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[nincompoop]

Looks like Constantine Hantzopolous was right. Wii price drop to $80 imminent.

 

[onipex]

Spirit Icana I didn't read the rest of the thread, but let me try to tackle this.

Blue Ocean: "I don't mess with you, you don't mess with me."
Disruption: "All yo customers belong to me!"

Blue Ocean creates new values, and thus, new audiences.

Disruption is aggressive. It is an unexpected and massive assault on an incumbent. It's not about getting Modern Warfare on your platform. It is about stealing Modern Warfare customers and rendering the title old and irrelevent.

Nintendo may or may not take interest in this (I thought they did), but I think third parties could benefit by, say, taking Wii Sports Resort swordplay and evolving it into Dragon Quest Swords or something. Some Blue Ocean customers carry over and some may not. What will happen is that Blue Ocean customers, some of them, will demand more complex experiences, gadgets, or whatever. These people become the new hardcore buying up the latest Mega Man until the games run dry and begin to overshoot customer needs.

Example: Super Mario Bros. >>>>>>> Super Mario Galaxy

Kids play and love Super Mario Bros. back in 1985/86. Nothing like gaming on the d-pad and watching that screen scroll as you ran back in the day. Today, young adults that have played Super Mario Bros. back in the day play much more complex games.

You make a great point though! In Japan, Super Mario Bros. is the best selling single sku video game ever made. Mario games are now more expensive and teams are far bigger today than ever before. So... why upstream when you can make far more dough with Blue Ocean titles? Blue Ocean games are certainly not easy to make, but they bring in the cash!

But Opiate, there would be no Wii Sports Resort if Blue Ocean was all Nintendo should care about. Little Joey would be so disappointed, just like I would if Super Mario Bros. 3 or Sonic the Hedghog didn't come after my lovely first experience with the original Super Mario Bros. And I certainly hope, oh I don't know, SOMEONE, would give my folks a better fitness product than Wii Fit Plus one day.

I think it should be acknowledged that upstreaming is inevitable, whether Nintendo and its Wii upstreams the bottom pyramid customers to core and passionate high pyramid customers or not. If Nintendo won't do it, someone else WILL. The hardcore games of today are dying. The hardcore games of tomorrow will be quite different beasts from the hardcore games of today. The Blue Ocean kidz are still enjoying their Wii Sports and some have upgraded and are also enjoying the extra precision and complexity that Wii Sports Resort offers. Also, Mario Kart Wii is out and it has bridged the new value, motion controls, with the old, classic Mario Kart racing, and both the expanded audience and the core audience are responding to it.

Wii is only the beginning. These are grassroots that will one day bloom to something of more splendor..

Isn't Nintendo using the Blue Ocean and Disruptive strategies with the Wii? They are trying to expand the market and change the values of the market. The Wii changes the value in consoles from graphics to controller. The popular games on the Wii appeal to a wider audience and a different audience than the popular games on PS3/360.

When Sony and Microsoft announced motion controllers Nintendo released motion plus to fight them off. Nintendo then took it one step future and announced a totally different input device. If the sensor thing is successful Nintendo will either have another disruptive or blue ocean input device for the Wii. The balance board is their current blue ocean device for the Wii of course.

 

[Opiate]

So yes, disruptive technologies do push into the old market, but they only do so by convincing old market customers of the value of the disruptive innovation.

No! This is simply wrong. They only do so when their product becomes satisfactory to their traditional needs. Mainframe users did not begin buying 5.5 inch drives once they were convinced that smaller is better: they began buying 5.5 inch drives when sustaining innovations made them large enough to suit their needs. Users of traditional excavation equipment did not start using hyrdolic equipment until their reach and bucket size were large enough to meet their needs. Users of traditional motorcycles did not start riding Hondas when they were convinced that street bikes were better: they started buying them when Honda improved their technology and made long distance bikes to suit their needs.

The disk drive manufacturers that you sighted did increase the drives capacity as they pushed into mainframe computers, but they did NOT increase the physical size of their drives, which would be embracing the values of the old market.

No it wouldn't! The consumers of mainframe computers never valued size. That's illogical. You think they actually valued their drives being larger? It isn't as if they valued big hard drives: they cared about power, and still do. That's what mattered to them. More memory space. Christensen says this explicitly.

Mainframe customers never stopped caring about large memory space. They still care about that. They didn't say, "Well, before we cared about memory space, but now we care about smallness." That's illogical. Instead, what happened is that the weaker technology got better, and eventually had large memory space too. At that point, mainframe customers began buying 5.5 inch drives because they suited their old needs, in addition to being smaller and cheaper, so why the heck not.

 

[jrricky]

After reading this news, I decided to go back and watch the gametrailers video about the guys discussing the future of the industry and how the Wii sales will drop to a crawl after the PS3slim release and it continues to crack me up.

