The Hostility Against Disruption

There are two reactions from people once they realize what disruption is about. The first is a sense of joy, a sense of hope, a sense of confidence of the entrepreneur. The second is downright fear.

Clayton Christensen revealed that big business executives react to his talks on disruption with fear.

I, of course, am in that first reaction. Disruption taught me that I loved the computer revolution not because of computers. I loved the computer revolution because of the disruptions it unleashed. For example, snail mail was disrupted by email. Amazon disrupted brick and mortar book stores. Video games disrupted other entertainment mediums. It was disruption that I relished, not computers or their technology.

But it appears the second group is larger and vaster than the first. There is more fear against disruption. This fear turns into hatred.

Why would someone fear disruption? Obviously, big businesses do not want to be gored or made obsolete. But I think the big thing is the removal of prestige. Decades ago, a newspaper journalist had a type of ‘prestige’. Today, the same newspaper journalist is seen as a joke. The prestige is gone.

The business bloodsport of the computer industry that we witnessed with companies like Netscape trying to disrupt Microsoft (and being ripped to shreds afterward), of small computer companies completely disrupting the larger ones, is now, like a genie going outside the bottle, exiting the computer industry and affecting every industry in the world. A typical business has to not only compete on traditional terms. It has to compete in a global environment, against entrepreneurs with computers in South America, in Africa, in Asia, in places they never thought they would have to compete.

Scott Anthony, a disruption author, coined a term called “The Great Disruption” which is disruption becoming a macro-event.

What reaction does an entrenched big business have against disruption? Sadly, the reaction is to turn to legislation to out-law the disruptor! When Japanese car companies were disrupting American car companies, the American car companies went to Washington and tried to outlaw the Japanese cars (through tariffs or other means). Washington at that time wisely said, “No, you guys have to compete.”

This is the trigger for all the bail-outs we are witnessing. Wall Street has been disrupted as have newspapers, American car companies, and among others. Yet, they are being ‘bailed out’. A good illustration would be unions. Unions made sense in the Industrial Revolution, but they do not make sense now in the computerized world. Unions are shrinking all over and are being ‘bailed out’ as a reaction against disruption.

Why am I saying all this? It is to highlight that disruption is greeted with hostility if not outright banning from legislators. Imagine if the makers of mainframe computers could ‘ban’ the personal computer! They would if they could.

Recently, Reggie has aired his frustration about third party companies.

“I’m extremely disappointed. I’ve had this conversation with every publisher who makes content that is not available on my platform. The conversation goes like this: ‘We have a 22-million unit installed base. We have a very diverse audience… We have active gamers that hunger for this type of content. And why isn’t it available?’ I think for those games, typically decisions are being made two years prior, and so the decisions two years ago were that those types of games would not be effective on the platform. But we’ve shown that that’s just not the case. High-quality, effectively marketed against our installed base will sell, period end of story.”

It appears Nintendo thought that the high install base would be enough to attract third parties. After all, it worked on the DS, right? But there is a very critical difference between the DS and the Wii. The Wii is disruptive. The DS is merely innovative.

The first way how third parties reacted to the Wii was the “Birdman” approach. They thought they would copy Wii Sports and mini-games and rake in big bucks. They actually did put out effort in marketing and all. The “third parties” were only applying the “Industry Formula” to the Expanded Audience.

And it didn’t work.

Contrary to conventional belief, the Expanded Audience are not a bunch of retards who can easily be hoodwinked into buying mediocre garbage. It is the hardcore who have been manipulated to keep buying mediocre garbage. But the Expanded Audience is a far savvier customer. Not even Nintendo can easily sell to them. They rejected Wii Music as you saw.

So the third parties declare that no third parties can sell on the Wii. It is not arrogant to say that third parties cannot sell on the Wii. However, it is arrogant to say third parties cannot sell on the Wii just because THEY failed.

Third party company games are selling on the Wii. However, many of them are not considered traditional members of the “Game Industry”.

When the Wii came out, they tried to create a “Casual Game Industry”, and that blew up on them. You have to love the Expanded Audience. They would not allow themselves to be ‘industrialized’ as the hardcore have been.

I’m not surprised at the “Game Industry”‘s reaction to the Wii. From their perspective, the Wii is a threat to their existence. This is why you keep hearing so much about “Wii HD” even from manufactured and made up sources (which are, bizarrely, dutifully reported as ‘fact’).

