Just don't take stuff away from people

Alas, I never got to experience the taste of New Coke back in the eighties. And with just 12 signatures on an online petition to bring it back, it's likely I never will. As famous as the outcry against it was, the stories I read tell me that it wasn't actually an unpleasant drink: the bad taste in people's mouths had to do with their being deprived of the drink they'd loved for decades more than anything else. To quote an excellent Radiolab episode, 'loss hurts twice as much as gain feels good'. New Coke would had to have been pretty damn stunning to stand a chance.

Part of the opportunity of creating new brands, I've always thought (a new brand being, say, Tab, as opposed to a variation on an existing brand, like New Coke), is that it pretty much gives you license to put whatever random restrictions you like on a product or service, excused by 'this is a new thing. It works differently from other things, but that gives it some great benefits'.

Consider, as an example, the shopping model for furniture stores since time immemorial:

1. Customers visit the showroom, choose the items they like.
2. Delivery people show up at their homes, and, with full white-gloves treatment, install the items wherever they belong.

Now consider the IKEA shopping model:

1. Find a friend with a big heart, strong shoulders, and nothing to do on a weekend. Ideally he owns a huge car or small truck.
2. (Stop by a U-Haul if he doesn't)
3. Drive him to IKEA. Collectively pull heavy boxes from a shelf in a giant warehouse and cart them over to the checkout.
4. Lug the boxes into the vehicle, drive home, and try assemble the new furniture, from pieces, using your own tools and a cartoon that dare not use a single word of English to clarify the instructions.
5. Buy him dinner.

Now consider this: if you were a furniture retailer, already established by the time IKEA comes along, there is no way in hell that you can tell your customers that they're going to have to pick, carry and assemble their furniture themselves from now on. IKEA got away with it, and became phenomenally successful, because they were able to communicate to customers that theirs was a radically different shopping model. One that had clear drawbacks, but also great advantages. The only way you could compete with them would be to create a new brand, with the same up-front message on how the shopping model works. To do otherwise would be to lose the customers you already had. Why? Because they already associate your brand with convenience and white-gloves treatment, and you know that:

Customers don't forgive you when you take stuff away from them.

Which brings us to the Xbox One PR clusterfail. Apologists for the company will tell you that Microsoft are simply ahead of the curve on the DRM issue, and innovating their way to a solution for two very real, and very serious problems: one, the way that developers, publishers and console manufacturers have been cut out of the profits made when games are re-sold at retail, and, two, the inherent inability to prevent piracy of games where there isn't a central system verifying entitlements.

As with anything else, when there's an abundance, no-one rocks the boat: it's when resources start to get scarce that fights break out. In the gaming world, resources have been getting squeezed for years now. I could write pages on why, but I'll summarize instead:

1. Gaming has hit the mass market already. There isn't the opportunity for the kinds of exponential growth that drove profits up until around the PS2 days.
2. Gaming hardware gets a free ride on Moore's Law. Software isn't so lucky. Customers demand games that take full advantage of what the hardware can offer, which means that, just to keep up, some poor art team has to model the difference between an enemy getting shot in the stomach vs getting shot in the kneecaps (yeah, I don't like it either).
3. That art team is already the outsourced replacement for what used to be in-house development. The costs don't have much room to shrink.
4. Smartphone gaming has stolen attention from console gaming, and driven the perceived value of games way down.
5. The mid-sized developers have been dropping like flies throughout the 2000s. This gave the larger players less competition and hence room to expand in spite of the squeeze, but the corpses of former competitors are not a renewable resource.

So, kudos to Microsoft for firing the first shots in the war to reclaim profits? Well, put it this way: do you remember Qwikster? It's an eerily similar tale: Netflix could see which way the future was going (all content will be streamed, discs to become obsolete in a decade or so), and tried to get ahead of the game by going all-in with streaming, isolating the disc-based side of their business into a separate product (presumably so they could offload it to some poor sap before its money well dries up. Wouldn't you have loved to have been a fly on the wall for those negotiations?). But in blazing a trail to the future, they'd ignored the fact that the new bifurcated service would make things so much worse for their users: customers who used streaming and DVD-by-mail would now have two separate logins, on two different websites (how do you spell Qwikster again?), each of which having an independent billing configuration, and neither (presumably) would be sharing your viewing tastes with the other to make recommendations.

Fortunately, Netflix was able to pull the plug on the venture before rolling it out. The outcry was huge. And the one big message:

Customers don't forgive you when you take stuff away from them.

The real folly for Microsoft is that they knew as well as everyone else that disc-based gaming is going to be gone in a few years anyway, and had they waited just one generation for that to happen, they could have avoided alienating their entire customer base and handing Sony an easy victory.

Furthermore, they really could have had their cake and eaten it too. Suppose their E3 presser had gone like this instead: announce two products, an 'Xbox One' which competes head-on with the PS4 and maintains the status quo on DRM issues, and an 'Xbox On' which is the same hardware, minus optical drive. The Xbox On would be sold for less (and can be, since there's no optical drive in the bill of materials), and its games could be cheaper too (also without harming profits, since less value is lost through resale and piracy).

