks cannot.

Two Types of Analysis
 

What is the difference between the astronaut and the astronomer? The astronaut straps himself to a rocket and flies (or explodes) and is able to soar into the heavens while the astronomer sits in one spot and looks at the action from the side lines with various telescopes and charts. Ask a child, "What do you want to be when you grow up?" They say the astronaut, never the astronomer. One of the problems with stock trading lately has been all the analysis and brainpower applied, in other words, more and more astronomers and less and less astronauts. The same is occurring in the game industry where analysts, both professional and amateur, are multiplying like rats at a terrifying rate. "Ooohhh! Look at my new line graph! I am so wonderful!" Oh, you miserable cretins who wish to put everything in a chart and talk from an Ivory Tower! Why don't you analyze yourselves? That, itself, would solve many problems.

One difference between the astronomer and the astronaut types of the business world is that one uses academic speak and the latter uses street speak (often, these 'entrepreneurs' talk like truck drivers). Another major difference is that the astronauts are always seen as crazy because they are thinking in the future while the astronomer can only see the past. Iwata was seen as crazy a couple years ago. Today, he is seen as a top CEO in the world. Astronomers often try to see the future, but they cannot act without a formula. The formula of new technology and past success was applied to confidently predict the PS3 'winning' and Wii 'losing'.

The articles you will find here adopt an astronaut context, trying to view the context as an entrepreneur and doer. When my articles first appeared in the Wiikly, I received emails saying, "How on Earth can you be so confident of Nintendo dominating? No! That is absurd and wreaks of fanboy belief! I refuse to believe you!" I said this generation would have Wii slaughtering the competition, though the full effects of the disruption would take a couple of years to set in. I talked about disruption when no one else would mention it. Only when the Wii came out did non-games analysts, who focused on disruptive products, made similar comments to me that Sony better act now or it will be completely made *gone* by the new disruptive Nintendo product. I wrote "Drowning in the Blue Ocean" that described hardcore games screaming as they would drown in the 'Blue Ocean'. Sure enough, the gamer community reactions to Wii Fit are matched only by borderline insanity.

The point is that the articles here are intended to reflect the context of why the future will be what it is and where that future is going. You will find the executives and entrepreneurs talk in a similar fashion: of using metaphors to communicate complicated future changes, of applying oddball play like scenarios such as Iwata referring to himself as a cook and the gamers as the diners, and a bizarre love for tsunamis, tidal waves, ocean travel, and the sixteenth century naval explorers. This world is unknown to the Astronomer type analysts who believe the more charts they have, the more scientific they have become. All this talk of sales and it is doubtful most, if any, of these analysts have spent any time on the street actually selling. Most of their knowledge appears to have come from Academia (which is not market based) or the banking world (which does not teach risk).

In other words, here is the advisory board to game analysts:

Here is the advisory board to Malstrom Analysis Group (tm):

Who is the better forecast of the future, bankers or children? I choose the children because unlike our sophisticated, and brilliant analysts, the children have not yet divorced their hearts from their heads. When you read a long academic analysis with many charts, consider the lack of heart and the dominance of head. The secret to my foresight, as can be seen in the more entertaining style of my articles, is that, like the children, I have not divorced my head from heart, have not stopped reveling in child-like play, and pray that I never will.

The Disclaimers

A prominent game journalist’s reaction to when some of my first articles appeared was, “No serious journalist would talk this way!” This made me chuckle since it shows a collision of contexts (each industry context speaks a different way. Investors speak differently than a journalist would). Now, I love all the game journalists. They are young men who are underpaid (tip: if you want money, don’t write for a living). But “serious game journalism” (oh that term!) is not unlike “serious academic writing”. The halls of academia are full of books no one reads. The game community leaning towards blogging and message boards is indication that no one really cares about one’s perceived “serious game journalism” (as parallels mainstream journalism. Newspaper subscriptions and televised news viewers are plummeting while the Internet and alternative news sources gain popularity). Does anyone want a game review to critique it under the formula of ‘graphics’, ‘sounds’, and so on? The best course for journalists to take would probably be to emulate the “fun” style found in (considered today) retro magazines such as Nintendo Power magazines of the 80s. They will, undoubtedly, recoil from this but consumers want information delivered in a fun way.

The material of these articles (market shifts) is extremely dry, a little absurdity is mixed in to make it easier to digest. Insane metaphors often illustrate points better than charts. For example, below [in the "Fools' Paradise"] one will find a score of analyst quotes. In order to make them digestible, I placed the quotes in a farcical play. Even that wasn’t enough to make it easy to consume. So I added in offside comments and even an absurd Chorus whose stage exit is an appropriate shooting from the reader. The point is that journalists no longer seem able to laugh at themselves. While these articles are trying to present serious ideas, it does not mean they cannot be told in an entertaining way.

As for the problem of the articles being too long, this is because when given a choice of removing information or leaving it in, I often leave it in. I figure that since it is being read on the Internet, the reader is used to shifting through countless information at their fingertips. In other words, the reader knows how to handle tons of info. In the past, leaving parts out resulted in readers emailing me demanding to know this, that, and the other. Had I left in the information, it would have satisfied those questions. I believe a wordy text is better than a text where the reader is still asking questions.

Now that the disclaimers are done, let us begin!