From "Finding Nintendo's Sword by Sean Malstrom" at http://malstrom.50webs.com/sword.htm :

The Eighth Cow: “Sony will catch up because they have demonstrated core competency in market dominance of Play Station and Play Station 2.”

Even as Sony stumbles, analysts and investors think the company’s chances are good. They will base their continued optimism on Sony based primarily on Sony’s past performance with the Play Station and Play Station 2. They will say, “Sony has demonstrated core competencies. They will be back…”

This used to be said about Nintendo. And what happened was that Nintendo slipped further and further into irrelevance. Why? Because…

”Core competence, as it is used by many managers, is a dangerously inward-looking notion. Competitiveness is far more about doing what customers value than doing what you think you’re good at. And staying competitive as the basis of competition shifts necessarily requires a willingness and ability to learn new things rather than clinging hopefully to the sources of past glory. The challenge for incumbent companies is to rebuild their ships while at sea, rather than dismantling themselves plank by plank while someone else builds a new, faster boat with what they cast overboard as detritus.”

-Clayton Christensen, Page 162, “The Innovator’s Solution: Creating and Sustaining Successful Growth” (Emphasis is Dr. Christensen’s)

Values. In the end, it doesn’t come to technology, to resources, to even processes, but values. Who cares what Sony (or Microsoft) is competent in if that is not what the customers’ value? And who cares about their inward thinking of past glories? This a mistake Nintendo did as they were very competent in making some killer games, but people value consoles with vast software libraries more. Nintendo was stuck thinking of its past glories from the NES and SNES and that a new Mario or Zelda game would tilt the market their way. None of this inward thinking helped the company until it wiped the slate clean and started over.

Sony and Microsoft have been looking inward at past successes with thinking Halo 3 or Grand Theft Auto IV will magically rearrange the market to their favor. Not only did it not happen, it didn’t happen with Zelda: Ocarina of Time or Super Mario Sunshine either. It isn’t because a single software can’t turn the market around (it can, just see Super Mario Brothers, Tetris, Pokemon, or Wii Sports for that), the ugly truth is that lightning rarely strikes twice in a franchise. Only if the franchise is re-invented, such as it going 2D to 3D making it into a fundamentally different game, is it possible. This would be a radical sustaining change but a more disruptive software change would be giving a game new values based on a new technology. Warcraft 2 was lightning striking that put Blizzard on the map. Morphing the game into World of Warcraft was lightning striking again to turn Blizzard into the source of Vivendi’s profits. Entertainment hits thrive on surprise which means new values, not tweaks to old ones. Super Mario Brothers and, to a lesser extent, Super Mario Brothers 3 caused the market to go crazy. But Super Mario World became the last 2d Mario console game ever made. Super Mario Kart and Super Mario 64 could not be called ‘sequels’, but the new values they put out allowed lightning to strike again.

If Grand Theft Auto IV morphed into a MMORPG or something else, it would have created the sensation all over again if not more. But simple sustaining upgrades satisfied devoted fans, the majority are left unsurprised and find the game no longer as surprising as they once did.

This is why Nintendo cannot, and should not, make a Wii Sports 2. But by giving the, uh, ‘franchise’ new disruptive values, the sequel to Wii Sports, Wii Fit, strikes lightning again. In order for Wii Music to succeed, it must have new disruptive values within it to surprise the market.

It is common that after a hit game, the publisher creates sequel after sequel and watch the sales slowly decrease. Desperate to create a new ‘hit game’ to milk as a ‘franchise’, the publisher, through gritted teeth, occasionally publishes ‘a new IP’. Almost always, this ‘new IP’ is described to be like ‘this game’ or to be like ‘that game’.

Imagine presenting Donkey Kong to a publisher. They would ask, “What is this game like?” How can you answer? Nothing like it was made before. You might sheepishly say, “Well, there is this giant monkey who throws barrels…” and the publisher would look at you funny.

