Oh it's easy to explain. Steve Jobs said it best [1]. He talks about innovation at Pepsi being a new bottle. That's what Activision Blizzard is. They have a "monopoly" with their key franchises, most notably CoD and WoW. They just release a new "bottle" every 1-2 years.
Game studios are a bit like a large film studio. They don't like the creative process. It's too unpredictable. They want a formula to produce content that can be predicted, projected and tracked.
Here's another key point: everything you do as a company either adds to or subtracts from your brand value.
For example: Square Enix giving discounted subscriptions and a general mea culpa around the original FF14 release, brand value add. Blizzard adding micro-transactions to classic TBC? That's nothing more than the short-term extraction of brand value into money.
It's a bit like delivering pizza. You're trading long term car depreciation and maintenance for short-term cash.
I think you’re more explaining what happens than why it happens.
Personally I know every project or initiative I’ve pushed for is because I have a vision of how things should be. When I give up the reigns to someone else, usually they’re just doing it because they have to.
Once an organization has grown to multiple layers of management the people on top will eventually become those who are good at climbing the ladder.
How we choose our leaders is IMHO one of the most important problems we yet don’t really understand. It’s partly a function of how we structure our organizations.
Just trying to play devils advocate, im not sure it’s possible to do it differently. You simply can’t replicate true founder attitudes and mentality and choices with a management with stock options and fiduciary responsibility.
Steve Jobs seemed to be very concerned about this and spent a lot of time trying to create an innovative organisation independent of him. What have we got since him? A smart watch and ever increasing apple taxes on the App Store. And incremental improvements to the iPhone.
It’s really depressing but I’m not sure as humanity we can do better really. The entrepreneur is just someone who starts with nothing and creates something. You can only go so far in recreating that in a large organisation.
> A smart watch and ever increasing apple taxes on the App Store. And incremental improvements to the iPhone.
And Swift, and Apple Silicon, and FaceID, and HomePod (which hasn't been a massive success but is at least an attempt at something new), and a return to the Cheese Grater Pro, and massive improvements to Maps, and the perpetual autonomous driving rumors. What am I forgetting? Oh, Apple actually halved App Store rates for smaller developers, inducing the stores on other platforms to do similar. Maybe some of these were on some sort of roadmap that Jobs left behind, but not all of them could have been.
The "innovation at Apple died along with Jobs" argument is looking more and more ridiculous as more time passes and Apple continues to innovate.
And you can’t talk about the Apple Watch without talking about the other half of its wearables: Airpods, which are near-universally lauded and undoubtedly innovative.
And who was talking about wearables before Apple entered the game? Only nerds, pretty much. There is something to be said about Apple repeatedly setting trends in our society. Many will chalk it up to “Apple worship” or whatever, but I think the real answer is that Apple is one of the only tech companies who can innovate in the cultural space.
> Airpods, which are near-universally lauded and undoubtedly innovative.
Are airpods innovative? I thought wireless Bluetooth headphones have been around for ages, including ones with better (subjective) aesthetics and sound quality than airpods.
This is a sincere question. I'm not familiar enough with airpods to know if they have some novel feature, or pulled off a magic combination of marketing+quality+features that predecessors had not, like the iPhone did.
Ha I get you, I tend to have a low opinion of Apple products so I try to temper my assumptions and ask questions about the products with an open mind.
Hm, my understanding is that this combination of positives wasn't especially novel in the wireless headphone market. Was it?
As far as the design, I tend to think Apple has historically excelled at design, to the point that my favorite phones aesthetically have been shameless Samsung rip-offs of iPhone designs. But I don't see this reputation lived up to in their last few products: eg, the square Apple Watch is a lot uglier than the contemporary (at launch) round Motorola offering. And I personally find Airpods to look like hearing aids; I was recently in the market for high-quality Bluetooth headphones and the Airpods' hideousness is part of what knocked them out of the running.
Also, the size is key. Hearing aids keep getting smaller and less visible while continually improving at varying performance metrics, and airpods represent that technology starting to impact the consumer market.
GP probably meant that people pay more and more for apps. They buy more apps or more expensive apps or more people buy apps. In other words, even with rate staying the same Apple has ever increasing revenue from the App Store.
