tag:blogger.com,1999:blog-19346366.post5397277834432490231..comments2024-03-28T21:56:51.675-04:00Comments on Face to Face: Economic lessons of video gamesagnostichttp://www.blogger.com/profile/12967177967469961883noreply@blogger.comBlogger7125tag:blogger.com,1999:blog-19346366.post-29083340474470542182009-08-07T23:46:12.007-04:002009-08-07T23:46:12.007-04:00OT, but thought you might like this:
http://www.b...OT, but thought you might like this:<br /><br />http://www.blog.sethroberts.net/2009/08/03/did-genghis-khan-read-weston-price/Chingiznoreply@blogger.comtag:blogger.com,1999:blog-19346366.post-69928270368080274152009-08-07T23:30:47.201-04:002009-08-07T23:30:47.201-04:00Obviously bad systems do not build inertia, but go...<i>Obviously bad systems do not build inertia, but good systems can build inertia that allows them to do better than if they had been released later.</i><br /><br />In other words, there is no inertia. Rather, quality drives up sales. It's a tautology that for a given level of quality, selling earlier allows you to earn more by a certain date -- though not if the selling period is the same (i.e., if you expect the console to last 5 years).<br /><br /><i>the PS2 had way more market share than the XBox or the Gamecube even though it had inferior graphics and design.</i><br /><br />But were the games more highly rated? Yes. That's all that matters when we judge whether a system is an inferior choice for consumers. Powerful processors and no games = inferior system.<br /><br /><i>The 360 is not competing directly with the Wii. The Wii appeals to casual gamers and the 360 appeals to hardcore gamers. </i><br /><br />Of course they're competitors. The so-called hardcore gamers make up roughly 1 in 100,000 people -- and Microsoft is not stupid enough to pump out tons of machines for a tiny audience of 20 and 30-something boys who make video game playing a second full-time job. <br /><br />You've reversed the "most X are Y" here -- most hardcore gamers prefer the Xbox 360 or PS3 over the Wii, but most people who prefer those systems are not hardcore gamers.agnostichttps://www.blogger.com/profile/12967177967469961883noreply@blogger.comtag:blogger.com,1999:blog-19346366.post-79487041369853285622009-08-07T23:04:09.552-04:002009-08-07T23:04:09.552-04:00Isn't the network effect exerted primarily thr...Isn't the network effect exerted primarily through forces like investment and compatibility? A network effect for a keyboard layout would be created by the user's investment in familiarity with that layout, and therefore with other keyboards with that layout the person might need to use. A driver of the network effect for an OS might be format compatibility with other systems, software and networks (embrace and extend). How does that dynamic apply to largely standalone toys?<br /><br />---<br /><br />Regarding frustrating to develop for consoles, the PS2 is *notoriously* difficult to develop for, but developers put up with it for the sake of the PS2's large user base. <br /><br />Sony's success with the PS2 occurred in the face of competition from the Dreamcast partly by virtue of the consumer's expectation that the sequel to the Saturn would sell poorly (and be bad), and the sequel to the PS1 would sell well (investment in either console was a commitment to the selection of games that was going to become available for it, in turn driven by the size of the user base). The 'first mover' advantage totally failed to materialize for Sega in the face of expectations created by the Saturn and PS1.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-19346366.post-16833864605998994622009-08-07T22:45:47.187-04:002009-08-07T22:45:47.187-04:00I think that you are looking at the lock in advant...I think that you are looking at the lock in advantage incorrectly. When a system is released first, it has the potential to build inertia. Obviously bad systems do not build inertia, but good systems can build inertia that allows them to do better than if they had been released later. <br /><br />"Or we could look at what are called generations of video game consoles -- did the first entrant win? The Super Nintendo came out years after Sega Genesis and the TurboGrafx-16. The Sega Saturn came out four months before the PlayStation but got destroyed by it. In the next generation, Sega's Dreamcast enjoyed more than a one-year lead over the PlayStation 2, and a two-year lead over Nintendo's GameCube, although it too was quickly eclipsed by both of them. "<br /><br />You're right about the Dreamcast failing. But that's because it wasn't very good and didn't use its early release to build up intertia. The PS2, however, was popular and was able to build intertia. By the end of the generation, the PS2 had way more market share than the XBox or the Gamecube even though it had inferior graphics and design. <br /><br />"In the current competition, Microsoft's Xbox 360 should have benefited from its one-year lead over the Wii, but instead it has been leapfrogged by the Wii."