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Console makers may have a case of innovator's dilemma

Console makers may have a case of innovator's dilemma Exclusive

January 17, 2013 | By Brandon Sheffield

January 17, 2013 | By Brandon Sheffield
More: Social/Online, Smartphone/Tablet, Business/Marketing, Exclusive

Disruption is a term bandied about by marketing types -- especially in the San Francisco Bay Area -- without much meaning behind it, aside from its usefulness as a buzzword. But Ben Cousins, founder of Ngmoco Sweden and former general manager at EA, says true disruption has come, in the form of mobile games upseating the console behemoths.

"What we're seeing with mobile is actual classically described -- from an academic point of view -- as bottom up disruption." he says. "[That's] where something comes into the market which is worse, but it's cheaper and more convenient; it serves the same purpose, and people just drop down to it and then they ride it up, and then they drop down to something else and they ride that up."

The big three console makers are all planning (or in Nintendo's case have already released) new high end offerings. But what value does this have when game time is migrating so heavily to mobile? Every one of these companies has spoken about how they want to capitalize on mobile, free-to-play, and social integration. But can they?

"Research [from The Innovator's Dilemma by Clayton Christensen] tells you that these companies might know what to do, but they can't do it; they literally cannot," Cousins says.

"It's almost impossible to get the organization to change away from being one which creates Cell processors and enormous boxes with fans on them that draw 300 watts of power, and create these high-end games with these high-end developers," he adds. "This whole kind of value structure is built around that, and it's just not possible for them to transform even if the guys at the top of the company know exactly what to do."

So what, then, is the future of game consoles, if they can't adapt? "I think there's a good chance we will see one of those companies suffer what Digital Equipment Corporation, DEC, who made mainframe computers suffered, where they just completely failed to get onto the PC market and just sunk into nothing," he cautions.

"It's going to be very interesting to watch, and I still can't really predict what will happen. Whether one of these consoles will come out of the gate disappointing, like the PS Vita for example, or whether we will see this gradual decline during the lifetime of the consoles, as something like an iPad or an iPhone catches up with them. I don't yet know..."

Right now, companies like Microsoft and Sony are sustaining, rather than growing. Cousins thinks this is an ill omen. "I mean there's this old thing where people say that the bottom of an exponential curve looks flat, right? You see, and that happens for declines as well as increases," he says.

"Something will fall off the cliff at some point. I don't know what that's going to be and I wouldn't ever -- like the talk I did at GDC about the consoles dying -- I never made a prediction of when it was going to happen; my only prediction was what was going to replace it. And I've got no idea what's going to happen, but something very, very dramatic and interesting is going to happen in the next few years."

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