And the GP would be wrong. Apps have never been cheaper and the App Store is a prime reason. The drive to $.99 or free apps started there.
Apple's increase in services revenue is primarily due to the incredible number of Apple devices in use, as well as the increased number of services being offered now.
I’m curious about your “apps have never been cheaper” comment. Is that actually true? Does that take into account long term ownership (recurring subscriptions)?
When the App Store first launched, it wasn't unusual to find apps being sold for more than $20. That quickly dropped to where it was hard to find an app that cost more than $.99. Of course this meant that many large vendors simply didn't create or sell apps in the Store, fearing to cannibalize their products.
Now the model has shifted to subscription based apps. But even with these, there's a huge amount of free apps as well. It appears that the majority of income comes (as it does in Las Vegas) from "whales" who spend an disproportionate amount of money, primarily on games.
I’m sure we can do better, but not sure exactly how. Working with longer time periods for incentives is probably of importance. Actively nurturing creative behavior rather than just risk mitigation also. I think this is something organizations need to be aware of because it is not natural.
Also I don’t think we are at a optimization level where only the most radical types like founders are needed. It is probably enough to get out of the way of reasonably smart people. I see this in the public sector all the time.
As the company grows the types of people that are attracted and unattracted by the company change, as do those that are accepted and rejected by it. For example, risk averse people are attracted to mature companies, and they don't like risk takers.
One of the consequences is that companies become more specialized and lose deep expertise. To put it bluntly, its because they no longer have people with deep expertise, and even when they do they are ignored by management who tend to be less interested and knowledgeable about the subject matter.
I don't know of any company that has tried to prevent this. It's a general force that permeates everything, including recruiters, HR, their job postings, etc. So even companies that think they're preventing it probably still walk right into it regardless.
Of course, specialization is not necessarily good or bad. In a very competitive environment the company may not have a choice.
Why it happens is because you cannot find a genuinely creative person with the drive and motivation needed to keep pushing a juggernaut like Blizard forward who would be willing to drop their own creative vision and adopt the one of the original founders. Who knows what they'll do? When its time to eat plates of shit will they do it? It's far too much risk to put an unknown in that position.
Your only option is to send in the corporate fleet because they're predictable. Even if they've failed before they will never surprise or throw out any curve balls to investors and shareholders and that's valued far above the possibility of a new creative spark achieving something.
A large market position (not really anything related to monopoly power per se) leads companies to be very risk-averse since they can always make better gains in the short-term by incremental improvements rather than radical changes. Right up until someone disrupts the market and crushes them.
>Steve Jobs said it best. He talks about innovation at Pepsi being a new bottle. That's what Activision Blizzard is. They have a "monopoly" with their key franchises, most notably CoD and WoW. They just release a new "bottle" every 1-2 years.
Isn't this also kind of what Apple has become in the post-Steve Jobs era?
Cook is not a product leader cut from the same cloth as Steve (I mean... few are). His talent was always for supply side management. This is really significant. To secure components and manufacturing capacity for Apple's scale is no mean feat.
I would say 2 significant things have happened on Cook's watch though:
1. The Apple Watch. This certainly hasn't had the impact the iPhone had. It was also launched as a luxury product (remember the ex-Burberry CEO who drove this? The $10,000 Apple Watch edition?). It later got rebranded as a health product and there I think it has potential. The latest version can do ECGs and determine blood oxygen. IMHO there's a massive future market in passive health monitoring.
It's still a somewhat awkward user experience however in a way that never would've happened on Steve's watch. Apple's reputation for polished user experience as a whole is degrading and we may eventually get to the point of Bill Gates's legendary rant [1].
Steve also pushed back against Johnny Ives' hardline pure vision and I doubt the butterfly keyboard fiasco would've happened under Steve.
The second innovation is on the silicon front. There are two prongs to this:
1. Replacing Intel with ARM (M1); and
2. Breaking Qualcomm's "monopoly" on wireless broadband chipsets. This is still ongoing.
Apple still has a lot of inertia from Steve even after all these years. Who knows how long that will last.