 

[TheKingsCrown]

After reading this news, I decided to go back and watch the gametrailers video about the guys discussing the future of the industry and how the Wii sales will drop to a crawl after the PS3slim release and it continues to crack me up.

link? lolz

 

[gerg]

I think it can be worth nothing that Nintendo's strategy could be disruptive without their strategy being disruption. I hope that makes sense. Their goal, in the blue ocean sense, was to make their competition irrelevant. It seems they have done that quite admirably.

Definitely.

A lot of talk has been made over whether or not the DS is actually a disruptive product, but, nevertheless, it disrupted the market. (I would say that it is both disruptive and sustaining.)

As for Nintendo's incentive, it is in their interest to get the Xbox gamer who buys a new game every month because that gamer is more reliable and brings in more revenue than a less avid gamer. But disruption theory suggests this will occur not with Wii HD, but with the Xbox gamer coming to appreciate motion controls as they become more sophisticated and meet the needs of this customer.

I think that Nintendo will eventually move upmarket, but only because Sony's and Microsoft's movements downmarket make that transition very profitable. If graphical improvement next generation (and the generation after that, and so on) is very minimal, then (some demographics of) the upmarket will be forced to care for other values, including those of the downmarket.

 

[gerg]

No! This is simply wrong. They only do so when their product becomes satisfactory to their traditional needs. Mainframe users did not begin buying 5.5 inch drives once they were convinced that smaller is better: they began buying 5.5 inch drives when sustaining innovations made them large enough to suit their needs.

My lack of knowledge of 5.5" disk drives will make it harder for me to comment, but I think that both of you may be saying the same thing in two different ways.

From what I understand of what both you and kame-sennin have posted, at one point there existed large 8" and 14" disk drives. At some point, smaller 5" disk-drives appeared on the market, which remained downmarket until technological progression meant that they could hold more data. At this point, the 5" disk-drives moved upmarket.

No it wouldn't! The consumers of mainframe computers never valued size. That's illogical. You think they actually valued their drives being larger? It isn't as if they valued big hard drives: they cared about power, and still do. That's what mattered to them. More memory space. Christensen says this explicitly.

This is unsupportable.

If these consumers never cared about size, why would they then opt for smaller disk drives?

Mainframe customers never stopped caring about large memory space. They still care about that. They didn't say, "Well, before we cared about memory space, but now we care about smallness." That's illogical. Instead, what happened is that the weaker technology got better, and eventually had large memory space too. At that point, mainframe customers began buying 5.5 inch drives because they suited their old needs, in addition to being smaller and cheaper, so why the heck not.

Why do we have to posit that once a consumer values one feature he has to stop caring for another?

It seems that while these consumers didn't say "Now we care about smallness", they may have said "Now we care about smallness as well".

You seem to be looking at the retention of old values as evidence that these consumers remained upmarket, whereas kame seems to consider the addition of new values as evidence that they moved downmarket.

I think that looking at values alone doesn't provide a full enough picture of a consumer. Rather, we need to consider priorities of values. Here I think it is arguable that the priorities of values changed when the mainframe customers began buying smaller disk drives.

 

[jrricky]

link? lolz

Shane Shitterfield of amazing insight

 

[kame-sennin]

No! This is simply wrong. They only do so when their product becomes satisfactory to their traditional needs. Mainframe users did not begin buying 5.5 inch drives once they were convinced that smaller is better: they began buying 5.5 inch drives when sustaining innovations made them large enough to suit their needs. Users of traditional excavation equipment did not start using hyrdolic equipment until their reach and bucket size were large enough to meet their needs. Users of traditional motorcycles did not start riding Hondas when they were convinced that street bikes were better: they started buying them when Honda improved their technology and made long distance bikes to suit their needs.

You're only looking at one side of it, and in doing so, you're missing the entire point of disruption. None of your examples are false, but old customers do convert to new values. If they didn't, why would incumbent firms be displaced? You are absolutely correct that disruptive innovations eventually become good enough for old market customers. But it is the new values that they bring to the market that lock out the incumbent firms who are still operating under the old values. The automobile disrupted the locomotive when it was good enough (fast enough, large enough range) for mainstream locomotive customers. But the reason locomotive companies suffered is because of the NEW values introduced by the automobile; convenience, independence, and more control over destinations. If old customers do not fall in love with disruptive values, than the incumbent firms are in no danger and both the new technology and the old can comfortably coexist.

No it wouldn't! The consumers of mainframe computers never valued size. That's illogical. You think they actually valued their drives being larger? It isn't as if they valued big hard drives: they cared about power, and still do. That's what mattered to them. More memory space. Christensen says this explicitly.

