Chasing trends is a losing proposition.
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According to EY, 99% of CEOs are planning to invest in GenAI in the coming year.
The scene that is unfolding in front of us is reminiscent of the dotcom goldrush which ultimately led to a string of success stories and the bustling e-commerce economy we enjoy of today.
It also gave us a number of iconic flops such as Pets.com and Webvan which will forever serve as testament to the heights our tech-fueled hubris can take us.
Given how history has a habit of repeating itself, I doubt that the AI boom will be much different in its outcomes.
If you are keen on staying on the winning side of the AI arms-race, remember that the main lesson the past has taught us is that chasing trends never works out.
In fact, we have a wealth of contemporary examples of how inauthentic pivots and unsubstantiated design shifts often spell disaster instead of ROI.
Electronic arts office at 3 Place Ville-Marie
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How EA Lost Its Way By Chasing The Live Service Trend
The video games industry has held on to the crown as the highest-grossing entertainment industry for quite some time.
Apart from mobile gaming, the bulk of the industry’s revenues accrue from ‘live service’ multiplayer games such as Fortnite, which raked in $6 billion in 2022 and GTA V which has generated more than $8 billion since it was released in 2013.
Live service successes are few and far between, but each example embodies the ‘build once, cash in for a decade’ concept which companies like EA have found irresistible.
In anticipation of EA’s move from single-player experience to more bankable multiplayer games, the company’s former president Frank Gibeau went so far as to claim that single player games is ‘finished‘ as a model. However, what EA would soon discover is that chasing trends is a horribly risky way to do business.
Anthem, EA’s ambitious live-service game that launched to disastrous reviews in 2019, is a stark reminder of how far even the largest companies can fall when they do not stay true to their original vision and mission.
In addition to a slew of technical issues that plagued the game, Anthem’s failure can be attributed to poor decision-making in pursuit of a lucrative trend.
For reasons that are hard to understand even in hindsight, development of the game was assigned to Bioware, a studio renowned for its deep single-player experiences. The consumer base sensed the insincerity of the pivot, and the poor quality of the game was reflective of a grander malaise that strikes companies with a long heritage after being bent and contorted to unnatural market positions.
In their desire to bank on the live-service trend, EA managed to clip the creative wings from Bioware’s staff while also jettisoning any sense of artistic authenticity the product might have otherwise had.
The lesson for CEOs looking to integrate AI into their offerings is simple: never jeopardize your company’s vision or its heritage in order to check a box for investors or shareholders.
How Ubisoft Embarrassed Itself With A Greedy And Mistaken Pivot to NFTs
Staying on the topic of video games, the next cautionary tale of chasing trends comes from Ubisoft, the French gaming industry giant with an approximate 8% market share in Europe and North America.
Non-Fungible Tokens, or NFTs, came into prominence in 2020 when the mainstream market poured millions upon millions into these blockchain-powered digital images. The NFT crash and burn was a violent ride and wonderful example of the madness of the markets.
As the bottom continues to drop from underneath the NFT industry even celebrities like Justin Bieber have seen 95% of their ‘investments’ melt away within the course of barely two years. But for a time, there seemed only to be upside to be had, and that upside attracted hobbyist investors and major conglomerates like.
When the NFT market was close to its peak in 2021, Ubisoft decided it too should have its share of the returns. Enter Ubisoft Quartz; an ambitious initiative that aimed to turn in-game collectible items into NFTs.
While the initiative launched with great fanfare, only a few months later Ars Techinca would call the initiative out as the dumpster fire it would ultimately turn out to be. Other NFT and blockchain based investments, such as Project Q, would soon be cancelled entirely.
While the NFT and blockchain ecosystem faced hurdles that Ubisoft did not anticipate, the real reason behind the failure was a deep misunderstanding of the company’s client base.
At no point had any consumer demand for NFT-infused games manifested itself; a fact that was clear to anyone keeping even a cursory eye on the industry. On the contrary, the customer base aggressively rallied against attempts at driving NFTs and other artificial monetization methods deeper into the industry.
Ubisoft now calls its embarrassing foray into NFTs as being ‘in research mode‘, but the real motivation behind the pivot was opportunistic greed, pure and simple.
The lesson for CEOs looking to invest in AI is clear. Whatever you do and however you tweak your product offering, always make sure you are in service of your customer. Never jump on a trend simply because you can and could profit from doing so and definitely don’t think your clients beneath seeing your motivations for what they truly are.
Netflix years after its successful pivot
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Look At Netflix’s 2007 Pivot For The Right Way to Implement AI
There are as many correct ways to invest in AI as there are companies in existence today.
However, when it comes to successfully pivoting to new technologies with authenticity and impact, we can all learn from Netflix’s examples.
The company that began as a humble mail-in DVD rental service in 1997 came to dominate streaming by boldly reinventing their business model and attaching it to a nascent technology that had more promise than examples of past performance.
Netflix’s decision in 2007 to ‘deliver movies to the PC‘ would transform the company as much as it would the way we all consume entertainment today. Although luck and serendipity surely played their role in making the pivot work, the main driver of success I see is Netflix’s consistency with its mission.
At no point did Netflix jettison its prior beliefs or consumer-facing promises by moving to online streaming. In fact, the adoption of streaming technology doubled down on Netflix’s central promises of ease, convenience and consumer choice.
The fact that Netflix mailed its final DVD envelope in September 2023 speaks volumes to its commitment to its clients. It is this kind of commitment and authenticity that CEOs must strive for if they wish to come on top in the AI race as well.
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Eugen Boglaru is an AI aficionado covering the fascinating and rapidly advancing field of Artificial Intelligence. From machine learning breakthroughs to ethical considerations, Eugen provides readers with a deep dive into the world of AI, demystifying complex concepts and exploring the transformative impact of intelligent technologies.
