Why consumer technologies succeed and fail

SOURCE: Mike Rowe "Death of a Video Game"

Image Source: Mike Rowe “Death of a Video Game” on Flickr

I collect full-sized arcade games. Most of my games are from the 1980s, but occasionally I’ll find something newer that I like and I’ll add it to the collection. Arguably, arcade games are a decent enough example of how forces conspire in us to choose when a consumer technology succeeds and when it fails. Of the many possible reasons, we’re going two focus on two: novelty and utility.

In the picture above, this arcade game had lost both its novelty and its utility. In the end, the only novelty it had left was to burn, and the only utility it had left to have its picture taken as part of a photo collection. The remaining pile of ashes had no significant novelty or utility to offer us.

The Dimension of Novelty

YouTube: 1983 Atari Starwars Arcade Highscore Run

YouTube: 1983 Atari Star Wars Arcade Highscore Run

If you played arcade games in the 1980s, you’re going to relate very quickly to this example.

Why was this Star Wars game so popular? It had amazing high resolution three dimensional color vector graphics. It had digitized speech from the actual characters. It was based on events in the real Star Wars movie! So it had two cool new technologies from the period, and it was still very uncommon to see an arcade game with a movie tie-in. This game had novelty written all over it, and that was a good thing. It pulled you in and got you to play it.

After that, why did you keep playing the game? The gameplay was rock solid. It was fun and it was worth the entertainment value for the $.25 or $.50 per game that you might have paid. (You might have even paid a little more for the novelty of sitting in the cockpit version of the game.) Over time, you harvested the novelty that you had discovered and the rock solid gameplay offered very little negative incentive (other than the fact that it ate quarters) for you to stop playing.

For a game as awesome as this one, and this one was awesome, why did you ever stop playing it? Sure, some of them broke down and stopped working — those Amplifone vector monitors were a pretty strange technology in their day. But really, after a while, it lost its novelty. The gameplay continued to be rock solid, but you got used to the technology and the game. It didn’t wow you like it first did. It was still Star Wars, and that’s awesome, but the magic of playing the game was mostly gone. You’d still play it, though, if it was free.

What we’re describing is the decay of novelty. It might even be tied in to the concept of hedonic adaptation. No matter how great something is, it eventually becomes stale. We need something new, we need another dose of novelty to grab our attention.

YouTube: Atari The Empire Strikes Back Arcade Game Review

YouTube: Atari The Empire Strikes Back Arcade Game Review

You better believe that Atari was already on top of this; their arcade division completely understood that novelty is a decaying resource. See the image above? It kind of looks like the previous image, but at the same time, it kind of looks different?

In 1985, Atari released a conversion kit which turned the Star Wars arcade game into Star Wars: The Empire Strikes Back. Cool new songs and all new voices! Completely different gameplay! It even introduced a bonus system. Novelty had returned and you were entertained once again.

You plugged your quarters into the machine, but not as much as you did the original Star Wars vector graphics game. You were already acclimated to the idea of a Star Wars game with music, speech, and high resolution color vector graphics. No question, it was just as much a rock-solid game as the original, but your interest died off even sooner this time. You harvested a smaller amount of novelty than the first time, and when there was little novelty left, you went on to something else.

The Dimension of Utility

Beyond the entertainment of extracting all that novelty through twitch-oriented gameplay, you probably didn’t find much usefulness in the game. That is, it probably didn’t solve any real problems in your life. Maybe you won a bet with your little brother that you could beat his high score, and he had to do dishes for a week. But that experience isn’t very unique to this particular game.

You found no utility. When novelty was gone, there wasn’t any utility to fall back on. This piece of consumer technology, once a winner, now fails.

While you may never have found any utility in the game, someone else sure did — the arcade owner. Let’s look at this from his perspective. The Star Wars game, when properly put on location and maintained, was a constant stream of quarters. It also supported the attraction of customers to his establishment. The arcade owner was totally in it for the utility.

Image Source: Arcade Otaku forum

Image Source: A arcade game coin counter at Arcade Otaku forum

While he didn’t derive any real novelty to the game, he knew that you did. As your novelty declined, the weekly collections went down, and the game was less and less helpful in drawing customers into his establishment.

He had originally paid $2300 for the Star Wars game, and after a year of being on the floor, it wasn’t worth much to him now. People weren’t going to his establishment just to find this game, and fewer and fewer people are plugging quarters into it. He reduced the price from $.50 to $.25 and that squeezed a bit more life out of it.

Another year passed. The game was old. He knew that if he invested another $900 into a kit to upgrade it to The Empire Strikes Back, the game would regain much of its utility. That’s what he did. It didn’t quite have the same attraction as the original, but it was worth the cost of a refresh.

After some time, a bit quicker than the first time around, the game lost its novelty with players (and therefore, it lost its utility with the operator). It wasn’t drawing in any customers. Perhaps it was occupying floor space that more useful games could be using. Maybe it broke. He took it off the floor and put it in the back of his warehouse.

Novelty vs. Utility

Fast forward to the year 2001. The operator decides it is time to clear his warehouse. He decides to take his Star Wars arcade game to auction. He’s lucky — the game still works. What is the game worth, to who, and why?

Source: An arcade auction by American Amusement Auctions

Source: An arcade auction by American Amusement Auctions

A vintage arcade game derives its value at auction from two sources:

1] Utility. What an operator is willing to pay for a machine that could generate revenue, draw more customers, or be used for parts. Let’s say $50.

2] Novelty. What a collector would pay to have this in his home. Often, this form of novelty is actually nostalgia, which is novelty that returns years after a significant novelty event has passed. Call it $800.