Mainframe customers never stopped caring about large memory space. They still care about that. They didn't say, "Well, before we cared about memory space, but now we care about smallness." That's illogical. Instead, what happened is that the weaker technology got better, and eventually had large memory space too. At that point, mainframe customers began buying 5.5 inch drives because they suited their old needs, in addition to being smaller and cheaper, so why the heck not.

You're missing the fact that once computer manufacturers adapted their products to a smaller hard drive size, like 5.5 inch drives, they were no longer willing to accept 8 inch drives even though the 8 inch drives continued to increase in capacity over and above 5.5 inch drives. Once 5.5 inch drives became good enough (large enough capacity) for most manufacturers, they did in fact appreciate the physical space savings. If not, they would have purchased 8 inch drives.

 

[ViperVisor]

The best selling console selling best shouldn't be news but these are the blurst of times in the gaming industry.

 

[kame-sennin]

It seems that while these consumers didn't say "Now we care about smallness", they may have said "Now we care about smallness as well".

You seem to be looking at the retention of old values as evidence that these consumers remained upmarket, whereas kame seems to consider the addition of new values as evidence that they moved downmarket.

I think that looking at values alone doesn't provide a full enough picture of a consumer. Rather, we need to consider priorities of values. Here I think it is arguable that the priorities of values changed when the mainframe customers began buying smaller disk drives.

Thanks, I think the debate was getting tripped up by semantics, but you summed up my point very well, especially the quoted above. The only correction I would make is that customers are not moving downmarket. That would be a phenomenon not discussed by Christensen, Kim and Mauborgne, or Nintendo. Rather, I would refer to the adoption of new values and (as you astutely pointed out) the re-prioritization of values, as a paradigm shift.

 

[Xeke]

The Wii is a cultural phenomenon in America and much of the world, the other two are just consoles.

 

[Eteric Rice]

What is actually the best selling console of the three? I thought it was the PS3... I know wii had 3 million this month, but I think that PS3 sold more overall right?

 

[Opiate]

You are absolutely correct that disruptive innovations eventually become good enough for old market customers. But it is the new values that they bring to the market that lock out the incumbent firms who are still operating under the old values.

I reduced your quotation down to this, because in here is the key.

Disruptive innovations don't become good enough on their own. It requires investment -- significant investment -- to push technology and advance it at a rapid pace.

And this was my whole point in the first place. The motivation for disruptors to push the technology to make it "good enough for old customers," using your words, is that those "old customers" are very profitable, in theory. Except in the case of gaming, they aren't profitable. So why push technology that hard? Why not go at a much more leisurely pace, simply keeping up with your new customers?

 

[Regulus Tera]

http://www.youtube.com/watch?v=xdCrZfTkG1c

This is the correct answer.

No, this is the correct answer: http://www.youtube.com/watch?v=RnrXiaPVeHY

 

[Somnid]

I'm really not sure what Opiate is trying to say or whether I agree or disagree with him. I know he's arguing for something but I don't see where he is going.

 

[Black-Wind]

I'm really not sure what Opiate is trying to say or whether I agree or disagree with him. I know he's arguing for something but I don't see where he is going.

Im . . . kinda in the same boat.

Seems like he is saying that Nintendo can't take in the hardly cores with JUST the Wii on it's own . . . but they shouldn't care because the hardly core have shown to =/= profitable . . . ?

 

[Opiate]

I'm really not sure what Opiate is trying to say or whether I agree or disagree with him. I know he's arguing for something but I don't see where he is going.

I'll get back to that first rhetorical question: why would Nintendo invest heavily to try and take back "core" gamers, when "core" gamers aren't very profitable?

We're looking at this through the lense of The Innovator's Dilemma. In that book, Christensen says that disruptors start in a new, low end market they create, but then gradually move upmarket, towards the old users, because those old users are very profitable.

Except, they aren't, in this case. So why move upward?

 

[Spirit Icana]

Isn't Nintendo using the Blue Ocean and Disruptive strategies with the Wii? They are trying to expand the market and change the values of the market. The Wii changes the value in consoles from graphics to controller. The popular games on the Wii appeal to a wider audience and a different audience than the popular games on PS3/360.

When Sony and Microsoft announced motion controllers Nintendo released motion plus to fight them off. Nintendo then took it one step future and announced a totally different input device. If the sensor thing is successful Nintendo will either have another disruptive or blue ocean input device for the Wii. The balance board is their current blue ocean device for the Wii of course.

Blue Ocean, sure, but my faith in Nintendo following through the course of disruption has dwindled greatly after the lack of motion plus enabled software titles following the release of Wii Sports Resort. Since they decided to play wait and see instead of having a robust line-up ready and the fact that adjustments to Zelda Wii for motion plus were stalled to wait and see how Wii Sports Resort performs, I think it's safe to say they were never really serious about disruption. They may get the ball rolling this year or not. All that remains to be seen. Nintendo still has a large edge over the competition.

