Different kinds of innovations

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The challenge of measuring diversity has been tackled by Benhamou and Peltier (2007) using three different diversity measures in their study on the French publishing industry between 1990 and 2003. First, variety was measured by the number of titles published. Second, balance was measured in the distribution of sales among different titles. Third, disparity was measured by how much the products differed from each other regarding their content. The conclusion was that diversity measured by variety has increased, but when the measures of balance and disparity are used diversity seems to have decreased.

Despite its shortcomings, the research on the relationship of industry concentration and product diversity offers a useful building block for considerations of industry evolution in the cultural and creative domain. Eras of low and high degree of diversity at the first glance correspond to the eras of ferment and of incremental innovation. However, early motion pictures as well as early video games were rudimentary and homogenous. Motion pictures were initially sold as commodities and the first video games were similar Pong clones. The diversity of the product content took years to develop. Some sort of industry maturation was required for more culturally diverse products to emerge. It may well be that a degree of technological evolution and the development of dominant technological solutions enabled growth in content diversity. The open system model of cultural production increases diversity while associated powerful gatekeepers have the power to decrease it.

However, horizontal differentiation and diversity in tastes create the requirement for cultural diversity in products just as the artists have the inherent drive to be original. Ultimately the question is whether the innovations produced in the cultural and creative domain can be classified into radical and incremental or competence-destroying and competence-enhancing ones. Technological innovations, such as the introductions of film projector, home computer and compact disk, are relatively easily classified. Innovations in content, i.e. new symbols, characters and styles, are far harder to fit into the conceptual frame of industry life-cycle model.

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the evolution of creative and cultural industries cannot be explained solely through technological innovations, but the analysis should be broadened to aesthetic and stylistic innovations. However, Tchmuck‘s (2003) work does not help us much in this respect as his analysis of innovations within the music industry is limited to technological innovations. In Mezias and Kuperman‘s (2001) work on the film industry two major changes in product are mentioned. The shift from kinetoscope to projectors created the opportunity to serve larger audiences and the shift from short films to features enabled continuous consumer interest. Restricting the concept of innovation to such technical advances fails to fully appreciate the value of the cultural product, its demand and production process. Concentrating on equipment or film length is rather simplistic.

The solutions to this shortcoming are scarce, but the work of Cappetta et al. (2006) on stylistic innovation within the fashion industry is usable. In their framework firms face periods of ferment and periods of convergence. During the former many stylistic variations are present, whereas during the latter offerings converge to a single trend which corresponds to the dominant design of the industry life-cycle literature. They argue that even though fashion firms offer differentiated products there is convergence to an underlying trend that communicates different intangible meanings. Instead of technological compatibility there is social and aesthetic compatibility. In their empirical study Cappetta et al. (2006) find that there are periods of ferment during which more new styles are introduced compared to the periods of incremental change. During periods of ferment entrants are also more innovative than incumbents and during periods of incremental change the incumbents are more innovative. However, they find that incumbents still outperform entrants in both kinds of periods. They hypothesise that this is due to the strengths of the established brands to create popularity for new designs independent of the phase of the cycle. Cappetta et al. (2006) emphasise that in the fashion industry the designs converge to a trend, while in technological innovations one variant dominates. However, they also point out that stylistic and technological innovation may reinforce each other. New materials and developments in the production system broaden the possibilities for creating new styles.

The idea of new genres as innovations has reached a noticeable level of popularity in the creative and cultural domain. This conceptualisation has been followed by Peterson and Anand (2004) concerning the music industry and Perretti and Negro (2007) concerning the film industry. Most importantly, the idea of genres as dominant designs in video games has been put forward by Tschang (2007). In earlier work Tschang and Szczypula (2006) concluded that evolution in the game software industry is unbounded as there are no dominant designs. Later on, however, he took the stance that game genres, such as first-person shooter or real-time strategy, define dominant designs of game content. New genres are radical innovations whereas games that extend a genre are incremental innovations. He mentioned the following genres as established dominant designs:

adventure, first-person shooter, role-playing, simulation, strategy, real-time strategy, music, MMORPG and virtual life. Furthermore, Tschang (2007) came to the conclusion that game development is a mature industry since no new dominant designs have emerged in recent years. The latest one of these, namely the artificial life genre, was brought to the market in 2000.

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In addition, the emergence of large publishers, the importance of established IP and growing project and team size are mentioned as signs of industry maturity. Firms concentrate on well-established genres to avoid uncertainty. As a further indicator of industry maturity Tschang (2007) mentions that in 2002 of the top 20 publishers‘ titles only 25% were based on original IP. This begs the question whether 25% is a little or a lot in this situation. A quarter of products having never before seen unique characteristics is unthinkable in mature manufacturing sectors, such as automobiles, televisions or computers. Another debatable logic in Tschang‘s (2007) paper is that of the rationale for innovation. Tschang states that game developers innovate to test the innovativeness of a design, to make a name for themselves beyond subcontractor status or to satisfy the inner yearning of game designers to create novelty. This misses the economic reality as some firms may choose to innovate simply to stay in business. A good example of this is Miller and Shamsie‘s (1999) study on film genres by major Hollywood film studios between 1936 and 1965. It shows that declining demand encouraged firms to offer greater variety and broader distribution. Shrinking demand induced experimentation whereas healthy levels of demand allowed the firms to continue without changes.

On the other hand, when firms did not get awards and when costs went up variety was reduced.

Research on innovations within cultural and creative industries has so far concentrated on technological innovations. The study by Cappetta et al. (2006) on stylistic innovation is an important step towards understanding other than technological innovation in this context.

Furthermore, Cappetta et al. (2006) call for research on the complementarities between stylistic and technological innovation which they identify as a theme that is so far underdeveloped in the literature. It appears that in cultural and creative industries innovations should be classified into stylistic/aesthetic and technological, in addition to incremental and radical or competence- enhancing and competence-destroying, to analyse industry evolution.

Genres have been suggested as the concept corresponding to dominant designs in cultural and creative industries. This conceptualisation, however, has its shortcomings. Dominant designs are selected from a competing population and there is a limited number of them present at the same time. As a new genre emerges the competitive situation is not so clear as the new genre does not need to replace existing genres but attract enough demand to co-exist with previous ones. Thus the number of genres existing at the same time is not limited to the same degree as is the case with dominant designs. Furthermore, the limits of genres are more fluid than those of dominant designs.

Films, music recordings, novels and games are often classified under several genres and different sources may classify them differently. With technological solutions there are rarely differences of opinion on which dominant design the solutions corresponds to. New genres may well serve as major stylistic innovations, but attention should not be limited solely to these.

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