<br /><br />The 360 is not competing directly with the Wii. The Wii appeals to casual gamers and the 360 appeals to hardcore gamers. A better comparison can be made between the 360 and the PS3. In terms of capabilities they are almost identical, but the 360 became a huge winner because it came out earlier. <br /><br />While the PS3 has superior hardware, it's games have inferior graphics because developers design games for the 360 and then port them over. If the PS3 had released early, developers would be more balanced. <br /><br />Also, people will want to play online games with their friends. Since the 360 was released earlier, anyone considering buying the PS3 would most likely already have many friends who are regulars on Xbox Live.Alhttps://www.blogger.com/profile/17327836181389523648noreply@blogger.comtag:blogger.com,1999:blog-19346366.post-1167624304140379102009-08-07T17:30:56.366-04:002009-08-07T17:30:56.366-04:00The inferior lock-in literature always refers to t...The inferior lock-in literature always refers to the consumer side -- "Look at what we keyboard users have to put up with."<br /><br />But looking at developers, is there an actual instance of inferior lock-in? That's always the question -- not whether it could happen, since I can build models that show that anything can happen, but does it really happen.<br /><br />I don't know much about developing, but I do know of one example of a console that was supposed to be really hard or frustrating or baffling to program games for -- the Sega Saturn, and it bit the dust in the mid-1990s.agnostichttps://www.blogger.com/profile/12967177967469961883noreply@blogger.comtag:blogger.com,1999:blog-19346366.post-44493801231039105152009-08-07T17:09:28.602-04:002009-08-07T17:09:28.602-04:00"the games for the Nintendo were better than ..."the games for the Nintendo were better than for the Atari 7800"<br /><br />You are missing half of the lock-in story when you talk about games. From talking to people, I get the feeling that most people buy consoles in order to buy particular games which means that the consumer side lock-in is not going to be particularly strong.<br /><br />The developer side lock-in, however, which you completely gloss over, should be at least somewhat stronger.<br /><br />A quick look at developer lock-in suggests that there are roughly three elements that are of interest: platform quality (ease of development, machine power), platform cost (development/distribution fees, advertising help, etc.) and platform audience (current and trending).<br /><br />It is undeniable that a platform vendor can present superior platform quality and cost which more than balance out the platform audience for developers, but to say that lock-in is so small that it can be effectively ignored is nonsense.<br /><br />That lock-in exists is immediately evident from the actions that developers and platform vendors take: developers try to port their games to several platforms (although some, like the Wii make this too difficult) while vendors try to get as many tier-1 games to be exclusive as possible.<br /><br />"Imagine it: <b>no competition at all</b>, plus the first mover advantage, ..."<br /><br />Outside of commodities, perfect competition (ie: exact substitution of products) is impossible. Thankfully, partial competition works just fine - hockey has to compete against tennis, books and travel, etc.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-19346366.post-38583783583240690662009-08-07T11:35:25.488-04:002009-08-07T11:35:25.488-04:00Beta's advantages over VHS indeed were "a...Beta's advantages over VHS indeed were "alleged." While Beta (heh, what a name) may have had slightly better picture quality, that being a matter of debate, what was undeniable is that many movies would not fit on a single tape. Viewers did not like having to swap tapes partway through a movie. VHS, in contrast, could accommodate all but the longest movies on one tape.<br /><br />PeterAnonymousnoreply@blogger.com