A lot of talk has been made over whether or not the DS is actually a disruptive product, but, nevertheless, it disrupted the market. (I would say that it is both disruptive and sustaining.)

Disruption involves two parties: A 'disruptor' and a 'disruptee.' So whom or what exactly is the Nintendo DS disrupting?

 

[Riou]

I'll get back to that first rhetorical question: why would Nintendo invest heavily to try and take back "core" gamers, when "core" gamers aren't very profitable?

We're looking at this through the lense of The Innovator's Dilemma. In that book, Christensen says that disruptors start in a new, low end market they create, but then gradually move upmarket, towards the old users, because those old users are very profitable.

Except, they aren't, in this case. So why move upward?

Nintendo has already produced enormously successful upstreamed games in NSMB Wii and MK Wii that have/will have some of the highest margin this industry has ever seen and these games have substantial cross over appeal between the old core audience and the new expanded audience. I see no reason why Nintendo would stop making games of this nature

 

[Opiate]

As I said, I see (what I believe to be) Kame's mistake, here.

He suggested that Nintendo needs to improve their technology just to keep their new customers, which is true. However, the pace needed to accomplish that is comparatively relaxed. Nintendo can take their time, as the technological needs of this group are increasing slowly.

The pace needed to push towards the established users is far faster. Nintendo would have to catch up -- and possibly surpass -- Sony and Microsoft in this regard, who already have significant head starts. Nintendo would need to invest in new IPs, particularly new ones with high end graphics and effects.

Kame-sennin conflated these two paths, when in reality they create quite different trajectories. In other words, it costs money to keep pace with the technological needs of the casuals, but it costs extra money -- likely quite a bit of it -- if Nintendo wanted to go well beyond this, and catch up to the technological needs of the "core."

So again, I ask: why spend that extra money?

 

[eastside49er]

If it is estimates from Nintendo, than most like they are talking about sold to retail. Also the key word is estimate.

 

[gerg]

Disruption involves two parties: A 'disruptor' and a 'disruptee.' So whom or what exactly is the Nintendo DS disrupting?

It is disrupting the once-reigning values of graphical fidelity and substituting them for the interaction between the player and the console (via the touch screen, and subsequently the two-screen layout).

The "shades of grey" with the DS regard the fact that, while it disrupts the current paradigm, it simultaneously sustains it by being more graphically advanced than the GBA, and featuring more buttons than it, too.

Thanks, I think the debate was getting tripped up by semantics, but you summed up my point very well, especially the quoted above. The only correction I would make is that customers are not moving downmarket. That would be a phenomenon not discussed by Christensen, Kim and Mauborgne, or Nintendo. Rather, I would refer to the adoption of new values and (as you astutely pointed out) the re-prioritization of values, as a paradigm shift.

Yeah, that works better.

So again, I ask: why spend that extra money?

I would negate your premise: that it would be fundamentally unprofitable for Nintendo to move upmarket. I don't think that the core consumers are inherently unprofitable.

 

[GDGF]

If it is estimates from Nintendo, than most like they are talking about sold to retail. Also the key word is estimate.

Nintendo's had their own retail tracking service for years, and it's so accurate that other companies used to use it back in the day (before NPD I guess)

It's not sell in it's sell through.

 

[Christine]

If it is estimates from Nintendo, than most like they are talking about sold to retail. Also the key word is estimate.

So this is what people mean when they talk about fractal wrongness.

 

[eastside49er]

Nintendo's had their own retail tracking service for years, and it's so accurate that other companies used to use it back in the day (before NPD I guess)

It's not sell in it's sell through.

Ok then. Provide a link as far as Nintendo proving they know how many systems are sold direct to customers hands.

As far as I know, Sony, Nintendo and MS go off of sold to the retail because in the end that is all that matters to them.

 

[eastside49er]

So this is what people mean when they talk about fractal wrongness.

There is always room for error when estimating something. The only hardcore numbers we get are from sold to retail because it is easier to track than anything else and it comes directly from the source in fiscal/annual/quarter reports. Can't lie on those.

 

[kame-sennin]

I reduced your quotation down to this, because in here is the key.

Disruptive innovations don't become good enough on their own. It requires investment -- significant investment -- to push technology and advance it at a rapid pace.

And this was my whole point in the first place. The motivation for disruptors to push the technology to make it "good enough for old customers," using your words, is that those "old customers" are very profitable, in theory. Except in the case of gaming, they aren't profitable. So why push technology that hard? Why not go at a much more leisurely pace, simply keeping up with your new customers?

Ok, I know why we haven't been able to agree so far. We've been dancing around the term "good enough" without describing which aspect of the Wii has to be good enough for core gamers. I imagine that you would argue that the graphics must be improved because, if gaf is any indication, they are not good enough for the core. But this raises the problem of decreased profitability, making any move upmarket illogical.

