I think you've pretty much put you're finger on the biggest issue with modern karate, albeit somewhat unconsciously, I'm guessing. They have plenty of talent but each organization is so splintered that it leads to twenty different rule sets with 100 plus different organizations.
I don't know if they want to fix the problem to be honest; but if they do they need to establish two rule sets. One for the serious (full-contact) and one for the weekend warrior types. (point based continuous, light/medium contact) The point based competition should be solely based on referee discretion on when to start and stop.
Now I know each and every club/school has their idea of what's the perfect rule set but to have a good sized competition population everyone needs to work together.
I like Karate, it holds a nice little niche in my heart, but even in the disgustingly splintered world of martial arts it's in a league of its own. Unified rules would send Karate on the route to healing; Just everyone has to be willing to compromise.
Always loved this HL (especially the build up to fighting Filho)
I don't think the problem is competition formats & the huge number of different rule sets for competition - the problem is with the splintering of organisations into smaller organisations - it's like with Kyokushin karate - the original IKO of Sosai Mas Oyama - the talent pool was huge & it in turn produced some of the greatest fighters in Kyokushin's history & arguably some of the greatest stand-up fighters in the world - this was because it had a huge pool of fighters - so the increased competition forced karateka to become more competitive & there was a much more diverse range of fighters on display which forced fighters as a whole to be more well-rounded if that makes sense - I'm sure shinkyoku would agree - we haven't seen the same level of competitors (skill wise) & in such numbers than when the IKO was still one organisation (even when IKO1 hadn't entirely splintered off yet) - Andy Hug, Kenji Midori, Kenji Yamaki, Akira Masuda, Shokei Matsui, Gary O'neill, Ademir Da Costa, Keiji Sanpei, Hajime Kazumi, Makoto Nakamura, Filho, Hiroki Kurosawa, Peter Smit, Michel Wedel, Michael Thompson, Shichinohe, Feitosa, Pettas...and that's the few that come to mind.
When the original IKO splintered off into IKO1, IKO2, IKO3, IFK, IFKK, IBK, KSK etc etc Kyokushin Karate suffered as a whole - because first the unity had gone & on top of that the talent pool had been splintered - each group by itself doesn't have the huge talent pool & diverse (talent pool) that the original IKO of Sosai had - as a result competition has suffered; karateka are less well-rounded & less competitive as there predecessors as a result.
If Karate as a whole really wants to start healing - all the organisations & styles of Karate such as Shotokan, Goju, Uechi, Shorin, Kyokushin, Wado etc etc should come together & form a worldwide competition format that's realistic & full-contact (semi-contact for those that want it) to determine who the best karateka in their respective weight classes are - it will breed competition & make all karateka more competitive but I seriously doubt that it would happen -
even though Karate is meant to be Budo - Karate ironically has many personalities that are not conducive to the Budo aspect of Karate unfortunately, lets hope this trait isn't passed on from generation to generation lol.
Ryu Narushima is one of my favourite karateka - it's ashame that K-1 MAX came well after his time - but I would have loved to see him compete in K-1 MAX, think he could have done extremely well, maybe even a MAX champ - till this date I've never seen anyone in all of combat sports throw high roundhouses with the speed & power he managed to throw them with both left & right - pound for pound, I've never seen someone come close & to top it off he was tough as hell - would have loved to see him fight guys like Masato, Kraus, Buakaw, Souwer etc etc provided he had done an Andy Hug & done some cross-training.