Some games (like this one), because of the age and unique technology, have high novelty and low utility. Why? It may be perceived by operators as difficult to maintain. As well, even if it had a nominal utility value, it could be far exceeded by the novelty value.

Some games (like Pac-Man) have both high utility and high novelty. They still make money for arcade game operators and they still are highly prized by collectors. Despite being one of the most common arcade games, Pac-Man (and Ms. Pac-Man) are also one of the higher priced vintage games today.

Modern games tend to have a higher utility to operators than they have novelty to collectors. Some games have neither novelty nor utility (a game like Super X). Despite being very rare, it has almost no novelty and almost no utility. In this case, uniqueness and rarity are not novelty or utility. Nobody cares. Of those games, the lucky ones are converted into a more valuable title, or they are set ablaze and have their images posted to Flickr.

Beyond Vintage Arcade Games

We can also look at the success and failure of other consumer technologies in terms of novelty and utility.

Seven years is a very long life for a first person shooter. Why has the PC version of Team Fortress 2, a game introduced in 2007, not yet failed? Valve continued to refresh the title at no additional cost, and they actively maintained the novelty. Later, they change to a free-to-play (F2P) model.  When the game went F2P, the negative incentives (specifically: a high initial cost) were reduced, so the game was able to continue to attract players new players at lower levels of novelty.

I had an interesting anecdote to share about the TF2 development process, and how a series of both positive and negative changes each managed to increase player participation. I couldn’t source an article for this, but I was reminded that what I was describing sounded similar to the Hawthorne Effect (or probably more precisely, the Novelty Effect). If both a positive stimulation and a negative simulation could increase productivity (or engagement) in the short term, perhaps novelty itself is the cause.

A posting at The Shamanic Economist suggests that novelty may be a hidden factor in sales and also in investments. (I’d be remiss if I didn’t at least make a mention of the recent $3M investment in the Virtuix Omni treadmill.) Is it time that investors, product manufacturers, sellers, and consumers directly acknowledge novelty as a (desired) product feature?

Beyond novelty, and back to the topic of Team Fortress 2, it also managed to generate a bit of utility. The Workshop allowed players to design new assets which could potentially be sold in-game. The Marketplace allowed players to buy and sell in-game items for Steam wallet credit that could be used to buy other games. TF2 maintained novelty and added utility, and that has kept Team Fortress 2 alive.

Image Source: 512 Pixels article "The Macintosh that Saved Apple"

Image Source: 512 Pixels article “The Macintosh that Saved Apple”

When I look at modern Apple products, I see don’t see a casual orchestration of novelty and utility. I see an intentional management of the two. The practice at Apple became most apparent with its iMac G3 desktop and has been easy to follow in the company’s products ever since.

Apple works hard to maintain novelty. When novelty can’t be maintained, utility holds the package together. (When both of those become weak, perhaps price becomes the key.) Does Apple owe its product management, in part, to the years that Steve Jobs spent in Atari’s arcade division?

What other consumer products come to mind that have succeeded or failed? How did they rate in terms of novelty and utility? What about the goat simulator? What would make it have long-term appeal?

How does the decay of novelty relate to for-pay downloadable game content? Do automobile manufacturers intentionally maintain a small but constant treadmill of novelty and utility enhancements in their products?

Back to the Metaverse

Image Source: Reuters pulls out of Second Life, reporter calls the game boring

Image Source: Reuters pulls out of Second Life, reporter calls the game boring

Historically, implementations of virtual worlds have focused on novelty. They offer new places to explore. Hopefully, they try to refresh their technologies. Second Life strikes me as a great example of a virtual world which is full of novelty. That’s a problem.

In order to retain users, the technology isn’t being refreshed fast enough, and the stimulus of new sights doesn’t come quick enough. If a user gets hooked, what is there to keep them around? When hedonic adaptation kicks in, the supply of new stimulation runs dry. Maybe you’ve heard someone say, “Second Life is boring“, even though there are plenty of things to do. Now you know why.

In the book The Active Consumer: Novelty and Surprise in Consumer Choice, the editor claims that not only can novelty be too low, it can also be too high. Could the shock of too much initial novelty be keeping some users away? (In the past, I’ve argued that the Second Life user interface was too complex for new users. Is this another part of the novelty problem?)

Now, it is unfair to say that Second Life is pure novelty. It has utility; a select few have found real uses inside of virtual worlds. They might design 3D models, or sell virtual goods. Some subcultures have found a place to thrive there. These people stick with Second Life because they still have utility after most of the novelty is depleted. For them, Second Life has succeeded. I should also acknowledge that novelty and utility have different thresholds for different audiences.

Perhaps in this context, we might better understand trolls and griefers. Once they have exhausted novelty, and they have no utility at risk, do these people find ways to generate their own novelty (at the expense of other users)? Can we deter casual griefers by keeping them engaged?

In Closing

In The measure of a Metaverse, I argued that virtual worlds should be judged on utility (in terms of its impact and influence and what you can actually accomplish with it). Today, I’d still make that same argument, but with a different slant. Keeping up with the hedonic treadmill for novelty may be possible, but is likely unsustainable for most virtual worlds. Once the magic fades and you’re only left with small impulses of novelty, you have to rely on utility to keep people engaged.

As you are building a new virtual world, be thinking about the amount of effort you are spending up-front on cutting edge technology and hyper-realism. At first, yes, it can pull in a lot of new users. Months and years down the road, will you be able to keep up with the decay of novelty? For how long? Look at utility and useful applications as the way to sustain your users.

Update 04/26/2014 – I came across an article on Reddit that was originally published in April 2012, before the successful Kickstarter for the Oculus Rift. Reality Crumbles: Whatever happened to VR? If you are interested, head on over and read it. I think it comes to a similar conclusion on what killed VR the first time around: the decay of novelty.

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