On the other hand, I've been talking about the gradual improvement of motion controls. You are correct in stating that this doesn't jive with the example we've been using from the disk drive industry. In disk drive terms, storage capacity = graphics and physical size = motion controls. Once the initial disruptive innovation (smaller size) was introduced, it improved in the area that was important to old market customers (storage capacity). I'm writing all this out because if our only example of disruption was the 5.5 inch drive disrupting the 8 inch drive, you would be very right and I would be very wrong.

However, if we look at other case studies in disruption, or at the computing market at large, we see that a key factor in all disruptions is the paradigm shift that occurs when customers begin to become more demanding of new market values. Eventually, computer manufacturers did await smaller sized drives because they valued the space/weight savings. When the telephone disrupted the telegram, it first had to be good enough for telegram users by improving the distance of communication (old market value). But today, no one purchases a phone wondering whether it is technologically capable of making long distance calls. The old market values are a given and so modern customers instead seek out phone-specific features, i.e. new market features. When automobiles disrupted locomotives, they first had to become good enough in the old market values of speed and distance. And while today, speed is still a selling point for many cars, most customers seek out vehicles that improve car-specific features - new market values.

Christensen had not fully developed this aspect when he wrote The Innovator's Dilemma, but subsequent books and articles explain it in greater detail:

But when incumbents become cornered, they face two problems. First, asymmetric motivation still stymies effective response. Even though the new opportunity may appear big, it typically requires a different business model. Even worse, incumbents are now at the mercy of asymmetric skills. Remember, disruptive innovations typically introduce new benefits to a market, usually centered on convenience, simplicity, customization, or affordability. As the entrant steadily solves unique problems, it builds the ability to do whatever is required to succeed in its context. When the incumbent has retreated into the highest tiers of its market and has to fight because there is no room for further retreat, it is at a competitive disadvantage. As the game changes to the one the disruptor plays best, it is very hard for the incumbents to develop new skills quickly.

By the time the Bell companies firmly established themselves, they developed unique competencies related to transmitting the human voice over relatively short distances. They established skills in acoustics, network management, customer service, and so on. Western Union had none of these skills. Its business did not need to solve these problems. It was on the wrong side of asymmetries. Western Union couldn't suddenly become a viable competitor after the telephone had been improving for twenty-five years. Similarly, Digital Equipment Corporation couldn't match the flexibility of the personal computer assemblers' processes, Sears couldn't match the inventory turns and low prices of the discount retailers, and so on.

http://hbswk.hbs.edu/item/4353.html (great article, btw)

In the case of the Wii, Iwata's gamble is that the graphics the Wii provides are already good enough for most core customers. Where Nintendo intends to invest is in motion controls, as shown by the development of Motion Plus. If more advanced motion controls can entice core gamers, then Nintendo will have displaced the values of core customers, or at least re-prioritized them to favor new market values. Doing so will be VERY profitable, as I imagine the $20 Motion Plus add-on has been.

I'm really glad you proposed your initial question; I think I understand disruption better now than I did this morning. Specifically, my usage of the term "good enough" was consistently incorrect throughout the debate, and I expect a source of much of the confusion. Disruptive innovations must be good enough in old market terms before they can move up market. But once they are, they disrupt old market products with sustaining improvements in new market values.

 

[Dalthien]

Ok then. Provide a link as far as Nintendo proving they know how many systems are sold direct to customers hands.

As far as I know, Sony, Nintendo and MS go off of sold to the retail because in the end that is all that matters to them.

Nintendo set up their own internal tracking system years ago. Nintendo has a far better idea of what they sell than NPD does. And yes, SIRAS is for point-of-sale, meaning sold to customers.

http://www.siras.com/html/about/about.shtml

NPD is far more of an 'estimate' than Nintendo's internal tracking. NPD has to guess for all of WalMart, Toys R Us, among others.

 

[Yes Boss!]

Ok then. Provide a link as far as Nintendo proving they know how many systems are sold direct to customers hands.

As far as I know, Sony, Nintendo and MS go off of sold to the retail because in the end that is all that matters to them.

Just stop.

 

[Opiate]

I would negate your premise: that it would be fundamentally unprofitable for Nintendo to move upmarket. I don't think that the core consumers are inherently unprofitable.

Okay, that I'm willing to listen to.

 

[Christine]

There is always room for error when estimating something. The only hardcore numbers we get are from sold to retail because it is easier to track than anything else and it comes directly from the source in fiscal/annual/quarter reports. Can't lie on those.

Hardcore numbers? Pull thy head from out thine arse.

 

[BowieZ]

Forgive my ignorance, I'm pretty new to sales and industry speak etc, but I've had a great time reading through this thread and the theories over Wii's success and, in spite of it, an unwillingness on the part of third party developers to develop high profile Wii content.

