The Myth of the Vicious Market Circle

A vicious circle describes a sequence of events which reinforce themselves through a feedback loop. People will often claim that supply and demand for a specific product or technology fall into a vicious circle and in turn yield a stagnant marketplace, but this is a myth. This article is specifically inspired by virtual reality.

You see, my curiosity often leads me to places I don’t expect to be. The other day I found myself not only watching a Kickstarter pitch for the video game System Shock—when I don’t even play video games—but I also ended up browsing through the comments to see what people were talking about.

Since I don’t necessarily play video games, I don’t usually understand their hype, and especially have difficulty understanding their culture. However, gaming popularity and communities are both extremely fascinating to me. I’m interested to see what games are popular, and what pushes someone to support the production of a game through Kickstarter—because I think these two things may reveal clues about the future of tech in the household environment.

In the pitch for System Shock (which I must say was well filmed and put together), they mentioned that if they reach their stretch goal they’ll include virtual reality (VR). We all know virtual reality is on its way, and it’s people in these communities that I believe will be responsible for most of its development and initial popularized adoption.

As I was rummaging through the comments, one of them caught my eye which read:

“We won’t see most games produced for VR until it’s a commodity, and it won’t be a commodity until all games support VR. So we won’t get it ever. Welcome… to the desert of the real.”

I want to highlight the last part. “So we won’t get it ever. Welcome… to the desert of the real.” This kind of thinking is extremely common. It makes sense, right? We can’t demand things if there’s no supply, and there won’t be any supply if there is no demand. While this may seem right, it’s an extremely isolated point of view, one which rarely exists in reality. In the marketplace, especially with tech, the vicious circle is more likely a myth than a reality.

No market is an island itself, they’re a part of a coexisting world. It’s silly to suggest that this is the desert of the real—has our technology literally not advanced and become commoditized in the last 100 years? So many people doubted that touch screen phones would become the future because very few phone companies were producing touch screen phones nor was there much demand for it. It’s the same perceived vicious circle. But here we are, the global revenue for smartphones is over 400 billion dollars and most people you know probably use a touch screen phone.

It’s easy to convince ourselves that things won’t work out. You can think like that guy I mentioned above, who thinks we’ll never get VR or you could be the person that believes in the advancement of technology.

When you find yourself on the side of believing in the myth of the vicious circle, you end up kicking yourself in the ass when things actually work out. If you’re on that side and things don’t work out, not much happens for you and you can remain indifferent. Really, no good comes from believing in the vicious circle and doubting the future of the market.

The inverse is where you want to be. The inverse is believing in technology and making your way into the industry before it takes off. If it does work out, then you’re the one that’s on the cutting edge defining what that market looks like (and not to mention monetizing the success). Most people fear that it won’t work out, but it’s guided by misperception. If it doesn’t work out, then you’ve failed, right? Perhaps, but that’s usually not the case. If your predictions go wrong, you’ll most likely find out along the way and gain valuable insight that’ll help you switch directions or aid in your next venture.

The opposite of success isn’t failure, it’s indifference—it’s the lack of taking action.

Many people will lead you to believe the potential market for something new won’t come to fruition because it exists in a vicious circle, but very rarely does that ever occur. It’s usually safe to ignore those people. It’s really up to you to decide whether you’re going to watch it unfold or be on the side doing the unfolding.

If you’re interested in that Kickstarter that spurred this article, it can be found here.