Wii HD is not about HD. Wii HD is about Nintendo abandoning disruption.

The “Game Industry” wants Nintendo to abandon its disruptive ways and return to the traditional core ways. While third parties say a Wii HD allows them to easily port over their game, this is also a lie. The “Game Industry” froze the Gamecube even though it had the same install base as the Xbox. Gamecube was deliberately left out.

And as this generation began, the “Game Industry” declared either further niche of Nintendo or its outright destruction as a console company. All analysts “agreed” that Nintendo would be last place. It is clear that the “Game Industry” wants Nintendo to be a game company, but not a console company. They want Nintendo to make Mario and Zelda and port it to all the systems.

One analyst who made the prediction that Nintendo was leaving the console business went into a rage when the Wii launched. I haven’t heard from him since. (Why would an impartial analyst be “furious” about a turn of events? The answer that comes to mind has to be the shocking conclusion.)

Atari and the other console companies crashed in the early 1980s was because of the “Game Industry” at the time overreaching. A foreigner comes in called “Nintendo” and re-creates the market.

While the NES was a disruption, what is fascinating is the sheer hostility against the little gray box. I remember the United States Congress going after Nintendo. The losers of Atari sued Nintendo and tried to take away their profits in court by saying those profits absurdly belonged to Atari. Electronic Arts and other computer software companies heavily resisted making games on Nintendo. So even back then, there was hostility towards disruption.

Third parties began to flock to Sega to stop Nintendo, but they didn’t like Sega too much either. Sega had adopted the same business strategy as Nintendo. I believe they didn’t like Sega because Sega was a game company like Nintendo. A third party had to compete against Sega’s games as well.

Sony, who was not a game company and did not create their own software, was immediately rallied by third party companies. It is this combination which created the beginning of the modern “Game Industry”.

Look at what happened to poor Sega. Sega competed with superior hardware and kept up with technological pace. What was the reaction? The reaction was that the “Game Industry” froze out Sega and did their best to destroy the company. The Saturn was quickly abandoned as companies jumped on Sony. The Dreamcast was entirely isolated by the “Game Industry”.

The “Game Industry” succeeded. Sega was destroyed.

Nintendo was increasingly isolated. Hilariously, the increase of Nintendo’s isolation was blamed on Nintendo. Many people believed this. No matter how far Nintendo would go with making development easier, with reaching out to third parties, with even allowing third parties to make games using their IPs, the console was consistently frozen. Remember that the Dreamcast, also, was easy to develop for. None of that mattered.

It appears that the “Game Industry” is so revenue mad that they are hostile to any game maker that also makes consoles. All software revenue goes to them, not to “First Party” games. Also, the “Game Industry” then becomes in full control without having to make the hardware. They can dictate what they want the hardware to be. But a console company with a first party game company can recreate hardware to fit the first party and the hardware will sell because of the first party. “Game Industry” cannot boss such console companies around since they have a first party to sell hardware.

But there is that concern that one, lone, hardware maker would dictate terms. So this is why Microsoft was welcomed.

The Console War was such a scam. No matter if the PS3 or Xbox 360 ‘won’, the “Game Industry” would go on in continuity. The “Game Industry” liked the console war because it was the PS3 and Xbox 360 fighting over THEM, on bribing their companies and all.

Nintendo was supposed to be third party by now. They were to make their Mario and Zelda games and port them to all systems.

To say the Wii shocked the “Game Industry” is an understatement. Investors demanded the companies make games for the Wii (while they were invested for the HD Twins). The “Game Industry” thought they could create a sister industry as “Casual Game Industry” and ‘industrialize’ these new Wii gamers. When this failed, the “Game Industry” returned to original course of freezing out the Nintendo console.

Yes, the Core Market is shrinking. Yes, it is because the “Game Industry” is a parasite off of gaming and slowly draining the life out of gaming. Nintendo believed that the “Game Industry” would want life to return to gaming. On this, Nintendo was incredibly naive.

The “Game Industry” has the context that it is about themselves first and at all times. If gaming dies, they do not care. They will have made their millions and their money. They don’t care about the health of gaming. They care about revenue. They do not care about customers.

Before, I would be thought to be seen as a madman to say the above. But the current situation with Activision has been an eye opener to many people. The “Game Industry” does not care about you at all. All the “Game journalists” are taking Activision’s side and throwing you, the consumer, into the jaws of exploitation.