Customers get a clear choice. They can maintain the status quo if that's what they prefer (or, like many, have no choice), or they can move to the new system willingly (and, indeed, are incentivized to do so). Microsoft loses nothing. Everybody wins.

(Of course, I'm considering only the DRM issue here. Other factors, such as the live-TV-centered design and higher price point are separate mistakes).

But, it is not to be. The opening salvos in the next-gen console war have been fired, and Microsoft's shots were aimed, surprisingly, at their own feet. But maybe not so surprising: there's a clear pattern to their recent MO: force all their customers onto the same products; products which lack the variation that customers need to fit their circumstances, and for which the design priorities are aligned entirely with Microsoft's strategic interests, as opposed to the needs of their customers.

Kinda like with Windows 8. You're a desktop user? Don't want to use an interface designed for touch on your 27" display? Well too bad, we're trying to condition you to feel more familiar with our new smartphone OS.

That blinkered vision -- that customers would actually want to buy the smartphone variant of the OS whose new interface had been sapping their productivity ever since it was forced onto their desktops -- is the same kind of naïve wishful thinking as the belief that they can take away the freedoms that gamers have long enjoyed with discs. The outcry was entirely predictable; what's harder to guess is whether or not they'll capitulate.

That diem wasn't going to carpe itself

I quit my job.

Actually, that's old news: I left at the end of last year, I just hadn't been sharing many details about what's been happening with me since. Facebook's not the best forum for rambling essays, and now I have something more suitable, I feel I owe an explanation. 

I should say for the record that SCE has been a great group of companies to work for, and there are good reasons why I stayed as long as I did. I have unbounded respect and admiration for some of the people who work there but there were a couple of big factors that made me feel it was time to move on. If you'll indulge me...

The industry isn't what it was

What made me want to enter the games industry in the first place is gaming as it was when I was growing up. They say it's constraints that make creative works interesting, and for gaming of the 1980s and 1990s, I heartily agree. Commanding a small, blocky sprite around a spartan, primary-colored world required a pretty healthy imagination, something that as a young boy I was more than happy to supply.

What I saw back in the eighties

What I imagined

It was an exciting time to be a gamer; an age when hardware's modest increments in complexity opened the doors to great leaps in software's capacity for expressivity. As each new generation of gaming platform arrived, game mechanics that would previously have been impossible to implement were bringing us ever more compelling and immersive experiences. As the years rolled by, games companies inched closer and closer to delivering on-screen what previously existed only in gamers' imaginations.

But be careful what you wish for.

With the likes of, say, Commando and Out Run back in the eighties, the lack of realism provided more than enough of a gulf to separate in any gamer's mind the abstract fun of a simple game from any concerns of the horrors of war or the tragedies caused by reckless driving. But in the years since, we've done a pretty damned good job of building a bridge over that gulf, and while others presumably can defend modern games as merely enhancements of the simple concepts developed decades ago, it's an argument I can no longer swallow. Commando was a shoot-em-up. Call of Duty is a murder simulator.

What I'm seeing today

What I'm imagining

And it's not just shooting games that lose their innocence as realism is cranked up. How advanced would you like your racing game to be? Gran Turismo took a lot of flak for not allowing its vehicles to show damage, while otherwise emphasizing how real its driving simulation was. But I don't think there's an alternative here. Modeling a realistic portrayal of a driver's grizzly death in a spinning fireball of twisted metal doesn't sound like appealing entertainment (the first-person shooter crowd may disagree); yet seeing a car emerge from a head-on collision at 100mph with only superficial scratches is going to seem jarring given how faithful the game's visuals are to real life otherwise. You can't win.

I know I can't take the argument all the way and claim that all genres are ruined by increasing technical sophistication. Sports titles at least don't get grizzly, they just get dull (their ancestors relied on high-speed cartoon physics to make them fun, a trick that 8-bit graphics handily disguised but with photorealism just looks dissonant), while abstract titles like Tetris are fun whatever the implementation.

But, see, Tetris has been done already, and while I'm certain that there are great gameplay concepts still undiscovered, the industry (who can blame it?) is competing to sate the appetite of its customers. And for some time now, the demand has been for violence, the more graphic the better.

At heart, my interests lie in creativity and technology. What excited me about the games industry originally was the opportunity to play a part in shaping new technologies to bring about groundbreaking, exciting new games. But as time progressed, it seems increasingly clear to me that technical advances post the millennium have been more of a curse to gaming entertainment than a blessing, and that the kinds of games the market's now hungry for just aren't the kind that I'd be excited to make.

(But a big tip of the hat to Portal 2, one of the few games in recent years to be fun because of technical excellence, not in spite of it, and for using a first-person shooter engine in a way that didn't get third-persons violently shot).