Not sure if it's a stupid question, but exactly who are these people who are in the drivers seat making the decision to (not) work on Wii software? I mean, really, who are they?

I keep reading comments that developers in the industry more or less feel emasculated merely by the concept of "last-gen" Wii hardware, but are these the same people who are actually the Presidents of these companies and making the executive decision to disregard Nintendo out of spite? Is bias against Nintendo really that inherent, all the way up to the top?

Surely the only question is about profit and risk?

 

[Busaiku]

Casual numbers are obviously part of the blue ocean.

 

[gerg]

Okay, that I'm willing to listen to.

Of course, it would be very expensive for Nintendo to attempt to move upmarket (by which I assume we mean to try and attract 18-35 male gamers). However, provided the circumstance is right (this involving the corporate strategies of Nintendo's competitors), I think Nintendo could make a lot of money by trying to create a platform for these consumers.

The reason for this is because I don't think that Nintendo will have to do all the work in trying to convince these old consumers to adopt new values. When I think of Nintendo moving upmarket, I think of, in a way, Nintendo almost meeting Microsoft and Sony half way. I don't think that Microsoft or Sony will pursue large graphical advancements in future generations, allowing Nintendo time to become competitive in this area again. Rather, I think that Sony and Microsoft will attempt to build on the values that Nintendo has created, and shepherd their own herd in that direction.

Forgive my ignorance, I'm pretty new to sales and industry speak etc, but I've had a great time reading through this thread and the theories over Wii's success and, in spite of it, an unwillingness on the part of third party developers to develop high profile Wii content.

Not sure if it's a stupid question, but exactly who are these people who are in the drivers seat making the decision to (not) work on Wii software? I mean, really, who are they?

I keep reading comments that developers in the industry more or less feel emasculated merely by the concept of "last-gen" Wii hardware, but are these the same people who are actually the Presidents of these companies and making the executive decision to disregard Nintendo out of spite? Is bias against Nintendo really that inherent, all the way up to the top?

Surely the only question is about profit and risk?

I don't think that there's instituted bias against the Wii throughout the industry, any more than there is a mixture of good business sense when companies are stuck between a rock and a hard place, and conservative development that doesn't like unknown (but not inherently unknowable) markets.

Regarding the former, I don't think that there ever would have been a market on the Wii for the types of games that Western developers traditionally like to make (namely, those targeted towards 18-35 males). Regarding the latter, developing games that would sell well on the Wii would require the adoption of new development practices that would have proved very expensive and difficult to acquire. As a result, we have a situation partly created by developers' inadequacies and good business sense, and also by Nintendo's design decisions with the Wii (ignoring their third-party relations), which has driven development away from the Wii and towards its HD competitors.

 

[JordanLMiller]

Surely the only question is about profit and risk?

You would think so, right?

 

[nextgeneration]

Forgive my ignorance, I'm pretty new to sales and industry speak etc, but I've had a great time reading through this thread and the theories over Wii's success and, in spite of it, an unwillingness on the part of third party developers to develop high profile Wii content.

Not sure if it's a stupid question, but exactly who are these people who are in the drivers seat making the decision to (not) work on Wii software? I mean, really, who are they?

I keep reading comments that developers in the industry more or less feel emasculated merely by the concept of "last-gen" Wii hardware, but are these the same people who are actually the Presidents of these companies and making the executive decision to disregard Nintendo out of spite? Is bias against Nintendo really that inherent, all the way up to the top?

Surely the only question is about profit and risk?

After this generation is done, I'd love to see someone write a book or do a case study on wii. You have one of the most successful consoles in history, yet it's a system that is not really embraced by a lot of 3rd party publishers.

 

[Opiate]

Ok, I know why we haven't been able to agree so far. We've been dancing around the term "good enough" without describing which aspect of the Wii has to be good enough for core gamers. I imagine that you would argue that the graphics must be improved because, if gaf is any indication, they are not good enough for the core. But this raises the problem of decreased profitability, making any move upmarket illogical.

On the other hand, I've been talking about the gradual improvement of motion controls. You are correct in stating that this doesn't jive with the example we've been using from the disk drive industry. In disk drive terms, storage capacity = graphics and physical size = motion controls. Once the initial disruptive innovation (smaller size) was introduced, it improved in the area that was important to old market customers (storage capacity). I'm writing all this out because if our only example of disruption was the 5.5 inch drive disrupting the 8 inch drive, you would be very right and I would be very wrong.