All other ‘hit’ games would have received the same reaction. “You’re saying,” said the publisher, “that this Super Mario Brothers game has a fat, mustachioed Italian plumber running through Wonder Land eating mushrooms to ‘get big’ to save a princess?” What about The Legend of Zelda? “A fantasy land where you don’t even start off with the sword? A game of non-linear exploration without guiding the player? Are you insane?” Think back to Wii Sports

The surprise hit games share a common feature: they are nothing like previous games. The business model of making one hit game to milk it into a ‘franchise’ with endless sequels needs to go. Publishers, and console manufacturers, need to stop looking inward at past glories and focus on surprising the market where people said, “Simplistic games of characters without legs? Huh? Why would someone want such garbage?” .

Agree? Disagree? Discuss.

oh god its that Malesworm guy again , i just don't know why people are religiously following him, the definition of taking the internet too seriously....

He is the only video game analyst who looks at the numbers and analyzes them in a practical, sensible way. If you know of any other analyst who is as good as Malstrom, then I am more than interested.

Anita Frazier, Michael Pachter and their ilk just make unfounded assertions to stay in the headlines, henceforth staying relevant and push the trite and old "casual vs. hardcore" meme when they are proven incorrect.

What will be interesting is how Malstrom will change his tune in the next generation if Nintendo is in 2nd or 3rd place. Will he become a detractor of the top dog or will he be a front runner who all of a sudden hails Sony or Microsoft as "disruptors" when his library of articles from 2006 were detracting them?

Malstrom is a fanboy, not an analyst. Remember that he is mostly a fanboy. Just because he knows how to convince people with his writing does not mean he's an analyst. His fanboy-ism has been shown time and time again by his stance that "Nintendo can do no wrong" and "Nintendo can do no evil".

Note that I also think Pachter is a fanboy first and an analyst second. Just because he actually is an analyst doesn't hide his anti-nintendo views. He is blinded by his fanboyism and that is why he can't see things objectively.

I agree with everything, except all of it

Every analyst and every developer as evidenced by the latest post about an Ubisoft dev calling the Wii a refurbished Gamecube is a "fanboy." If it is an unspoken truth for everyone in the industry to be biased one way or another, then the proper way to criticize them is on their arguments.

What I want are the PS3 and 360 equivalents of Malstrom.Then again, will Malstrom be singing a different tune if Nintendo is not ontop in the next generation? It will be interesting to see.

As for Pachter, I can't imagine him being a "fanboy" much less having ever picked up a video game controller. He looks like my Dad where you get a job doing one thing, get promoted to do another which you have no formal training or education in, and spend your leisure time at the golf course.

As for the industry analysts being "fanboys" just imagine how that would be received if all print journalists were divided between Liberal and Conservative ideologues. No one would trust the news. Then again, we have Fox News for the Conservatives and MSNBC and CNN for Liberals when it comes to television news. Print journalism is a different beast and the foundation of television and all news.

kool

Do you have any idea how often he has criticized Nintendo in the past year? Tu put it simply you are wrong.

At OP, this article is fairly old, and by that I think two years.

May be old, but the intellectual foundation from Clayton Christensen's The Innovator's Dilemma is older (1997) and still being employed by those on the business side of things.

Great ideas are timeless.

My reason for bringing this up was to see where commentators would take it. I am hoping it gets taken into a discussion concerning Gran Turismo 5, Call of Duty: Black Ops, Fable 3, Fallout: New Vegas, Halo: Reach, Donkey Kong Country Returns, and Gears of War 3.

All of my examples are what Malstrom would describe as the industry milking franchises via an endless number of sequels which present very little new gameplay other than updated graphics and refinement to gameplay. Personally, I can see Fable 3 changing up and revolutionizing the Fable series with a whole half of the game dedicated to ruling your kingdom.

Then again, I could be dead wrong.

No. I have no idea because I would read what he wrote a few years back. I loved what he wrote at first until I saw him praising even their mistakes as genius. I kept trying to read his articles but with a more critical view from then on until I noticed there was nothing useful there. Maybe he could have changed, but it's too late for him to gain my attention. 

On Patcher... OK, fanboy might not be the right word. But he has this doomsaying speech about nintendo that does not go away. Nintendo doing right or wrong does not matter. He seems to downplay the Wii in almost everything I see from him and seems to have this blindness towards what's happening in his views. Behaviour similar to a fanboy... but fanboy is just not the right word for him. Can someone find the right word for this?