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I wish someone would offer a prize, of piles of money,
ribbons, and a piece of chocolate cake for a good, simple, delicious definition of the
word: “Generation”.
What an immense service it would confer on The Industry
Generation!
What is it? Where does it come from? What does it do? What
ought it to do?
All we know is that it is a mysterious personage; and,
assuredly, it is the most promised, most hyped, most accused, the most invoked,
and the most provoked of any personage in gaming.
I have not the pleasure of knowing my reader but I would
stake ten to one that for seven months he has been imagining new Killer Apps,
and if so, that he is looking to the next “Generation” for realization of them.
And, should the reader happen to be a gamer demanding more
from the present “Generation”, I have no doubt that the gamer is sincerely
desirous of seeing all his dreams for fantastical epic games be easily made, if
only the next “Generation” would only undertake it.
But, alas! That poor unfortunate personage, like Figaro,
knows not to whom to listen, nor where to turn. The hundred thousand mouths of
armchair quarterbacks cry out all at once:
“Integrate online gaming with everything.”
“Instruct your consoles to output to my HD TV.”
“Re-introduce the old arcade games.”
“Make experiments with online advertising.”
“Offer gaming work-kits to gamers.”
“Play DVDs.”
“Plant a new high definition disc into the console like Blu-Ray!”
“No! Offer HD-DVD add-on for those who choose.”
“Make online free with virtual worlds.”
“No! Offer subscription online for integrated experiences!”
“Deliver us Achievements to make Pavlov proud!”
“Encourage the arts by telling your developers they are the
new Shakespeare.”
“Rear and perfect even greater epic games.”
“Nurture bald space marines.”
“Discipline us with brown. Colorful games are kiddie.”
“Use cutting edge technology. Turn the console into an
entertainment computer.”
“Cure Cancer.”
“Defeat Hollywood at their own business model.”
“Do have a little patience, gentlemen,” says the young
‘Generation’ in a beseeching tone. “I will do what I can to satisfy you, but for
this I must have resources. I have been preparing new business models to tax
you, which are quite new, as well as incredibly large hardware prices. You will
see how pleasurable it will be to pay them.”
Then comes a great exclamation:
“No! Indeed! Where is the merit of doing a thing with high
costs? Why, it does not deserve the name of next ‘Generation’! So far from
loading us with fresh costs, we would have you price drop your hardware
immediately to a manufactured suggested retail price of $200.
“You ought to suppress
“Micro-transactions.”
“Hardware replacement costs.”
“Paying insurance on your hardware.”
“New revisions of systems after I bought mine.”
“Software prices.”
“Online subscription prices.”
“Talking to Indian guy ‘Sharma’ about my broken hardware.”
In the midst of this tumult, and how one ‘Generation’ melts into another, let
us hear the wise sages of the industry who, like angels flying above us, have
carried their wisdom from their esteemed mountains to us lowly peasants:
“We expect the dominant console at the end of the next cycle to be the Sony PlayStation 3 primarily due to our assessment that Sony will win the high definition DVD format war,”
–Michael Pachter, Senior Analyst of Wedbush Morgan Securities
“I think the Wii bubble is about to burst”
-Steve Kent, Author of ‘Ultimate History of Video Games (early 2007)
“Nintendo Revolution to be console winner this generation”
–Gamespot’s 2005 April Fool’s Joke.
“[We] recommend that Nintendo abandon its traditional console-exclusive software publishing strategy and publishes its games across multiple platforms.”
–Strategy Analytics, 2003.
“Videogames are technology-driven and yet Nintendo continues to dismiss new, important technologies. It's unfathomable. It's like a painter throwing away his paintbrushes because they are too expensive. I mean, I've tried to understand this approach, but I don't think it can be understood. No matter how you look at it, it makes no sense.
“Gloom and doom mostly over. I'm quite sure that despite this lunatic decision Revolution will have its unique appeal. It'll still have a place in my living room. But I think it will become more niche due to a domino effect that's sure to happen. I predict less third-party support because cross-platform ports are sure to be more difficult. And as a result, I'm sure Revolution -- like GameCube -- will become a console for Nintendo fans.”
–Matt Casamassina. Senior Editor for IGN Nintendo (2005)
In 2004, when Nintendo announced the DS…
“I can’t understand why two screens are required rather than a split screen.” He went on to say, “Everyone will produce at least one game on the DS in order to learn the mechanics, but if it launches with 12 games, it will look a lot like the N-Gage.” (The DS would launch with six.) "I think that PSP will be a category killer with older gamers.
Indeed, the lackluster specter of Nokia's poorly received game deck is already hanging over the DS. Doubts about its very concept are rampant. "I can't understand why two screens are required rather than a split screen. If the device is a GBA SP with two screens, I don't think it will command much of a premium."
-Michael Pachter, Wedbush Morgan
“Some industry insiders were less kind, comparing the DS to Nintendo's greatest hardware debacle, the Virtual Boy. "The DS sounds very gimmicky to me," a source at a major publisher told GameSpot. "It's like a 'Crazy Ivan' response to the PSP.”
-Gamespot News covering the unveiling of the DS
Poor observers! How off they were in their diagnosis of that mysterious
personage known as “Generation”! The next “Generation” simply zagged when they
thought the market moved zig. And yet, they still predict their old predictions
to, somehow, come true. Nothing stops the sublime analysts, not even
contradictions, as “Generation” keeps ‘surprising’ them month after month.
In the midst of this tumult, and now that the market has again changed its
leader, for instead of “Generation” satisfying all of people’s demands, I want
to show that they were opposite. History records that in each “Generation”, the
weak hardware wins. Yet, each “Generation” is defined by its more powerful
hardware characteristics such as 8-bit to 16-bit to 32/64 bit. But, what could I
have been thinking about? Could I not keep this unfortunate observation to
myself!
