GDC China: SOE's Greg Short On Embracing Industry Disruption

Author: by Marcelo Careaga, Staff

At a GDC China keynote, Sony Online director of platform product management Greg Short rallied for embracing industry disruption, praising the Wii and Microsoft's Achievement system for its wider effects, and showed how Sony was doing the same with its Station Exchange. Short defined disruption as a change of generation that breaks the status quo and plays an important role in the industry. What if, he asked, the industry could embrace disruption instead of fearing it? Gaming, he said, has been, and continues to be, one of the key driving factors for technology, particularly in two ways. The first, sustaining innovation occurs through relatively small steps, and innovates without changing the fundamental parameters such as changes from Intel and AMD, or PS3 and Xbox 360. The other is disruptive innovation, allowing the market to change completely. To illustrate the latter, Short broke down disruptive innovation even further. New market disruptive innovation is that which brings new customers to an existing market. A good example of this is the launch of the iPhone, which has been used its easiness of use and its trend value to attract people that never bought high-end devices before. Low end disruptive innovation, he said, is that which concentrates on a part of the market that is not addressed by the current companies, choosing the Nintendo Wii as the best example because its price has been able to find a huge consumer population very rapidly. The case of the Wii is particularly interesting, Short said, because of its combination of both types of disruptive innovation, with the company now leveraging their consolidated low end market by expanding in a situation while the competitors cannot lower prices much further. Short also praised Microsoft's Xbox 360 GamerScore as another disruptive innovation. The system allows people to compare their results to other players, and extends the replayability of the games. Games with more diversity of achievements and scoring, he said, yield better returns. The system increases the loyalty of customers, and allows for viral marketing, such as the infection-type achievements seen in Small Arms and Jet Pack Refueled. The innovation, he admitted, pushed Sony to answer back with their own system, the trophies contained in PlayStation Home. But not all innovations are industry driven, some of the best disruptive innovations come from players, as was the case, he posited, with the gold farming phenomenon. In Asia, said Short, people are more used to the idea that virtual goods have real value, and while other companies focused on ignoring or banning this behavior, Sony launched Station Exchange to control it and provide the possibility for customers to do it in a safe environment. This way, he boasted, Sony embraces the disruption and made it positive for the company. Short said that the trend towards making money out of virtual currencies and goods is probably not going to stop, so it's better for the companies to address the situation instead of fighting it unsuccessfully. Looking specifically at the world of MMOs, the last disruption has been the success of World of Warcraft in Asia, in that it doesn't simply focus on hardcore gamers, but on a larger audience, that it was designed to run in a relatively low-spec computer, and that Blizzard did extremely good work in polishing and localizing the title. But, he said, Sony sees this as an opportunity, not a threat, and is leveraging that success to focus future business on the possibilities opened recently by other companies. Short said Sony Online will be focusing on new markets -- both geographically, and demographically -- and more casual gaming, and taking advantage of the generational change in gamers, who now demand more mature titles. Short concluded by illustrating the strategy with two forthcoming SOE titles, Free Realms, which contains 75% of free-to-play content, and is directed towards a young, predominantly female audience. It's fundamentally concerned with social interaction and lots of minigames, intended to be fun and easy to play. This is contrasted with The Agency, its mature title directed towards a 30-something audience, and with a launch for PC and PS3.