Good interview. I saw him speak at the tech forum at UAT. He is one lucky guy how things managed to fall in place for him. Read the entire interview here.
UAT: Can you explain that "something else?"
EF: Let me go back to when Sony took over [the market share]. When Sony took [the market] from Nintendo, there were two things [that they did]. One, they built a better product than Nintendo, and the main thing they actually did better than Nintendo was not a hardware thingalthough the hardware was quite good (about twice as good in performance as the Nintendo 64). What they really did well there is [that] they opened up the platform much more to the third parties, and they had greater third-party support.
The number two that they had was they switched the world from cartridges to CDs, and that actually changed the economics for all these publishers. When you had to deal with cartridgesand Nintendo was very religious about cartridgesyou had to decide long in advance before you release your product how many you were going to manufacture. And if you guessed wrong on either side, you lost. If you made too many, you're stuck with inventory; if you made too few, the reorder time was huge compared to a CD, and so you were screwednever mind that the cartridges cost a lot of money on top of that. By introducing the spinning disc, Sony really changed the business model. Those two things combined are the reason they took over, as far as I'm concerned.
So if you're going to make a [leap] again, what's that other thing you're going to do? It could be something like online distribution of content where you don't go to stores anymore [and] you download it directly to your machine. But nobody seems to be building a machine oriented around that. If you're going to do that, you need more than the 20-gigabyte hard disc. [There's] that and changing the royalty model around a console; those are probably the two "something else's" that somebody could do if they wanted to be aggressive.
Nintendo's saying that they're going to have a revolution the next time around. Nobody knowsand I've talked to everybody in the game businesswhether they really do have a revolution or not. In a way, I think that's smarter thinking than chasing what the competitors are doing. If could really introduce something that is very different and original, then at least you have a chance. If you just chase, you're always number two by definition.
UAT: When consulting, what would you advise publishers on in terms of publishing games on different systems?
EF: For Western publishers, nobody asks for my advice on that because they all feel the same way, which is fully supporting Xbox 360 and Sony's PlayStation 3. They don't really know what's going to happen in the war between the two, and they don't really care. They like fact that there are two warring platforms, and that has some benefits to them in their negotiations with each of the individual platforms. So they're going to support both and see what happens.
Nintendo I think everybody is kind of confused by right now. Publishers don't know what to think about Nintendowhether this Revolution thing is even going to happen, whether it's going to be cool or not, or whether Nintendo's just going to stop making consoles in the living room and just become a software publisher. Right now there doesn't seem to be a lot of information from Nintendo telling people what to do, so everybody's very, very wait-and-see on the Nintendo platformincluding me.
Japanese publishers are very different by publisher, so it's hard to put them all in one bucket. I think Konami is the most aggressively Western of the publishers. Many of the other Japanese publishers behave pretty similarly [and] they have similar attitudes. Many of the other publishers want something to be true that's not true, basically. They want there to be a real difference between the two platforms, so they want the audience to be different and then they like to design special games for each platform that speaks to that unique audience. But it's not true. When you go out and look at the audience who buys PS2 versus Xboxor who will buy PS3 versus Xbox 360it's competition for the same people.
Like I said, the Japanese publishers are in a very tricky position because their home market is shrinking. They know they have to go overseas [and] they have some difficulty adapting their content. (I'm just speaking really broadly, so that doesn't apply to everybody and every situation). They know [that] they have to make their content be more acceptable in the West, but the vast majority of income still comes from Japan. And in Japan, it's a one-console market: PlayStation. You'd say, "Why don't they just go and do the thing that every other publisher does, which is support both and see what happens?" It just seems so obvious. The reason is [that] they risk pissing off Sony in Japan where Sony really controls the market. They have a difficult balancing act that they have to do. They just have to placate both sides.
UAT: If there were one thing you could say to each hardware manufacturer about their new products, what would you say to each one?
EF: In the case of Sony and Microsoft, I think that I would say the same thing. It's pretty clear that the battle is not going to be so much about hardware, because the hardware is pretty similar between the two. The battle is about software, whether that's something like [Xbox] Live or games. That's where I would invest my money. But you see somewhat the opposite behavior. They've actually shrunk the first-party group somewhat since I left [Microsoft], and I believe at Sony there's actually pressure on the number of titles that they're producing as their first-party [software]. To me, if there are exclusive titles that are readily available, that could be one of the big drivers to why someone's going to buy one. So I would encourage both of them to spend more making first-party exclusive games.
In the case of Nintendo, I think they really get that. Their titles define their hardware. The Nintendo DS is outselling the PSPwhich is a vastly superior piece of hardwarebecause of a first-party software title called Nintendogs, which is very original and creative. You see stuff like that [and] it'll drive everything that the business is about. I don't think Nintendo's advice needs to be in that area.
I think Nintendo really needs to be clear with both consumers and publishers about what the Revolution iswhether it's real or notand they need to get that information out. Otherwise, there's just not going to be an opportunity for them. The stuff about, "We don't want to introduce these ideas because we're afraid people might steal them;" the PS3 and Xbox 360 are setthey can't go back and redesign that hardware. I don't even believe that argument. So either they don't have any revolutionary ideas, or for some reason they're just being really coy about it. I think they're doing a lot of damage to themselves right now by being coy about it.
I think Nintendo's always underestimated the importance of having full support from all the third parties. They were keeping the third parties down [and] Sony freed them. And yeah, they [the third parties] put out a lot of crappy stuff. That's why Nintendo was keeping them down. They were afraid that they were going to put out a lot of crappy stuffwhich is what they didbut it didn't destroy the business. If anything, it made the business stronger because they put out a lot of good stuff, too.
