The Business, Strategy & Intellectual Property

Last time I focused on the growing pains of a one-project, one-product company. Other scenarios have different considerations.

A company with a portfolio of projects is less reliant on the success of any one of them in order to achieve overall success. It may be acceptable for some projects in the portfolio to operate in a way that is not sustainable in isolation if the ensuing losses are offset by gains across the rest of the portfolio.

Apple have a product ecosystem comprised of laptop computers, watches, phones, audio equipment (and more), with each contributing to confidence (or brand equity) in each product as well as in Apple. There is not only a single Apple phone but a family of them, and these family members are refreshed over time. What started with The iPhone was succeeded year on year to today, where there is more differentiation than ever. We now have the iPhone 17, the iPhone Air, the iPhone 17 Pro, and the iPhone 17 Pro Max in a single calendar year.

Focusing more closely on software, Nintendo has a similar dynamic with a large and ever-growing catalogue of digital products that belong to various franchises, which we may be tempted to think of as distinct product lines, e.g. Mario, Zelda, and Metroid among others. Once a certain level of success has been achieved these intellectual properties can be diversified across many different kinds of digital games, but also media beyond games. This capacity to exploit intellectual property to grow confidence while venturing into new media is a differentiator between digital games and most other software, and it is consequential enough that we should reconsider our big picture. If we consider the big picture as a hierarchal structure we would have The Business before The Intellectual Property which would be before one or more Projects before everything else downstream.

In the commercial domain of digital games today there is a increasingly a focus on growing an audience for intellectual property as opposed to a particular project. This may be through several highly similar software projects, such as in franchises such as NBA 2K or Grand Theft Auto, or through a family of related projects that achieve meaningful differentiation in user experience such as with the Mario property - Super Mario, Mario Kart, Mario Party, Mario Tennis, and so on, where the demand for Mario Tennis is not necessarily cannibalised by the supply of Mario Kart. A relationship is nurtured between the customer and the intellectual property that ideally expands beyond software to other kinds of products such as clothing, soundtracks, concerts, movies, keychains, theme parks, and so on.

Online multiplayer games are similar in a number of respects to software platforms outside of gaming. Arguably the most important similarity is that an experience is provided at a price that is misaligned with its ongoing costs. In online games with a primary monetisation model of a one-time fee for access, a norm has evolved where obsolescence is planned a couple of years from a product launch. In many such cases a sequel is released a short time before the sunset period, creating something of a content treadmill. NBA 2K follows this pattern. Other games monetise through other means that reliably deliver revenue over a longer timescale and continue for many years without a follow-up release. Grand Theft Auto had tremendous success with this approach. Whether over the lifespan of a single project or several of them, these intellectual properties scale their audience by continuing to create and deliver sufficiently differentiated content that has broad appeal. In contrast, non-game software platforms tend to be aggregators for content created by other parties and scale their audiences with volume of relevant content and efficiency of access.

There's an elephant in the room. Businesses, intellectual properties and projects don't exist in a vacuum. They co-exist alongside other businesses that have their own intellectual properties and projects, and sometimes business decisions are made in direct response to the actions of other companies. This is not entirely untrodden ground as it relates to the previously covered topics of the digital supply chain and the division of labour as they relate to digital factories, but the influence of markets on projects will introduce some new food for thought.

Until next time.