If the winners of each generation are not defined by hardware, then how can
we define “Generation” by its hardware? Hence, the question this article asks:
“What is ‘Generation’?” And don’t give me the ‘new’ “Generation” of Nintendo’s
marketing talk compared to the ‘next’ “Generation” of Sony and Microsoft. If the
market doesn’t care about hardware, then why does it abandon the 8-bit
generation, for example, for the 16-bit generation? How does “Generation” exist
in the first place?
Microsoft, Sony, and Nintendo have invested billions of dollars in different
interpretations to the definition of “Generation”. It reminds me of the coffin
scene in Shakespeare’s “Merchant of Venice”. Except this time, “Generation” is
hidden inside a console. Sony would choose the gold console, Microsoft would
choose the silver console, and Nintendo chose the wooden console. “Generation’s”
portrait is, like Portia’s, hidden in the wooden box where no one expected.
The Wii Tidal Waves
The first clue we have to discover the mysterious
definition of “Generation” is this current generation. Wii’s early success was
as if a gigantic blue tidal wave crashed down on the fragile decade old hut-like
contexts that lined the industry’s shores sparking panic among the traditional
residents. The natives ran around in circles for fear of the Blue Ocean’s
incoming waves destroying all they were. The analysts, however, mimicked Xerxes
as he, too, went to the rising tide, held out his hand, and said, “Thus far
shall you come and no further!” Xerxes retreated from the waves before he
drowned. It remains to be seen if the analysts will do the same.
There are only two explanations as to why the industry’s
jesters, our beloved analysts and commentators, keep saying bizarre stuff. The
first is that after being wrong on the DS, wrong on the PS3, wrong on the Wii,
they make no attempts at reassessment of the shockwaves or hold a flicker of
curiosity’s light in the wake of the darkness of the Nintendo market megaton.
“Yes! Yes!” you say. “But the Alexander Pope was made to say, ‘To err is
Human.’“ You speak truly, reader. But the Einstein was made to say, “The
definition of insanity is doing the same thing over and over and expecting
different results.” Alas for the analysts! Nintendo keeps embarrassing them! And
despite the repeated proclamations spilling from their lips on bubbles bursting
and the rise of HD gaming, the market does the complete opposite! The
other explanation is that moneyhats have been dished out to commentators who
feed on it like a horse in its trough. Words mean things. If one’s integrity has
been subverted by money or other outside factors, in politics, they call it
corruption. In gaming, they call it a day’s work.
*Malstrom puts a pipe in his mouth and a Sherlock Holmes
hat on his head.*
Our first clue, dear gamer, of the identity of ‘Generation’
is that he is not defined by hardware. If he were, the PS2 and Wii would be
outsold by the Xbox 360 and PS3 by now.
“But Malstrom,” you ask. “Why do we define ‘Generation’ by
bits and displays, by only through hardware?”
Good question, reader! Journalists are easily influenced by
marketing. After all, how much did we hear from journalists about this
generation being the ‘High Definition’ generation (obviously Sony and Microsoft
talking points). How much fuss, last generation, was made over Halo being the
greatest thing ever though the Xbox sold around what the Gamecube did? Who can
not forget journalists talking about the glory of 16-bit generation and its
“blast processing” or Playstation making gaming ‘mature’?
Layers of dried up marketing cover console history similar
to layers of rock and sediment covering fossils. If we are to uncover the
definition of “Generation” and find the missing link, let us throw off the old
marketing like the compost it is and study the fossilized consoles in a new
light.
Value Break-Downs of the Generations
The following is an assortment of values from the consoles of previous
generations. The format used is the official Blue Ocean Template.
You will notice how some values change each generation. This is not the case of
the author selectively applying the variables but that some oddball variables
pop up a generation. An example of this is consoles playing DVDs which was big
in Generation 6 but, now, it is insignificant. Online gaming, also, is a recent
variable.
As for the more consistent values, I am using them as large umbrellas. The "size
of library" refers not just the size of the library but the support of third
parties. The "variety of software" means exactly how it sounds. Consoles that
easily become stuck into a certain demographic or type of software will have a
low value rating in this.
Seventh Generation
Click to enlarge.
One of the Oliver Twins correctly stated, “Nintendo zagged
when others zigged.” As the ‘zigs’ of Microsoft and Sony go one way, Nintendo
goes the other way. An inverse is seen.
While it is common to say that Nintendo is “not competing”,
a more accurate assessment would be to say that Nintendo and MS/Sony have
different values. The Wii’s value-jumps match the DS in rhythm while PSP’s
value is similar to the PS3.
I am sure someone will look at the graph and go bonkers
with saying, “Oh no, how did you place the PS3 value above Xbox 360 on this
matter!? (or vice versa)” These are approximations, not absolutes. What is
important is that the context should be seen. MS/Sony and Nintendo hold two
diametrically opposite values this generation.
This generation proves that “Generation” is not defined by
hardware.
Sixth Generation
Click to enlarge.
In this generation, there is no inverse. The lines are all
on top of one another with two major exceptions. Playstation 2 had a huge
library and variety of software that went beyond their competitors. This
differentiating factor was the number one focus for Nintendo in Generation Seven
(investing in building new studios, getting third party support, bringing
outside companies in early, etc).
Also, there is a sharp value difference between Nintendo
(and Dreamcast) with Sony/MS when it came to DVD playback. It is this difference
that is why Nintendo planned on making a DVD-playback enabled Wii. Nintendo
pulled back on this feature of the Wii not just because it added extra cost, but
it became clear that this value may not exist anymore for game consoles (DVD
players became cheap and numerous). It will be interesting to see if Nintendo
continues on with that DVD playback Wii but my guess is that they won’t.
