Video Games and the Shaping of Industrial Transformation
Center on Japanese Economy and Business, Columbia Business School
Tuesday, February 21, 2012
Uris 301, Columbia Business School
This graph shows the transition from games played on game consoles to games played outside of game consoles. Of course, the game console market has grown tremendously , from $15 Billion in 2002 to $25 Billion in 2009. But the growth rate and scope from 2009, of games played outside of game consoles is more significant. Earlier I said that the driver of growth for the games market had, until recently, been the device. And in making the growth driver the device, players in the game console ecosystem were blindsided by two major risks. One was mistaking the game console market for the games market as a whole; there came a point where you could play games on general purpose devices, but it was hard to see how many people actually played games on those devices.
The other risk factor, and this is more important, is that the game console makers placed too much importance on the processing power of the device as a game player, and had stopped evolving their business platform a long time ago. When all devices are connected to the net, you get an explosion of new business models that you can develop, but the game console did not make fundamental changes in its business model. A single task oriented, disc-based, closed communication loop device that lacks micropayments doesn’t fit with today’s market. From here on out, the game consoles should catch up to the business platforms of other devices. If they do that, then game consoles can level the playing field.
I’ll now move onto the next phase of my talk, which is on management methods during an ecosystem’s transformation.