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Gold Rushes
May 29th, 2009 by AlexWeldon

Recently, on the IndieGamer Forums, someone started a thread about a phenomenon familiar to many independent business owners. Small business is forever caught up in a series of gold rushes, and that’s especially true for technology-based businesses, such as computer game development.

The thread in question was mostly just a rant about how your patience can wear thin the umpteenth time a well-meaning but clueless friend seeks to persuade you that you have to get in on whatever trend the media is currently hyping. At the moment, it’s iPhone apps. The thread brought up the question of how to explain to such people that by the time you hear about it, it’s probably too late.

I came up with the following graph, which got a much stronger positive response from my fellow forum members than I’d anticipated:

Web

Of course, this graph is not based on any statistics or factual information whatsoever, only my own feelings about the way these trends progress. I had my tongue in my cheek when I drew it, but the general consensus on IndieGamer is that it’s qualitatively accurate. The trouble is with the way developer activity, customer base and media attention interrelate, and it results in the often-quoted cycle of “Innovators, Imitators and Idiots.”

At the beginning, developer activity and customer base increase together – a new technology appears on the scene, and the desire of people to use it is limited by the amount of content available, while the development of content is limited by the perceived commercial potential… which of course, depends on the number of users. The developers in this phase are the innovators, who have the foresight to guess at the future popularity of the technology.

However, developer activity has a snowball-like nature. Smart businesspeople spend a lot of time looking sideways, watching what the competition is doing. They see this burgeoning market and get on the bandwagon. This first generation of imitators is often the one to make the most money, more even than the innovators (though not always). Unfortunately, once some people start making a lot of money, the number of others trying to pile on the bandwagon increases exponentially, quickly outpacing the customer base, which tends to level out after a while.

Finally, the mainstream media’s attention is attracted. Although certain independent publications may have had their eye on the technology for a while, the general public’s attention is only drawn to the phenomenon long after it’s common knowledge to people in the business. By that point, of course, the market is oversaturated and it’s the time for the smart businesspeople to be moving on to the next big thing. Some people may still be getting rich, but getting on board at that point is more like buying lottery tickets than a reasonable business decision. The people who buy into the hype and try to get involved in a market they don’t understand at this point are, unfortunately, the “idiots” referred to before. It’s perhaps too harsh a term, since it’s a natural mistake to make, but nonetheless, these people tend to lose money more often than they make any.


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