Fifth Generation
Click to enlarge.
Again, the value lines are all on top of one another
creating another ‘red ocean’. And, again, two differences become clear. The
first, as with Generation Six, is that the Playstation has a huge and diverse
library of games which was the main reason the hardware rocketed up in sales.
The other is third parties.
*Malstrom puts on the Sherlock hat and puts the pipe in his
mouth.*
Now, dear reader, we come across the second clue to that
mysterious, but always invoked, personage known as “Generation”. In the past
three generations, we find the size of library and variety of software values
being differentiating factors.
The first clue was that “Generation” had nothing to do with
hardware. The second clue is now that “Generation” has something to do with
software. But what? More clues are required! Let us continue digging.
Fourth Generation
Click to enlarge.
This is the so-called great ’16-bit war’. Turbographx-16
drops down on the bottom of the values taking a big hit in the variety of the
software (the console’s library is basically shmups and clones of other genres).
The SNES and Genesis were basically on top of one another
in what could be described as a perfect ‘red ocean’. A major difference was that
Sega kept putting out additional hardware from the Sega CD to 32X which hurt the
system.
What is interesting about this generation is that it set
the media ‘template’ for the ‘console war’ sales horserace. What we can learn
from “Generation” in this era is that additional hardware is often a negative.
Why? It is because “Generation” refuses to be defined by hardware (despite the
marketing of bits and processors to the contrary).
Third Generation
Click to enlarge.
What is this!? The inverse has returned! This generation,
the era of NES, is the closest in precedence to our current generation.
Historians keep getting this generation wrong by comparing
NES’s competition to the Atari 7800 and Sega Master systems. But remember that
those two systems came out as mostly a response to the NES’s success. When NES
founded a ‘blue ocean’ twenty years ago, competitors jumped in. But they were
not the NES true gaming nemesis.
Gaming was well and alive in the mid-1980s in America, and
they were on the computers. When the console market crashed, the computer market
soaked up the gaming remains. It was believed that consoles would always crash
and gaming would return on computers. Each year of the NES Era, analysts
(obviously prototype incarnations of our current model analysts) proclaimed,
“Nintendo has had its last good year,” for then the market would suddenly
‘crash’. They kept saying that even into the 1990s.
But the game centric computers were in their own red ocean.
They were going into the 16-bit generation while the NES was, graphically, a
generation behind in the 8-bit generation. Those who think the Wii’s processor
is outdated should look at the NES’s processor which was from the 70s. But
people do not play graphics, they play games. NES had amazing software. The user
interface of the NES, sitting in the living room playing on the TV, trumped
sitting at a desk huddled around a small monitor with the computers. Kids
flocked to the NES simply because it was fun while computers were more like
‘work’. NES games loaded instantaneously while one had to wait a while for the
computer games. NES also sported a new controller that seemed odd when joystick
was king. Like the Wii, NES had non-games from Duck Hunt, Track & Field, and the
R.O.B. games. The Wii Generation will look back fondly on these ‘non-games’ and
likely turn them into cultural icons as the NES Generation did.
Some old computer gamers may blow a gasket at some of the
value ratings I placed the computers (especially on the topic of software).
Consider twenty years later, we still obsess over NES games while no one hears a
peep about these old computer games. Because of that, I place the higher value
of the software on the NES.
Notice how the Wii matches the value points that the NES
did. In fact, the Blue Ocean Strategy applies to no other console in the
past except the NES. Well, that and the handheld….
Click to enlarge.
Again, the Gameboy performs a Blue Ocean Strategy as
its values are inverse to the competition.
I could go back to the second and first generations, but it
becomes messy due to the industry crashes. (In the same, I did not include the
3DO, Atari Jaguar, or other systems because it would clutter the graphs, and
they were obvious failures anyway.) Nintendo wasn’t making systems then so
those generations aren’t relevant to this discussion. But one could describe
Atari as a ‘blue ocean company’ way back then as well.
*Malstrom puts on the Sherlock Holmes hat and puts in the
pipe.”
We are now at the final clue as to who and what the
mysterious personage known only as “Generation” is. The clue is hidden as an
obvious truth in Nintendo’s current strategy.
Dearest reader, the Blue Ocean Strategy did not
exist twenty years ago. So how did Nintendo pull it off with the NES and Gameboy?
Or a better question, that no one is asking, is how did the
examples in the Blue Ocean Strategy do what they did? The answer is the
truth behind the so-called ‘Blue Ocean Strategy’.
Casual Gamer Myth
I have never seen a book more cited and little read than
The Blue Ocean Strategy within gaming circles. The myth that is going
around, even hilariously believed by third parties, is that the Blue Ocean
Strategy means going after ‘casual gamers’.
Really? Where does it say that in the book? Notice how no
one ever cites the Blue Ocean Strategy saying that. They are too caught
up in the metaphor for Blue Oceans vs. Red Oceans to really get into the guts of
the book. They are only applying the metaphor to the games industry as
opposed the strategy and contexts themselves. So they see only Sony and
Microsoft competing for the hardcore with Nintendo’s new direction they mistake
for aiming at casuals.
If one reads Nintendo’s words carefully, they do not cite
the Blue Ocean Strategy in terms of ‘casuals’ but only in terms of
non-competition. Let us listen to what Reggie really said:
“In the past, you've heard us talk about blue ocean strategy and innovator's dilemma and our role in this industry as a disruptor. But let me showcase for you another way to think about what it is that we're doing in this marketplace -- another way to look at our strategy.”
–Reggie at the Nintendo Summit for Summer 2007
Reggie then talks about Nintendo aiming at casual and
expanded audiences before the typical hardcore. But isn’t that the Blue Ocean
Strategy? Why is Reggie referring to the aiming at expanded audience as
different from the Blue Ocean Strategy? It is because the popular
stereotype is not true, that Blue Ocean Strategy does not mean ‘aiming at
the casual audience’.