I needed to vent my creativity

Working as a project manager for five years was a great job and left me with many treasured moments to look back on. I had hoped when I took the position that I'd have enough spare time to continue my enjoyment of coding as a hobby, but sadly it didn't work out that way.

As time went on, I missed getting my fingers dirty. I'd had a few ideas for personal projects that I wanted to work on, and the more that I missed engineering, the more it seemed like the right thing to do to take a career break and see if those projects had potential.

It's been about half a year now, and though it's taken me a little while to retrain in modern tools and languages (my previous professional experience requiring low-level C and hand-rolled assembler) and in spite of a couple of false starts, there's one concept I've been developing that's been getting a few people excited. It's early days yet, but I look forward to revealing more soon.

You know, for kids!

Microsoft supporters looking for a ray of sunshine amid the storm clouds of Windows 8’s user antipathy and Windows Phone’s trifling market share often cite the Xbox as the one example of how the company has found mass-market success in a new consumer segment. So at a time when Windows itself is under unprecedented threat, and the future of computing looks to be leaving the company behind, today’s Xbox One news from E3 is making me wonder why the company isn’t trying harder not to extinguish one of the few bright spots its future may have held.

Would it be absurd to suggest that there are forces within Microsoft who have something to gain from bringing the whole company down? Yes. But if there’s an alternative narrative that explains why Microsoft is repeating many of the mistakes that Sony made with its PS3 launch, please enlighten me. So far, the similarities are uncanny. The playbook reads something like this:

1. Lose sight of your target audience

Sony’s lofty ambition was to launch a set-top box that would be not just your games console, but a gateway to your whole connected life. In 2005, Ken Kutaragi announced to attendees of the company’s E3 press conference that the PS3 would feature two HDMI ports, three Ethernet sockets, and memory card readers for SD, Memory Stick and CompactFlash. Fortunately, much of that waste was scaled back by the time the machine launched, but the focus on non-game uses surely cost the company engineering resources that would have been better spent developing compelling games and gaming technology. More so than photo viewers, video editors and the like, I would argue.

Microsoft’s Xbox One reveal last month gained notoriety for its emphasis on being a new TV device rather than a new gaming platform. At a time when the nature of TV is fundamentally changing, it’s stupefying that the company is embracing the past of television rather than its future: nothing says anachronistic like bundling an IR blaster with a next-gen console. And nothing says that you’re ignoring your target audience like devoting the big reveal to a completely different market.

2. Get the launch price very, very wrong

Spectators rightly balked at Kutaragi-san’s suggestion that fans would want the PS3 so badly that they’d work a second job in order to afford its launch price. To remind: $499 for the basic model and $599 for a premium SKU.

That was in 2006, nearly two years before the first iPhone games hit the marketplace. In the years that passed, the established console gaming companies stood by and watched the mobile upstarts eat their lunch, leaving them just scraps of market share, and product prices eroded to the extent that trying to charge even a few dollars for a game in the highly competitive mobile space is a kiss of death. Freemium as in beermium is the new normal for mobile. Can consoles fight the trend?

The tealeaves aren’t looking good. Attendees of Nintendo’s GDC keynote in 2011 will remember Satoru Iwata’s pleading cry to developers to resist the currents of price erosion and to double-down on trying to make high-value games a compelling proposition. It was wishful thinking. Shortly after the keynote, the company watched sales of its new 3DS console fall off a cliff, and was forced to reduce its price from $249 to $169, an unprecedented six months after launch.

Their next console launch, the Wii-U, went arguably worse. At the time of writing, the machine’s been available for seven months, and Nintendo are still demanding the original $299 price point. But with weekly sales charts showing the Wii-U being outsold by the original Wii, now six years old, it’s looking like an increasingly untenable position.

The good news for Nintendo is that, at least for the 3DS, sales are looking much healthier since the price drop. So, at a time when the marketplace has never been so price-sensitive, MS are asking $499 for the One? Good luck with that.

3. Get Phil Harrison to tell customers it’s all for the best

If sabotaging one of the few divisions of Microsoft with a bright future was the aim, stealing the PS3’s launch playbook is the right way to go about it. And it’s an amusing coincidence that Phil Harrison, Sony’s apologist for the PS3 at the time of launch, is now reprising that role at Microsoft.

It’s a fanciful thought that there are forces within that company who stand to gain from bringing it all down, Hudsucker Proxy-style. But while it’s a stretch to believe that Microsoft is full of super-smart people conspiring to fail, it’s also hard to believe that it’s manned by people who are trying to succeed but are dumb enough to be responsible for their recent litany of strategic disasters, from alienating Windows users with an unfamiliar and deeply flawed Windows 8 UX, to taking advantage of gamers with the Xbox One price, focus and draconian DRM.

If The Hudsucker Proxy is a fitting analog for what’s happening behind the scenes, Phil’s an unfortunate choice of patsy. To his credit, he’s not as dumb a person as Norville Barnes was. But to Microsoft’s detriment, he’s also not as smart.