Somewhat late to this discussion. But I am willing to bet Apple Watch didn't start out as some sort of innovative product. It was born as an urgent need for a product with leading edge technology. Or a need for the operation and supply chain. That is why the user experience didn't quite match the usual Apple standard and went on for a few years as path finding / soul searching.
iPhone success has its own problem. You can no longer put leading edge technology into it, because these tech dont scale to hundred million of unit per year. That is why you always see Apple being late to many tech. The only way to do that, or to help doing that, is to have a product that are sold in lower volume, higher margin, and allow them to test and innovate. Both Apple Watch and iPhone Pro ( or iPhone X ) were that. Apple Watch allowed their supply chain to test and improve OLED, LTPO, playing around with material such as ceramics, stainless steel, titanium alloy ( coming soon to iPhone Pro ), SiP ( System in Package ), Double Side Packaging, New Battery packaging, Low Power Bluetooth and WiFi and lots of other small details. They allow Apple to refine the process before they are put on iPhone, or in many cases never actually arrive on an iPhone.
The development line of the A CPUs that led to the M1 is definitely not ‘a new bottle every 1-2 years’. The M1 out-innovated Intel, Qualcomm and to a lesser extend AMD.
Apple also branched out to other categories with the Apple Watch and AirPods.
However, I'd argue the CPU change is considered a black box vertical improvement by the vast majority of end users. It's a big innovation, but it's still just an improvement to an existing product. And AirPods aren't really groundbreaking.
Apple Watch counts, but is also just a nicer version of something available to people for almost a decade, whereas the iPhone, iPad, MacBook Air, and early Macintoshes really offered something very different from anything else you could reasonably get at the time.
A modern equivalent would be, say, "just works" AR glasses, or something no one even knew they might want (faster horses vs. cars, etc.). It's a lot to ask for, but that is the reputation they're trying to maintain, and they are worth over $2 trillion.
While the nerd in me wants to agree with you, aren't all of these just great examples of deeper vertical integration?
When I started in computing most major players had their own CPU's, and over time everything converged on mostly Intel with AMD/ARM in there to mix it up. Now we see companies swinging back to the old days where each will have their own CPU's. To me its a return to vertical integration and exposes all of us to a new era of lock-in.
> They have a "monopoly" with their key franchises, most notably CoD and WoW.
I don't follow, even in the air quotes monopoly context. Could you elaborate? I thought anyone can make a game, even that specific type of game and reach a paying audience quickly if it is good. Aren't the game engines for CoD and WoW actually owned by different companies? Eg: Unreal Engine is owned by Epic/Tencent.
I guess they have a legal monopoly on their intellectual property? But I do see a lot of sloppy uses of the word monopoly that just seem to be autopilot.
There was no need for inverted commas in the GGP post. Intellectual property is precisely a government-granted monopoly under specific rules. Nobody else can make a Call of Duty game: they have a monopoly on the market for Call of Duty games.
Yeah, but having a monopoly over their own IP isn’t in any way noteworthy. I took the scare quotes to mean that they had pseudo-monopoly in the broader space (WoW -> MMORPG, CoD -> console FPS).
I’m not sure I agree with them, but stating that they have a monopoly over their own IPs is so obvious and uninteresting that I find it hard to believe that’s what they were going for.
It's interesting in the sense that as a consumer of CoD games, you're not getting any innovation from Activision. You're just getting a new bottle every couple of years. Compare that to Apple, where arguably you're not just getting a new bottle: if you're in the ecosystem, you're getting an M1, air pods, a watch, lidar on your phone, the opportunity to spend 3 figures on a "pencil", whatever. Very different approaches.
Oh it's easy to explain. Steve Jobs said it best [1]. He talks about innovation at Pepsi being a new bottle. That's what Activision Blizzard is. They have a "monopoly" with their key franchises, most notably CoD and WoW. They just release a new "bottle" every 1-2 years.
Game studios are a bit like a large film studio. They don't like the creative process. It's too unpredictable. They want a formula to produce content that can be predicted, projected and tracked.
Here's another key point: everything you do as a company either adds to or subtracts from your brand value.
For example: Square Enix giving discounted subscriptions and a general mea culpa around the original FF14 release, brand value add. Blizzard adding micro-transactions to classic TBC? That's nothing more than the short-term extraction of brand value into money.
It's a bit like delivering pizza. You're trading long term car depreciation and maintenance for short-term cash.
[1]: https://www.youtube.com/watch?v=NlBjNmXvqIM&t=2s