Monday, November 27, 2006

Video Games and Pissing Contests: Business Lessons Learned From Nintendo Wii

Although real life has made substantial demands on my free time, I have been an active video game player since the age of seven, when my parents purchased a Nintendo Entertainment System for my half-brother and me. I remember spending countless hours playing our NES-as it was more well known then-until my mother would force us to go outside and play. Eighteen years later, the video game industry has matured beyond what most people could probably hav ever envisioned. By today's standards, the NES was a dinosaur, more fitting to be placed in the Smithsonian than in the living room entertainment center. For some reason, though, I didn't seem to care back then. I had as much or more fun playing video games as I did any other activity.

Every new generation of game system would bring with it better visuals, better sound, larger worlds to explore and a generally better experience. I can always remember thinking to myself, "I can't believe how much more realistic the games on SystemNew look compared to the games on SystemOld." The holiday seasons in which new game systems were launched were spent with much anticipation and anxiousness. I could hardly wait for Christmas to find out what new experiences would be made possible by the new systems. It seemed like the experience just kept getting better and better and more and more fun.

Somewhere between generations three and four (it is generally accepted that the current generation is the fifth), however, I stopped having fun. I still marveled at how great the new games looked, but I didn't enjoy playing the games nearly as much as I did several generations ago. Sure, I bought an Xbox 360 during its launch last year, but have probably only played it once or twice since then. I enjoyed mutli-player gaming on the PC with large groups of friends, but I think it had more to do with the good-natured verbal sparring than it did the game. For the most part, I had mostly tired of the gaming experiences that were available at the time.

Then, earlier this year, Nintendo and Sony announced details of their upcoming systems. I was intrigued by Nintendo's Wii and its novel approach to the next generation of gaming. Instead of getting in a spec war (read pissing contest) with Sony and Microsoft, Nintendo decided to innovate in an area largely neglected by the other two: input. Since the original NES, video game controllers have remained largely unchanged and iterative. Nintendo seemingly started from scratch with the concept of input and its impact on game play. Using motion-sensing chips, the Wiimote, as it's affectionately referred to, lets users control games by more or less mimicking the motions of the desired move.

Soon after it's public debut, gamers debated whether or not the Wii would be usable or too gimmicky. Nevertheless, it got people talking. Fast forward to November mid November of this year. Sony and Nintendo release both the PlayStation 3 and Wii within days of each other. Of course, both systems are in high demand and securing a system required camping out in front of retail establishments for hours. I had decided that I would not camp out for the Wii as I had done with the Xbox 360. Luckily, however, I was able to secure a Wii a week after its launch and only had to wait for several hours in front of a Best Buy. I believe it's worth mentioning that Best Buy is handling the PS3 and Wii much better than it did the Xbox 360 and forced bundles.

It has now been approximately two weeks since I purchased my Wii. I have played it nearly every night since then. My son has played (with my help of course) and I'm sure my wife will play as soon as she's recovered from surgery. It's by far the most fun I've had playing a video game since my childhood. I haven't noticed the visuals one bit as I've been too busy admiring the experience. The Wiimote works flawlessly. I'm shocked at how realistically my bowling technique is replicated in Wii Sports Bowling. Sometimes, for just a split second or two, I forget I'm playing a video game. The experience is that good.

So, what business lessons have I learned from the Wii and why the preceding six paragraphs chronicling my gaming experiences through the years? The second question is easy. Nintendo has completely restored the fun and enjoyment I had lost from video gaming. More importantly, and to answer the first question, they didn't get into a pissing contest with their competition. As a huge supporter of Seth Godin's writings, I firmly believe in the "Purple Cow". For so many years, the video game industry has been nothing more than an arms race. Nintendo knew that it would have a hard time competing with Sony and Microsoft and decided not to try and match firepower with its two heavyweight opponents. Instead, Nintendo changed the game by innovating and changing the conversation about game consoles. Suddenly, there is more for gamers to consider than just CPU speeds and hard drive sizes in their consoles. That Nintendo could pull this off, after all but being declared dead after the last generation of consoles, is nothing short of amazing. Consider also that Nintedo is actually making money-an unheard of achievement in the console wars-on every unit they sell. Microsoft just started making money on the 360 and Sony, as has been well documented, is losing a pretty penny on each of its PS3 systems sold.

I am inspired by what Nintendo has done with the Wii. I feel obliged to look for ways to innovate in my company and to find ways to change the conversations in my industry. Apple has pulled off what I consider to be the greatest corporate comeback in big business history. Nintendo may end up giving them a run for their money with the Wii and their ingenious strategy should be the benchmark by which all others are measured. The question we should all ask ourselves concerning our businesses, our services, our products and our people is, "Do I have a slightly faster processor or do I have a Wiimote?"

Friday, November 17, 2006

Biting the Hand That Feeds

In an interview with Billboard Magazine, Universal Music Group (UMG) CEO Doug Morris claims portable digital music players are "repositories for stolen music and they all know it". This, he mused, was justification for Microsoft paying royalties for the privilege to sell its Zune device. Something here just doesn't make sense to me. The amount of "pirated" music is dwindling by the day. File sharing application use is constantly dwindling. Legal digital music sales are constantly growing. CD sales are up, despite what the record labels and the RIAA would have you believe. So, if all of this music is in fact stolen, where is it coming from and how are the record companies still making billions of dollars every year? Unfortunately for Microsoft, Morris and his cronies are still bitter about Apple outsmarting them and are taking pent up frustrations out on them. Of course, this is chump change, or something less than and more insignificant than chump change, for Microsoft. In fact, I'm sure they'll be glad to pay the royalty because it will mean their device is actually selling. Microsoft's indifference to money aside, has anyone ever openly berated their customers like this? Personally, I will refrain from purchasing any music in any format of any UMG artists or labels and I hope many others will do the same. I guess I just have a hard time buying something from someone accusing me of stealing it in the first place.