David Rosenthal: belief

Transcript context

…If Nintendo was acquiring the games, then it would be pure play scale economies, but they're not. They're convincing developers to build on their system. Yes, but there is a strong component of scale economies here, too. I think you're onto something that these are linked because it's all about the hardware R&D cycle, because you have to invest an enormous fixed cost of both money for everybody now, but at first, for Nintendo's time, in developing a superior hardware platform. That is a scale economy advantage. That directly links to the network economy of, because you can have that scale economy advantage on the hardware platform, then you can get the network economy effect going of consumers and developers. Interestingly enough, Nintendo historically hasn't done a great job of leveraging a large install base to advantage them with the next platform. We'll talk about this next episode. Their success in the N64 did not carry through to the next generation with GameCube. They were starting from zero again.…

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