Blue Ocean Strategy means competing against
disinterest and aiming, primarily, at underserved markets. With the console
market, the underserved markets have been females, families, and more casual
players. But had the underserved market been hardcore players with everyone
competing for, say, females, then the Blue Ocean Strategy would be to
expand interest to include the hardcore as well as the ‘traditional’ audience
(in this hypothetical, the females).
Consider Iwata’s quote from the Fortune article on
the Wii: "Even before someone invented the term blue-ocean strategy, we were
exercising it. It is an unwritten company credo, something that runs deep in our
DNA."
So what was Nintendo exercising? What was Iwata’s mandate
to the company? “We are not competing against Sony or Microsoft. We are battling
the indifference of people who have no interest in videogames." Even worse,
Iwata has said previously in the past that the ‘core’ gamers are Nintendo’s
priority. Isn’t that a contradiction for Nintendo to aim to satisfy their core
fans while aiming, as the stereotype goes, for casual gamers? The answer is
below.
The Legacy of the Playstations
Why did the Playstation 1 and 2 succeed? Much has been
written on it from ‘mature games’ due to gamers “growing up” but that is all
crock. Much of it is marketing hype from that period being cemented into
people’s minds. NES had deep RPGs as well as disturbingly dark games (Shadowgate
says hi). “Many in the industry think as long as
we keep on doing the same things ... the industry will continue to grow. I'm
afraid this idea is deeply ingrained in many minds. Will video game players
become bored and cause the industry to shrink? We have to expand the market. To
do so, we have to abandon the memories of the past and get back to the basics.
The whole industry must make an effort. First, unless we can increase the number
of people who are willing to play, we can never expand the market. If we cannot
expand the market, all we can do is just wait for the industry to slowly die."
The real reason why the Playstation 1 and 2 succeeded was
because Sony corrected (to a point) the licensing issues of Sega and Nintendo
but more due to the fact that Sony flooded their console with software. The
number of software available for the original Playstation was beyond any other
system ever. It was this vast library that shot the Playstation up.
In an interview with Gamedaily.biz, Nolan Bushnell even
said, “It wasn't anything brilliant that they [Sony] did. With the PS and PS2 it
was timing. They had the right pricing at the right time [and were] almost the
accidental winner.” Anyone applying the Blue Ocean Strategy to the
Playstation is just insanely wrong.
In the “Putting the We Back in Wii”, the New York Times
says, “The other thrust of Nintendo’s new strategy is to enlist software
developers like Namco Bandai to write more games for Wii than they did for
previous Nintendo machines. Nintendo’s hope is that this will help erase one
of Sony’s biggest past advantages: the far greater number of game titles
available for its machines. The more games a machine has, the industry
theory holds, the more gamers want to play it.” Another quote: “Analysts say one
reason for Wii’s popularity has been its larger number of available game titles.
At present, there are 58 games on sale in the United States for Wii, versus 46
for PlayStation 3, according to the Sony and Nintendo Web sites. That is a huge
contrast with the previous generation of game consoles: to date, PlayStation 2
has 1,467 titles, overwhelming GameCube’s 271 titles.” The last number of
Gamecube’s titles is wrong and is probably around five hundred but the point
stands. The reason why the Playstation succeeded was not because of ‘mature’
games or ‘casual games’ or any other marketing hype gamers swallowed in the
mid-90s but because the Playstations pushed out a vast amount of software. In
the issue of Game Informer where the first Red Steel images were revealed
(remember that one?), an interview with George Harrison appeared where he
elaborated that Nintendo learned Sony’s huge library strategies with the PS2 and
were set to emulate that with the Wii.
Aside from being a box with tons of software, the more
pressing legacy of the Playstations is that, as opposed to the popular belief of
growing the market, they have been shrinking the market. Gamers’ drift is very
real and can be seen in Japanese data where the number of players has been
shrinking. Since console trends begin in Japan before they come to the West,
this became worrisome for Nintendo whose livelihood is gaming.
When Iwata revealed the Wii controller for
the first time at TGS, he said:
Tragically, many in the gaming community wrote the above comment off as
‘Nintendo marketing’ despite the Japanese data and stagnant gamer growth in the
West. Many organizations attempted to portray gaming as expanding by leaps and
bounds by pointing to increase of revenue but without putting it in context of
higher prices and gamers buying more than one system. And while they did that,
they repeated, like zombies, what was Sony’s marketing with the Playstation:
that gaming had become ‘mainstream’ with the Playstation. If gaming was so
mainstream, then why was there such social stigma against it? The Wii’s
explosion on the market as soon as it was released proves that gamer drift was
real all along.
-Iwata, Tokyo Game Show 2005. (This was when Wii controller was revealed.)
The purpose of the Wii is not to aim at casual gamers or non-gamers. It is to
make gaming more interesting again. By making gaming more interesting, current
gamers keep playing and don’t end up in ‘gamer drift’. Non-gamers may find
gaming interesting enough to try out. And former gamers will find a reason to
return to playing video games.
The reason how Nintendo can aim at both
core gamers and new gamers is because they both fall under the umbrella of
‘removing disinterest’. Nintendo fears that traditional gamers will get bored
and stop playing (such as Japanese did with Zelda). In that light, there
is no difference between the hardcore gamer and the non-gamer.
The Passion Strategy
The examples of products shown in The
Blue Ocean Strategy were mostly not done by decision makers looking to exit
the ‘red ocean’ and enter a ‘blue ocean’. They were made by entrepreneurs
passionate about an idea or a solution. The very first example, the circus
company Cirque du Soleil, is very much an example of creating a circus to the
founder’s passion and creating ‘a blue ocean’. Like Nintendo, Cirque du Soleil
started talking about the Blue Ocean Strategy well after his success.