However, if we look at other case studies in disruption, or at the computing market at large, we see that a key factor in all disruptions is the paradigm shift that occurs when customers begin to become more demanding of new market values. Eventually, computer manufacturers did await smaller sized drives because they valued the space/weight savings. When the telephone disrupted the telegram, it first had to be good enough for telegram users by improving the distance of communication (old market value). But today, no one purchases a phone wondering whether it is technologically capable of making long distance calls. The old market values are a given and so modern customers instead seek out phone-specific features, i.e. new market features. When automobiles disrupted locomotives, they first had to become good enough in the old market values of speed and distance. And while today, speed is still a selling point for many cars, most customers seek out vehicles that improve car-specific features - new market values.

Christensen had not fully developed this aspect when he wrote The Innovator's Dilemma, but subsequent books and articles explain it in greater detail:



http://hbswk.hbs.edu/item/4353.html (great article, btw)

In the case of the Wii, Iwata's gamble is that the graphics the Wii provides are already good enough for most core customers. Where Nintendo intends to invest is in motion controls, as shown by the development of Motion Plus. If more advanced motion controls can entice core gamers, then Nintendo will have displaced the values of core customers, or at least re-prioritized them to favor new market values. Doing so will be VERY profitable, as I imagine the $20 Motion Plus add-on has been.

As a side note, I'm really glad you proposed your initial question. I think I understand disruption better now than I did this morning.

Yes, good conversation.

I think actual changes in values are very rare. Rather, I think Christensen argued (and I agree, it seems logical) that secondary and tertiary concerns become more significant once primary concerns are satiated.

Mainframe users, for example, never actually preferred huge computers. If they could be the size of a thimble, that'd be great. They just don't want that smallness to violate their primary concern, that being memory capacity.

So, once smaller drives improve -- and they no longer violate the primary concern -- then customers will obviously begin to distinguish based on other criteria. It doesn't actually mean that they started caring about smallness more than they used to: it's just that now, smallness is the only real differentiator.

My values didn't actually change, it's just that my primary values are now satisfied by multiple products, and thus the focus shifts to secondary values like size or speed or what have you.

 

[gerg]

Yes, good conversation.

I think actual changes in values are very rare. Rather, I think Christensen argued (and I agree, it seems logical) that secondary and tertiary concerns become more significant once primary concerns are satiated.

Mainframe users, for example, never actually preferred huge computers. If they could be the size of a thimble, that'd be great. They just don't want that smallness to violate their primary concern, that being memory capacity.

So, once smaller drives improve -- and they no longer violate the primary concern -- then customers will obviously begin to distinguish based on other criteria. It doesn't actually mean that they started caring about smallness more than they used to: it's just that now, smallness is the only real differentiator.

My values didn't actually change, it's just that my primary values are now satisfied by multiple products, and thus the focus shifts to secondary values like size or speed or what have you.

Hence the change in priorities of values I talked about earlier.

 

[Torhthelm Tídwald]

It is disrupting the once-reigning values of graphical fidelity and substituting them for the interaction between the player and the console (via the touch screen, and subsequently the two-screen layout).

The "shades of grey" with the DS regard the fact that, while it disrupts the current paradigm, it simultaneously sustains it by being more graphically advanced than the GBA, and featuring more buttons than it, too.

I think the true disruption of the DS is challenging the position of consoles as the primary video gaming device. This is especially true in Japan, but I think it will become more and more true in the US. People will begin to see gaming as something like music: most of the time you are taking it with you, except for social gatherings and such. This will have little effect on the current generation of mainstream gamers, but today's kids (who are pretty much being raised on the DS) + the next generation of handhelds with better graphics to appeal to teenagers will rock the market. In the end, you will have handhelds (the primary gaming device), consoles (the social gaming device) and PCs (the hardcore gaming device). And I really don't think that Nintendo intended any of this when designing the DS.

 

[AnimeTheme]

Nintendo set up their own internal tracking system years ago. Nintendo has a far better idea of what they sell than NPD does. And yes, SIRAS is for point-of-sale, meaning sold to customers.

http://www.siras.com/html/about/about.shtml

NPD is far more of an 'estimate' than Nintendo's internal tracking. NPD has to guess for all of WalMart, Toys R Us, among others.

So should I be surprised if the actual NPD is different, say lower than 3M?

 

[Man God]

DS can't really be considered a disruption device though considering it was a follow up to the obvious market leader, started ahead of its competition and never looked back at all.

 

[kame-sennin]

Disruption involves two parties: A 'disruptor' and a 'disruptee.' So whom or what exactly is the Nintendo DS disrupting?

The DS is a sustaining innovation, one of many, that developed from the original disruptive Gameboy (or Game & Watch, if you prefer). The DS, like its handheld predecessors, is disrupting console gaming. We can see this taking hold already in Japan. The new handheld values of portability, ease of use, and quick play time are disrupting the old market value of large screens, superior graphics, and in-depth play time.

