The third man stimulates innovation and extinction

For the past few years, I have been following gaming industry news: mostly news about Nintendo, Sony, and Microsoft—the Big Three that rule the gaming platform with their Wii, PlayStation 3, and XBOX 360, respectively. I thought I was following their news because of the technologies and innovations involved: What is the alternative for Wii’s motion control scheme and what is the next big thing?

But back when there were only Nintendo and Sony, I didn’t care about the gaming industry at all. It was only after Microsoft entered the picture that I started reading gaming news coverage on daily basis. What happened? (1) more stimulating news came out because of accelerated innovations, and (2) a survival game touch was added to the competition.

The third person stimulates innovations

When two companies rule an industry, they are in a safe equilibrium. There are tensions between them, but the structure of that microcosm is fundamentally stable. Innovations or changes occur in one dimension (do something faster or cheaper than the opponent) or two dimensions (do the opposite of the opponent). In a word, they are predictable. When a third player joins, innovation goes wild because the newcomer cannot survive by playing according to the existing rules.

When Microsoft and Apple dominated the computer industry, we did not know who will ultimately win, but we never questioned that a computer is a black box ruled by the OS. But then Google stepped into the computer industry and they introduced us with a new idea: the black box can exist somewhere (in a remote server), channeled by the browser. They started introducing Google Mail, Map, Calendar, and even office applications, all online. Google did so because they were great at building web applications, but also because they couldn’t compete with the BIG 2 on their turf.

In the gaming industry, if Microsoft did not join the console war, Nintendo and Sony would have played the clock speed race forever: trying to build faster but affordable gaming machines while alienating common people. But Nintendo saw that the market was getting too crowded, and decided to create a new market based on motion control. And here we are getting a daily dose of technical innovations, from motion controlling to glassless 3D to controller-less controlling.

The third person ignites a survival game

If we are perfectly happy with having three players in general, our lives will be much more peaceful (and boring). But in many cases “two” is the optimal number, like in our personal relationships. A perfect couple has its Good and Bad but is fundamentally stable (and boring, at least from the outsider’s point of view). It is when the Ugly—the third person—enters the picture, things get dramatic. We know it won’t last long, and someone must exit the stage sooner or later.

Maybe dualism is embedded in our mind, especially as an audience. For the parties concerned, the world might be big enough to accept many rooms. But as bystanders, we might always be looking for things to “settle down” into two: man and woman, heaven and hell, the hero and the villain, ying and yang.

I have applied the “two as the optimum number” theory to check my motivation for following the gaming news, and found out that there is a hidden agenda behind the ear-pleasing innovation-following: I want to know who gets booted/butchered. Is this how people feel when they watch bullfighting in Spain to enjoy the “elegant movement of the fighters”?

* An example of an industry with only two players is large-scale airplane manufacturing. I have a hunch that as long as there are only Boeing and Airbus, we might keep having faster or more comfortable airplanes, but we might never have a new transportation system that solves our imminent and largest problem: reliance on fossil fuels. It requires an out-of-the-box innovation rather than straightforward competition