“Our research confirms that there are no permanently excellent companies, just as there are no permanently excellent industries. As we have found on our own tumbling road, we all, like corporations, do smart things and less-than-smart things. To improve the quality of our success we need to study what we did that made a positive difference and understand how to replicate it systematically. That is what we call making smart strategic moves, and we have found that the strategic move that matters centrally is to create blue oceans.”Blue Ocean Strategy is nothing more than a study on these passion strategies: of why certain corporations were able to create a new market, skyrocket in profits, while other corporations were not. After studying this, the Blue Ocean Strategy puts out tools for companies that are in ‘red ocean’ type of thinking to get into a ‘blue ocean’ type of thinking.
-Preface from the Blue Ocean Strategy
There is absolutely no mention of casuals or ‘watered down’ products in the book. To the contrary, Blue Ocean Strategy is a book about building new values and lessening ones that are overshooting the market.
What the Blue Ocean Strategy does is also to point out the focus on ‘the big picture’ and to avoid militaristic comparisons. After all, we label this ‘race’ as the ‘console war’ where one system ‘dominates’, ‘destroys’, and ‘dooms’ another console. On message boards, discussion of the market sounds like people are playing a game of Risk with games, as soldiers, ‘conquering’ a territory. It is silly. It is absurd.
But to better illustrate how the Blue Ocean Strategy works, I will use three well known games that fit the strategy perfectly (which the designers didn’t know they were doing the strategy at the time. Hell, none of the examples in the Blue Ocean Strategy book knew they were either).
Three Blue Ocean Games
Starcraft-
When Starcraft came out, the game
was praised for its own merits but when compared to other RTS games at the time
(RTS was then at its peak in popularity), Starcraft was panned for being
Warcraft in Space, for not being in 3d (as Total Annihilation was), for
lacking many of the unit AI and doing little with elevation (as Dark Reign
had), and not as complex (as Age of Empires). In the expansion, Blizzard
would mock these reviewers such as having one hero say, “This isn’t Warcraft in
space! It is much more sophisticated!”
Unlike the other RTS games, Starcraft wasn’t trying to compete against
them. The game was following its own tune. A decade later, Starcraft is
still played while those other RTS games are not. More amazingly, Starcraft
became a huge phenomenon in Korea. Only a blue-ocean title could do that.
One person said to me, “Blizzard does not innovate. They simply take an existing
game, extract the good parts from it, take away the bad parts, and turn it into
a streamlined product that is easy to play but hard to master,” to which I
responded, “Good sir! You have described the Blue Ocean Strategy.”
World of Warcraft was designed to ‘fix’ the MMORPG by removing annoying
elements and focusing on the more fun elements by being inclusionary with
players rather than exclusionary. World of Warcraft aimed at not just the
hardcore MMORPG gamer but the casual gamer and anyone else who had disinterest
in MMORPG. Quests would give good directions. Rewards were a plenty in the early
parts of the game. One could rest at an Inn and get experience bonus so people
who didn’t have as much time wouldn’t fall behind so fast. In the end, the
game’s success stunned even Blizzard.
Even Starcraft 2 is a blue-ocean title. A Blizzard rep mentioned that
they wanted the game to find new markets and audiences as well as keep
Starcraft interesting to current players (that whole focus on ‘combating
indifference’ thing you hear Iwata mention). While all of Blizzard games are
guided by the developers’ passion, passion is the key for any product to
transcend competition and create new markets.
Mega Man 2-
Capcom was not interested in making a sequel to Mega Man,
but the developers felt so strongly about it that they made Mega Man 2
during their spare time at night. They focused on the elements that worked from
the first Mega Man game, took out the elements that didn’t, and created a
consistently fun product that made a new market. Mega Man 2 created the
huge franchise that exists to this day. As you can see, even sequels can become
blue ocean products.
Wolfenstein 3d-
id Software loved Castle Wolfenstein so much that
Wolfenstein 3d held identical ideas (and id negotiated to use the name
Wolfenstein). Castle Wolfenstein was that you were stuck in a castle full
of Nazis. You could shoot the guards or avoid them. The game held a high degree
of adrenaline and action.
Wolfenstein 3d was taking those experiences and putting them into 3d
form. The game became id Software’s breakout hit and created a new market: FPS.
For Blue Ocean games, I could have easily listed The Sims, Myst,
or Sim City. But I figured listing games well loved by the hardcore would
help reveal that The Blue Ocean Strategy is about passionate people
creating new industries and markets and have nothing to do with focusing on
casual users.
Look through gaming history yourself, and you will find that most classics are
Blue Ocean titles. As they created a new market (genre), tons of competitors
entered to turn it red. The premise that the Blue Ocean Strategy means
passionless watered down products ‘for the masses’ is untrue. Rather, the
Blue Ocean Strategy means to create so much value the product no longer
feels like a commodity. One of the reasons for the gamer drift of last
generation was that games began feeling like soul-less products as they competed
against other software.
Soul of the Wii
As the Wii shoots up like a fountain, consider the spray to be the Blue Ocean
Strategy and Innovator’s Dilemma. But what is the source of the
fountain itself?
Aside from the Wii, there is only one other console ever created that matches
the Blue Ocean Strategy and disruption of Innovator’s Dilemma.
This console is the NES. It created new markets while disrupting the game
centric computers at the time. Ironically, Bill Gates and Ken Kutaragi label
their systems as game centric computers rather than consoles. And, just like
twenty years ago, the analysts are proclaiming the Wii to be a bubble that will
‘burst’ and gaming will return to the game centric computers.
“We were the disruptors twenty years ago and now we are so again.”
-Reggie Fils-Aime concluding Nintendo’s 2006 E3 Press Conference.
