Disruption naturally occurs in an industry over time. It happens either intentionally or unintentionally.
The problem with the console war is that it talks as if the war is about consoles. It isn’t. It is about markets. What we have referred to as the ‘Console War’ has actually been the war over the Core Market.
In the beginning, there was the PC gaming market that began to be disrupted by flash gaming and other alternatives to the 3d video card games. Sims is a good example of this momentum of an expanded PC game market appearing and overwhelming the core games. World of Warcraft is another example.
Nintendo, always a keen observer of video game trends, sees this. Nintendo likely gets the advice of Will Wright, the creator of the Sims. Back in the early 2000s, the vision of the Wii was coming together. To show how difficult and scary disruption can be, it took Iwata and Nintendo a long time to get to the point of Wii. The DS was the first major step in this direction.
Iwata made himself clear prior to the Wii launch: Nintendo had no intention of making a ‘Next Generation’ machine. It’s next game console would be called ‘Revolution’ because, with it, we will see a gaming revolution. Looking at past Iwata quotes, it is hilarious in hindsight to hear Iwata say what we today consider the obvious. It is also hilarious to see game journalists shocked looks as Iwata spoke what he did. “Is the successor to the GBA going to have Gamecube graphic capability and use Gamecube discs?” one journalist eagerly asked. Iwata would give a very polite answer (whereas you know he was thinking, “Boy, these guys are DUMB”). Poor Iwata also obviously got constantly barraged about how could ‘Revolution’ compete with the HD twins. And my favorite was the constant asking was whether Nintendo would exit the hardware business.
Iwata was consistent. He said that the Wii would create an ‘Expanded Market’ because the ‘Core Market’ was shrinking and would die. He said that winning the ‘Core Market’ would not be a victory since it is doomed anyway. Even today, people still don’t realize the full meaning of his comments.
It is not exactly true that Nintendo was not competing. It is more accurate to say they were not competing for the CORE market. They focused instead of creating the EXPANDED market while Sony and Microsoft dished out billions in competition over the Core Market.
Now we come to 2008.
It became apparent that if Microsoft or Sony truly wanted to ‘win’, it would have to take on Nintendo in the Expanded Market. The best way to do so would be to make their own motion controller, perhaps a better one that take the winds out of Nintendo’s disruptive sails.
Prior to E3 2008, rumors ran rampant of Microsoft and even Sony releasing a motion based controller. No one would blame them if they did so.
I wrote two articles about the nature of such a conflict, an assymetric war, that would occur if Sony or Microsoft released a motion controller. One article was about the SHIELD of Nintendo and the other was its disruptive SWORD. These are, of course, Christensen terms.
Either three options could occur:
1) Microsoft and Sony could do nothing.
2) Microsoft and Sony could release a motion controller that would fail in the market.
3) Microsoft and Sony could release a motion controller that would succeed in absorbing Nintendo’s expanded market.
Microsoft or Sony launching a motion controller would launch a new Console War. Instead of a Console War over the Core Market (which we have seen since the 16-bit generation, it has become so habit that people think it is the norm of this industry), it would have been a Console War over the EXPANDED market. We are all familiar with how a regular console war is with its loud marketing, greater graphics, more testosterone flag waving. But what in the world would a war over the expanded market look like?
Nintendo’s E3 2008 press conference is exactly how such a war would look like. Assuming a competing motion controller was going to be unveiled, Nintendo hurries to unveil Motion Plus and does so right before the Microsoft press conference (which is a very aggressive move). The games Nintendo highlights all are toward the Expanded Market because Nintendo was ready to wage ware over it should Sony or Microsoft attempt to tap into it.
Nintendo saying they didn’t show Core Games at E3 2008 because “this wasn’t the place for them to be shown” was just spin. The real reason was that they were prepared to undergo a New Generation Console War. I doubt they were looking forward to it, but they had to do it.
Unfortunately for folks like myself, Microsoft and Sony did NOT release any new motion controller. Microsoft declared war on Sony some more and that was that. The latter half of 2008 has been absolutely boring to me as no competing motion controller was the most boring outcome from the three possibilities.
The lack of a competing motion controller had to have had Nintendo ecstatic after E3 2008. They began to ‘disarm’ for this New Gen Console War. Note how Motion Plus has been ‘delayed’. If Microsoft or Sony came out with their own motion controller, I assure you it would not have been ‘delayed’. Nintendo can now rest on its laurels somewhat. Their plans for the ‘Core Market’ will be to bring their Core Users in the Expanded Market. Expect the next Mario and Zelda to be designed for the mass market.
There has been no need for me to write more articles because there is no big change going on in the video game front. The Expanded Market keeps… expanding. The Core Market keeps… shrinking. What else is there to say that hasn’t been said in a previous article?
Since then, I’ve seen only two major changes. The first is Iwata embracing ‘user generated content’. This doesn’t really fit into the disruption discussion, and this is the first big mistake Iwata has done if he keeps pursuing it, since gaming is in the content business. But I suspect he is trying different things to create excitement in Japan. The second major change is the ‘melt down’ of the world economy. Have you noticed that the companies that are hurting are companies that are being disrupted (book publishers, next gen publishers, General Motors, etc.) while companies that are disrupting (Amazon, Nintendo, Toyota, etc.) are raking in record profits? This is no coincidence.
The next article will focus on how Nintendo intends to transform its company into a Wheel of Disruption and we’ll see how disruption is pulling the strings of the rise and fall of national industries and their booms and recessions.
You say recession, I say disruption. We’re both right.