Posted by Tom Grant on July 28, 2008
The most mature part of the technology industry may be the console and PC game vendors, who pitch their wares at the least mature audience. These companies matured the hard way, by surviving not just technology challenges, but having to master business techniques that many other technology companies have yet to learn. Here are a few examples:
- Channels. Game companies like Electronic Arts and Blizzard would never have survived and prospered if they hadn't mastered the retail channel. With a shelf-life of several weeks, every computer game had to hit the retail channel at the right time, with the right amount of copies, to succeed. Game vendors also had to maintain these channel relationships, even when there wasn't a lot of new product in the pipeline.
- Partners. Game vendors learned long ago how to make partnerships work. Small development firms, such as Dice or Relic, need to find big partners like Sega and EA to package and distribute their products. When it didn't make sense to invent new technologies, such as 3-D gaming engines, from scratch, they had to work out licensing agreements.
- Quality. The average console and PC game has fewer bugs than enterprise software costing hundreds or thousands of times more, per copy. If you buy a buggy XBox 360 game for $50, you can always take it back a few days later to Best Buy or GameStop. If you buy a $500,000 ERP system, you won't know all the showstopper bugs until you're well into the implementation.
- Innovation. The most successful game vendors were not always the ones to come out with a new technology or a new idea first. In fact, LucasArts did a great job of being the second through the door, having learned from the first competitor to build a
- Time to market. Having mastered these other techniques, successful game vendors can control their production schedules, instead of having the schedule control them. Blizzard has shown how a smart company can avoid making firm commitments about release dates until it's clear that the game is ready to go to market. Other vendors have waited too long, such as the Battlecruiser 3000 debacle, or rushed unready products to market, such as the bug-riddled Knights of the Old Republic II.
Sure, game vendors make mistakes. Many of them look worse than they really are, however. For example, the vast majority of "tie-in" games, based on popular movies and TV shows, stink on ice. However, in an industry where shelf-life is short, a small company can still make amoney on a licensed game, since the game will be off the shelves almost as soon as the negative reviews are published. Cynical, yes, but hey, it's business.
Other technology companies might learn a lot from the game industry. They may also ponder how much good it did for the game vendors to work under constraints like the retail channel. While everyone wants to be masters of their own destiny, sometimes you can learn a lot more valuable lessons with less freedom of action. To use a musical analogy, you learn to play scales before you improvise, not the other way around.