There are two possible ways to remove the “Game Industry”. The first is to await the slow death of gaming. When it dies, so does the “Game Industry”. While this solution works, it is very messy and very destructive. This is the 1983 way.

The other way to remove the “Game Industry” is to separate the ‘industry’ from ‘gaming’. This is done through disruption. The “Game Industry” works on the Expanded Audience like a fish works out of water. It gasps, it flops around, and it either dies or gets back into the water again. In our favor, the water level in that pond is shrinking. Less and less fish can survive in the Core Market pond leaving room for only a few big fish. And these few big fish are finding out there is less small fish for them to eat. They are on the path to slow death anyway.

Reggie expresses his disappointment and surprise. But I am disappointed and surprised at Reggie. Didn’t he know that the “Game Industry” has been gunning for the removal of Nintendo as a console company for some time? Can’t he see that no matter what games Nintendo puts out, those games are always “wrong”? Can’t he see that Nintendo is always doomed, even if their system is sold out for three years, and that PS3 and Xbox 360 are always ‘primed for a comeback’, even if they are billions in debt and lagging in sales?

The “Game Industry” is scared shitless about disruption. It is the only thing that can really destroy them. In order to successfully combat disruption, the “Game Industry” would have to become disruptors themselves. This is very difficult to do, and it would go against their revenue seeking and machine-like business model way of thinking.

Remember that Wii HD is not about Wii HD. Wii HD is about Nintendo abandoning disruption. The “Game Industry” knows that Wii HD would destroy the Wii which is why they suggest it. If such a thing comes out, the Wii HD would be frozen and isolated just as the Gamecube and Dreamcast were.

Remember the “Game Industry’s” obsession over the Conduit? They ignore every Wii game, but then took much attention over the Conduit. Why the obsession over a small developer game? It was because of FPS and motion controls. A FPS with motion controls could disrupt the great cash cow of the “Game Industry”: typical FPS shooters. There was fear over such a game.

There is only one true obstacle that is preventing the growth of gaming. It is the “Game Industry” itself. The “Game Industry” would prefer to have a smaller market full of zombie customers (called ‘hardcore gamers’) who they can extract greater and greater amounts of revenue from than trying to sell games to disinterested people.

Nintendo comes to an interesting crossroads. They can either try to work with the “Game Industry”, try to ‘boost’ the “Game Industry” up, and then only watch in puzzlement as the “Game Industry” sneers, screams, and stabs Nintendo in the back. Or Nintendo can embrace what they have started with disruption and follow the road of disruption to its conclusion: the creative destruction of the “Game Industry”.

Wii launched like a farg out of hell. Wii’s launch far surpassed anyone’s expectations, even Nintendo’s. And the console was sold out for three years in America. How did this happen?

There are many explanations, and they are all right. The motion controls cut down the barrier to non-gamers. Wii had good software with Wii Sports. Wii was cheaper. Wii did have good marketing.

But the most important explanation was that the Wii was positioned and presented as the Anti-Game Industry console. The PS3 was $600 and had no real software. The Xbox 360 was $400 and was constantly breaking down. It was an easy choice for consumers to make.

From the consumer perspective, the lack of “Game Industry” games on the Wii is a blessing, not a curse. When people do not like ‘shovelware games’, they are expressing their dislike at the “Game Industry” and its revenue hunting ways. The Wii received so much advocacy and support precisely because it was attacking the “Game Industry”.

Ever notice how when Nintendo follows the path of the “Game Industry”, such as with User Generated Content, that hostility replaces advocacy?

People have struggled to explain the bizarre reactions of the “Game Industry” to the best selling Wii. But the context I have found that makes everything make sense is that the “Game Industry” fears disruption and is doing everything in their power to stop it. If the “Game Industry” could go to Congress and outlaw the Wii, they would do so.

The question is whether Nintendo has the courage to follow through their disruption. Why won’t they do this? It is because they will be hated and despised. It is Human Nature not to want to be hated. Everyone wants to be liked. The question is whether the “Game Industry” will successfully fool Nintendo to abandon their disruption in the hopes that they will be liked and that game companies will put their games on their system.

I hope Nintendo will not be fooled. It is beyond doubt now that the only way for games to become mainstream is that the modern  “Game Industry” must be destroyed.

It will be no loss to witness the destruction of the “Game Industry”. They are nothing but a soul-less machine. Machine Men. Machine Minds. Machine Hearts. And it all equals to Machine Games.