 

[gerg]

DS can't really be considered a disruption device though considering it was a follow up to the obvious market leader, started ahead of its competition and never looked back at all.

Although, arguably, it is only so successful because it is a disruption device.

Disruption cannot be reduced solely to being more successful than the competition.

 

[kame-sennin]

Yes, good conversation.

I think actual changes in values are very rare. Rather, I think Christensen argued (and I agree, it seems logical) that secondary and tertiary concerns become more significant once primary concerns are satiated.

Mainframe users, for example, never actually preferred huge computers. If they could be the size of a thimble, that'd be great. They just don't want that smallness to violate their primary concern, that being memory capacity.

So, once smaller drives improve -- and they no longer violate the primary concern -- then customers will obviously begin to distinguish based on other criteria. It doesn't actually mean that they started caring about smallness more than they used to: it's just that now, smallness is the only real differentiator.

My values didn't actually change, it's just that my primary values are now satisfied by multiple products, and thus the focus shifts to secondary values like size or speed or what have you.

Agree 100%. Your statement, in bold, is a good correction to my previous post. Also, in case you didn't catch my edit:

I'm really glad you proposed your initial question; I think I understand disruption better now than I did this morning. Specifically, my usage of the term "good enough" was consistently incorrect throughout the debate, and I expect a source of much of the confusion. Disruptive innovations must be good enough in old market terms before they can move up market. But once they are, they disrupt old market products with sustaining improvements in new market values.

 

[eastside49er]

Nintendo set up their own internal tracking system years ago. Nintendo has a far better idea of what they sell than NPD does. And yes, SIRAS is for point-of-sale, meaning sold to customers.

http://www.siras.com/html/about/about.shtml

NPD is far more of an 'estimate' than Nintendo's internal tracking. NPD has to guess for all of WalMart, Toys R Us, among others.

I don't think NPD puts in Walmart estimates and what not, until they see what the actual numbers are from Walmart, Toys R Us, etc and if they do it is probably adjusted once they get the real numbers via quarter and fiscal year reports. Even then I'm not sure how Walmart and others factor in sections of their sales or if they just group them all into one pot?

As far as SIRAS goes, looks like another estimating tracking system to me, like NPD.

 

[eastside49er]

Hardcore numbers? Pull thy head from out thine arse.

:lol

So you think estimating is better than cold hard numbers? Please tell me you don't run a business.

 

[eastside49er]

Just stop.

Stop what? I was asking a question. He provided a link. It was pretty much what I thought it would be.

The other part of my post is a fact. The companies only care about the bottom line.

 

[Opiate]

Forgive my ignorance, I'm pretty new to sales and industry speak etc, but I've had a great time reading through this thread and the theories over Wii's success and, in spite of it, an unwillingness on the part of third party developers to develop high profile Wii content.

Not sure if it's a stupid question, but exactly who are these people who are in the drivers seat making the decision to (not) work on Wii software? I mean, really, who are they?

I keep reading comments that developers in the industry more or less feel emasculated merely by the concept of "last-gen" Wii hardware, but are these the same people who are actually the Presidents of these companies and making the executive decision to disregard Nintendo out of spite? Is bias against Nintendo really that inherent, all the way up to the top?

Surely the only question is about profit and risk?

Executive's reasons are far different, I suspect, and boil down to risk, as you suggest. Typically, large companies have an extreme aversion to untested markets. That's because there is no market research. No data, by definition. What these people want is poorly understood, and how to serve them even less so. Many publishers have even admitted this explicitly: the heads of EA, Ubisoft, and several other major publishers have described the Wii as "unpredictable." That word, in particular.

Obviously, it isn't that Wii owners actually have no pattern whatsoever to their buying habits, it's that third parties can't figure out what that pattern is, which to them is just as bad. It's not a market they're familiar with. Where they have 30 years of market research and careful, deliberate study in traditional "core" markets, they're virtually flying blind in this one.

Then, tack this problem on to another major one: that most of the major franchises third parties had to offer were already lined up for the PS3/360 well before the systems launched. Metal Gear, Final Fantasy, Grand Theft Auto, Half Life, Assassin's Creed... all of these games were scheduled for release before the Wii had sold a single unit. Consequently, the audience for these types of "blockbuster" games was already migrating towards the 360 and PS3 before any of them even came out. You could say the battle was over before it started, and that would be a reasonable argument.

Trying to convince customers to migrate away from the PS3/360 and towards the Wii would take a great deal of additional effort. It's a lot easier when the tracks are already greased for you, with the franchises already established on that platform.

 

[Dragona Akehi]

SIRAS is a serial number tracking programme. It's meant to track consoles sold and prevent fraudulent returns, repairs and whatnot. Every retailer in North America must scan the Serial Number of any Nintendo console or portable sold, or record it manually. It's probably the most accurate system currently available.

So stop being retarded, please.