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Video Killed the Radio Star

TV is killing the movies.

Home taping is killing music. Filesharing is killing music. MP3s are killing music.

E-commerce is killing retail. E-books are killing publishing.

Everything new is killing something old. It’s the way we’re conditioned to think. Darwinism. Nature, red in tooth and claw. Predatory executives quoting Sun Tzu, gladiators in suits. When they’re up, they’re lions, roaring and magnificent. When they’re down, they’re gazelles, swift or dead. Or whiny.

“It’s not fair!” they wail, although they couch the whine in terms like “killing the industry,” “economically unsustainable,” and “force for instability.” But what they’re really saying is “It’s not fair!” just like anyone else aged three through sixteen who suddenly realizes that life doesn’t always have to go their way.

At the Game Developers’ Conference earlier this month, Nintento chief Satoru Iwata urged game developers to ignore smartphones. Smartphone games are killing the game industry. They’re too cheap to be economically sustainable. They’re too cheap to be any good. People are buying too many of them with money they should be spending on Nintendo products. It’s not fair.

It’s the old story. Whenever something new comes up to challenge a large and established industry, we hear the same howls of anguish.  But the howlers are not in fear of their lives – or the lives of their industries – they’re in fear of change. Change is hard, as any therapist will tell you, and it’s impossible without will. How many therapists does it take to change a light bulb? It doesn’t matter unless the light bulb really wants to change.

The music industry has survived home taping, filesharing, and e-commerce. The Day The Music Died was never. But it was shaken up all the way through, from the label execs to the record stores. Musicians can now reach their audience directly without going through middlemen – although the middlemen still come in handy for their expertise in promoting artists, bankrolling tours, and the like.

The publishing industry is confronting the same dilemma right now. The author Barry Eisler explains on his blog why he walked away from a half-million dollar advance on a book – because he reckons he can do better through self-publishing. I’ve read his argument, and I have to admit it kind of makes sense. Enough sense for me to walk away from a half-mil advance? Offer me one and we’ll find out.

In giving his take on the shifts coming up from POD, e-readers, and the like, Eisler quoted the example of the railroads in the USA when the Interstate highway system was established. They thought they were in the railroad business, and they thought they were safe because they were the railroad business. No one could offer a better railroad service. But actually, they were in the transportation business, and other modes of transportation – first the Interstates and then the growing postwar airlines – offered passengers a better transportation service.

But let’s get back to Nintendo and The Great Smartphone Scare.

The market and a little time will sort out those games that are truly low quality and economically unsustainable (though “economically unsustainable” is often big-company code for “won’t make nearly enough money to sustain our company in the manner to which it has been accustomed”). But there will be survivors, and the paradigm will shift. Companies who are too invested in the prior paradigm to be able to shift along with it are in for a rough time.
Nintendo has been around long enough to have become a little set in its ways commercially, despite the technical innovation that drives it. It happens. Years and decades of refining your business technique to become the perfect shark in your area of your industry, and it can be tough to maintain the split-focus you need when something shakes it up. Smartphones have done just that. They could kill the DS stone dead, and although you hear more about the Wii (perhaps because smartphones have already begun to drag attention away from game-only handhelds – when’s the last time the PSP made any headlines?) the DS is one of Nintendo’s two core platforms. That’s got to hurt.

Nintendo needs to make a decision about the handheld/mobile market. Up till now, it’s been in the device business as well as the game business, selling the platform, making games, and exercising absolute control over third-party developers. If it wants to keep doing what it’s doing with the DS, then the DS needs to compete head to head with the smartphones – which means, Nintendo needs to get into the smartphone business. I’m no industry expert, but to me that looks like several billion dollars’ worth of scary. Could Nintendo turn the next-generation DS into an iPhone killer? An Android killer? Could it go toe to toe with Nokia, Motorola, and Apple to get its new smartphone out there in sufficient numbers to create a viable market for its games and apps? Imagine if Nokia or Motorola suddenly announced a new game console and gleefully predicted it would kill the Xbox, the PS3, and the Wii. Very long odds. Would a DS phone be a Wind from Heaven or a kamikaze? There’s only one way to find out.

After the Dreamcast failed, Sega got out of the console business and focused on the game business.  They’re still around a decade later, and doing very nicely, thank you. Discontinuing the DS would be painful, there’s no doubt of that, but letting it stagger on until smartphones finally kill it off would probably be worse. And with the installed base offered by the iPhone and Android platforms alone, Mario and friends would have new lands to conquer.

I know what I would do, although I’m realistic about the chances of finding Iwata-san on Line One asking my advice.

  1. March 24, 2011 at 4:39 am

    Nice article.
    Of course Nokia did try to get into the games industry about 8 years ago with it’s N-Gage. OK so not the hime console market, rather trying to compete with GameBoy Advance and PSP, to the point where it wasn’t that great at being a phone (like holding a pizza slice to your head when making calls!)
    Can’t help feeling if these smartphone games weren’t worth it, people wouldn’t buy them. Or perhaps it’s just that they’re so easy to buy thanks to digital download distribution. Maybe Nintendo need to concentrate on improving that experience on WiiWare and DSiWare?

  1. June 9, 2012 at 10:49 am
  2. March 18, 2015 at 8:10 am

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