Above: The NES, designed and marketed as a family system
with a focus on new controllers as opposed to graphics, disrupted the
solo-orientated graphic-centric game computers of the time.
While it is true that simply putting out a new machine with better graphics will
not slow down gamer drift, imagine how bored Nintendo developers must be. Many
of them have been making games longer than some gamers have been alive. If you
are getting bored with playing video games, imagine how the old veterans feel
making the same games with better graphics.
There is a saying in the entertainment industry that if the entertainer is not
amused by his act, the audience will be bored. If developers are bored, that
boredom is translated into the product itself. While Nintendo upset the apple
cart to correct gamer drift, they also did it for themselves.
“Generation” Revealed
*Malstrom puffs on his pipe and wears the Sherlock Holmes
hat.”
Good reader, what have you learned of the “Generation” so
far?
“He is not hardware. If he did, superior hardware would win
each generation.”
Very good. And what else?
“He is defined by software. The console market revolves
around software, not hardware.”
Excellent, reader, most excellent! But there are many great
games in the past. Why do we need “Generation” anyway? Why are we still not
playing our original consoles?
“You eventually get bored of the same thing all the time.”
Quite true! The entertainment business is about feelings.
No matter how awesome something is, too much of it will kill interest. This
explains why a “Generation” cannot last forever.
“So the purpose of a new ‘Generation’ is to create new
interest?”
Yes. If it didn’t, gaming would just stagnate, and we would
sit around waiting for the industry to die. But while this is the purpose
of “Generation”, what is “Generation” itself?
“I know not.”
Go back in time. Think of the first time you played
Super Mario 64 or Final Fantasy VII. Or how about the first time you
played Super Mario Brothers or The Legend of Zelda? Or what about
when you first got into Halo or Grand Theft Auto III? If you are
older, you may remember the sensation that surrounded Pong, Space
Invaders, and Pac-Man. When gamers talk about gaming (instead of
‘system wars’), they gargle nostalgia as they slobber over cherished memories
and feelings.
So what is the definition of the glorious personage of this
industry, that wonderful “Generation”? Shall we have an answer? Here it is:
The “Generation” is nothing more than a grand sum of
surprising and unique user experiences.
What a boring answer! But listen to gamers talk, and you
can tell how they relate their gaming through experiences of feelings. Consider
the definition of “Generation” tumbling out of Reggie’s mouth:
“Over the years, our industry has come to accept progress simply by what’s on the screen. I know many of you were back in our audience in 1996 when Super Mario 64 jumped to life in true 3d. And you said, “Man, that looks great.” But that leap toward a revolutionary form of gaming wasn’t really about the looks. Even then, it was about the feel. Moving your character and your viewpoint, independently, in any direction, all in real-time. And the memory of that moment was also the starting point for Wii.
“In the same way that Super Mario 64 changed everything, we asked, “How do we make video games that make everything feel new all over again?” This week, every one of you will FEEL our answer.”
–Reggie (2006 E3 Press Conference)
Now, all contradictions are solved. The reason why consoles with the largest
library tend to do the best is because they offer the most experiences and,
naturally, the most feelings. Better hardware, unless it produces new feelings,
is irrelevant.
“Different also defines our approach to our next home system. It won’t simply be new or include new technologies. Better technology is good, but not enough. Today’s consoles already offer fairly realistic expressions so simply beefing up the graphics will not let most of us see a difference. So what should a new machine do? Much more. An unprecedented gameplay experience. Something no other machine has delivered before”
“I could give you our technical specs, as I’d know you’d like that, but I won’t for a simple reason: they really don’t matter. The time when horsepower alone made all the difference is over.”
–Satoru Iwata (E3 2005 Press Conference)
Every time a new console creates fresh unique experiences
is when a new “Generation” is born. Decades from now when historians write on
this period, they will definitely place Wii as the start of a new “Generation”
and Playstation 3 and Xbox 360 will be seen as the peak experiences of the
Playstation 2 Generation.
What! You are astonished that I would place the HD systems
as a “Generation” behind? After all, we have heard from many that the HD systems
were a “Generation” ahead and that Wii, itself, was part of the Playstation 2
generation. But stop looking at hardware and look at user experiences (which is
what “Generation” is). It is no coincidence that the biggest competition the
Xbox 360 and Playstation 3 have is the Playstation 2.
Fallacies Through The Generations
Within every generation of gaming, a business myth is
created, catches hold, and becomes insanely believed by gamers and even some
publishers. Let us go through the list:
Generation One (Pong Era)
MYTH: The beginning of the business of personal computers
and video-games are entirely separate.
(History on computing has whitewashed gaming out. Steve
Wozniak admitted that the Apple II was designed mostly as a gaming machine. And
how many young people did “Space War” and other games inspire to start
programming in their youth?)
Generation Two (Atari Era)
MYTH: Video-games are a fad and would always crash. The
future of gaming will forever be on the PC. Soon, the PC will take over every
digital function in the household.
(The NES of the third generation would shatter this myth
completely. Using a processor from the 70s, the NES showed that not only does
the console market lives, the NES destroyed the dream that PCs would be the
nexus of everything digital.)
Generation Three (8-bit Era)
MYTH: Nintendo persecuted and kept third parties down under
an iron boot of draconian licensing, manufactured shortages, and uncanny
censorship of brilliant tortured artists and their masterpiece games.
(Nintendo's approach to third parties was to insure that
the Atari Crash would not happen again as their business model became copied
with every other console maker onward. Keep in mind, at the time, every analyst
and journalist kept predicting doom and crash for Nintendo up to 1992. The
simple sprite changes for religious symbols or anything that could be
interpreted as racist was self-regulation in a hostile political environment.
There was no ratings system at that time.)
Generation Four (16-bit Era)
MYTH: The "Console War" between Sega and Nintendo was the
best thing since sliced bread. Such competition created the best games! Oh, why
can't we have more console wars! They are so good for gamers and the business!
(The "Console War" was the worst thing ever for the
industry and gamers. Instead of focusing on growing the market, as Nintendo was
determined to in the 8-bit generation, the company began to lose its way inside
the Red Ocean. The 'competition' resulted in crass advertising campaigns and
games that mimicked one another. It was horrible for gamers as Sega threw silly
hardware onto the market from Sega CD to 32x. The "Console War" mentality would,
in time, destroy Sega and cripple Nintendo allowing an opening for newcomer Sony
to take the market.
Luckily, the "16-bit Console War is awesome" myth appears
to be dying this generation due to Nintendo's 'non-competitive' approach.)
Generation Five (3d Era)
MYTH: Nintendo lost to Sony because the N64 used cartridges
and not CDs.
(Obviously, licensing issues and third party relations went
way beyond the nature of the Saturn had CDs so why didn't they prosper? It is
because third parties were looking to escape Nintendo's heavy licensing and
thought Sega was the salvation with its Genesis. But Sega wanted to BE Nintendo
and had similar licensing. Sony carefully watched the third party companies jump
back and forth and Nintendo and Sega go at each other.
The N64 failing had more to do with Nintendo's change of
direction during the '16-bit war' everyone so mistakenly loves and failure to
update their business practices after the crash-solutions from the 8-bit era.
The DS surpassed the PSP in both sales and third party
support with DS using cartridges and PSP using discs. The point is that the
problem was deeper than the surface nature of the format.
Generation Six (Cinematic Era)
MYTH: PS2 sold so much because it was also a DVD player!
(Early adopters and some poor gamers might have bought the
PS2 also for its DVD capacity, but PS2 succeeded because of its game library. It
was also at a mass market price.
Ironically, Sony, Microsoft, and Nintendo bought into the
myth that PS2 did well because it was a DVD player. Nintendo made a DVD playing
Gamecube (that went nowhere). Xbox playing DVDs did not skyrocket the system.
Sony so believed in this myth that it made the PSP play UMDs (which died on the
market) and PS3 to play Blu-Ray discs (which are going nowhere in the market).
Happily, this myth appears to be dying this generation.
Generation Seven (Disruption Era)
MYTH: Nintendo's rise to heaven is because of casual gamers instead of
focusing on the hardcore.
(Like previous myths, this one is spreading like wildfire
and becoming cemented in the minds of gamers, the media, and some third party
companies. So how did this myth get started?
With Nintendo saying they are not 'competing' with the Xbox
360 and Playstation 3 this generation but are focused on 'growing the market',
everyone interpreted this to mean Nintendo to ignore the hardcore and focus on
'casual gamers' (under the impression the game market has been casual-less and
hardcore centric). This myth comes from people being enchanted with the metaphor
of the "Blue Ocean Strategy" of avoiding blood-soaked red oceans for blue-oceans
where there is no competition.
As Iwata has said repeatedly, Nintendo is competing against
disinterest. Who has disinterest? Disinterest can be found in those who
have never played a game, former gamers, and even hardcore gamers. Iwata then
says hardcore gamers are the main priority because if they become disinterested,
their best customers are gone.
Wii: The New NES
The NES is the model for the Wii. Not the SNES, not the
N64, and heaven forbid not the Gamecube! The reason why many gamers got the Wii
wrong is because they are young (in twenties or below) and did not know how the
industry was pre-NES. The reason why ALL analysts got the Wii wrong was
because they stubbornly refuse to incorporate a ‘sweep-of-time’ analysis that
involves all seven generations. They study only the last couple of generations
as a predictor of events for the future. Had they studied all seven generations,
they would have accurately predicted the Wii explosion. Remember that the last
consoles that recreate interest in primarily cold markets were the Atari 2600
(after the PONG crash) and the NES (after the Atari crash).
Studying the Atari and NES generations will yield more insight for the Wii
generation than studying any other generation. It is not a coincidence that many
Wii games share an eerie similarity with those generations from Wii Tanks
to Combat, Excite Truck to Excite Bike, and even Wii
Tennis to PONG. While Nintendo is praised for bringing back simpler
gaming, older gamers will
remember that Nintendo was the destroyer.
History will be very kind to the Wii. The Atari 2600 and
NES reached a high echelon dwarfing following systems in terms of their culture
shock, altering how society perceived video games, and defined their era. Just
as most reviewers today are mostly from the ‘NES Generation’, most reviewers
twenty years from now could be from the Wii Generation. They will grow up with
motion controls and will write feature stories about the ‘glorious year of 2007’
when their parents bought them a Wii. In 2027, people will probably remember the
PS3 as an Atari train wreck, the Xbox 360 as a hardware disaster (with no Xbox
360s working then unless specially modded), and the Wii for saving gaming as the
NES did. Today, there are Atari fans who, after two decades, are still bitter
about the NES success. Many game computer fans of the early 80s still believe
the NES ‘destroyed gaming as we know it’. The funniest surprise await the PS3
and Xbox 360 stalwarts who despise Nintendo’s business moves as their blood
pressure rises with any mention of ‘Blue Ocean’ or ‘New Market’. Twenty years
from now, their children will be reading about the success of the Wii in all the
business textbooks (as the NES is today).
The Flood
Before the Wii launched, I wrote a series of articles for
The Wiikly describing the incoming tidal wave of the Wii and not just
that the generation belonged to Wii, but that Nintendo would pull the rug from
the top box war of Microsoft and Sony. I received many emails with some being
downright nasty. The idea that Nintendo could overwhelm the console market was
shocking at the time, and they refused to believe it was probable, let alone
possible. I had to have been a wishful Nintendo fanboy or a convert viral
marketer to have said something so preposterous. Over half a year later,
business magazines echo much of what was said. Why? It is because Blue Ocean
Strategy and Innovator’s Dilemma were not marketing talk but real
strategy books and highly respected within the business community. Nintendo hid
their business strategy by placing it in plain sight.
Unfortunately, with all the media attention on the Blue
Ocean Strategy aspects, there has been little talk of the disruptive
properties of the Wii. This is probably due to the ‘LOL casual gamers!’ myth
that is the craze now. As you have witness in my above wall of words that
“Generation” revolves around software, not hardware, and specifically to user
experiences the software, working with the hardware, create. The motion
controller is not the disruption; it is the software working with the
controller. Genre by genre, franchise by franchise, the Wii is disrupting
its competitors in a systematic fashion. No one will accept playing tennis or
bowling game on the HD systems, even if the games are more ‘complete’, because
Wii Sports disrupted how we play those games. Why push button
combinations when it is more natural to swing one’s arm? As development with Wii
controls improves, the ‘novelty’ factor of Wii games blossom into a disruptive
nature. While God of War type games are certainly going to be made for
the HD systems, what if a Wii one was made with precise motion controls? It
would be far more interesting and intuitive to gamers that turn it to disrupt
the competitors’. Iwata won’t shut up talking about how Wii is ‘natural’ for FPS
games. What Iwata is really saying is that he intends the Wii to disrupt FPS
gaming despite the early lame attempts. Could this be a reason why magazines are
saying Metroid Prime 3’s controls are a ‘FPS revolution’ since the original
Halo? We will have to wait and see. Star Wars games have been consistent
sellers as well. Iwata also won’t shut up about a Wii light saber game. If such
a game was made, would anyone really care to push button combinations of light
saber fights on the HD consoles? How about strategy games using the pointer
versus the analog sticks? Other disruptions will be lesser in nature such as
RPGs played with one hand versus two. As these disruptions mount, the Xbox 360
and PS3 software become less and less interesting. Do not forget how the DS
software made the PSP games, despite their graphic superiority, seem tired and
used.
"Yes, we have already disrupted handheld and it worked. Yes, we have already disrupted Wi-Fi and it worked. We disrupted the very definition of a game and that is working, too. In a few weeks, you will better understand how to disrupt console gaming. You will play, and you will see.
-Iwata (GDC 2005)
You may think the revolution has come and gone, but I am
here to tell you it has just begun. So far, the Wii has been little more than
tidal waves slamming the shores and sweeping over the industry. Every month,
people stare at Wii NPD numbers in wonder. “Oh heavens, PLEASE be a fad.
Please!” This Fall is as critical to the success of Wii as the launch. It is
from here that those irregular tidal waves will become a longstanding flood.
Many people sold their DS systems the first year because “there were no games”.
Now, the DS has “too many games”. For those who sold their Wii systems, good
luck trying to buy another one this Fall. This Fall will begin to have ‘too many
games’. Nintendo will also unveil hardware you already have (but didn’t know
about) in order to ‘surprise’ the market.
What is more fascinating than the expanding gaming market
is the expanding Nintendo. Nintendo is now one of the top ten most valued
Japanese companies whose market value surpassed Sony. Nintendo of America has
decided to send the sales and marketing staff to New York and San Francisco.
This move shows that Nintendo wants to be a participant in Silicon Valley and
foreshadows more ambitious plans to come. So far, the Internet has been used
primarily for information. It has not yet been fully utilized for entertainment.
We are on the cusp of another Net Boom but this time it will take place in
entertainment. This is the reason why Sony and Microsoft shoe-horned all these
digital entertainment eccentricities into their monstrosity consoles because
they want to get there first. Nintendo designing the Wii hardware from the
ground up to be an online console shows they know which way the trends are
heading. Japanese companies think in long-term, and Nintendo is positioning
itself to take advantage of the huge change coming ahead.
Regardless, some people (they know who they are) have been
so embarrassed by the sudden change in the market that they are now saying,
“Nothing to see here! This is simply a market change like the changes of the
phase of the moon.” Or they say, “Nintendo did nothing! Microsoft and Sony just
screwed up!” While that shows the typical ‘blame the disruptor’ attitude when a
market gets disrupted, it doesn’t explain why EVERY analyst put their bets on
Playstation 3 or Xbox 360 to come out ahead this generation. Sometimes, they
would not think it worth including Nintendo’s ‘Revolution’ into their analysis!
This generation is unlike any other in two major ways.
First, Nintendo is introducing new business models and concepts that every
console manufacturer will emulate from here on out. We have not seen this since
the NES. Second, ‘console wars’ are caused by people wanting their hardware to
be a ‘good investment’. No one wants to be stuck with a turkey. Unlike previous
generations, competing systems now cost two to three times more let alone the
high costs of HD televisions and sound systems some gamers are insanely buying
just for their game machine. The higher the buyers’ remorse, the more bitter the
tears.
As the flood slowly rises, ignore the screams from the
‘elite’ gamers as they drown in the Blue Ocean. Let these ‘sophisticated’ and
‘cultured’ gamers swim with the other ‘sophisticated’ and ‘cultured’ consoles
from the past such as the Atari 7800, the Sega Saturn, the 3DO, and 1980 game
centric computers. Let them sink into their underworld of alternate realities as
their games become nothing more than fading embers from a gaming age long past.
While the old continent sinks below, the surface above has revealed an
unexplored realm.
"When I think of what faces all of us right now, I imagine what it must have been like for the explorers who first set foot on a new continent. For them, it was impossible to imagine all the adventure that lay ahead.”For above the Blue Ocean awaits the New World.
-Iwata, GDC 2006, "Disrupting Development" speech
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