Many businesses have suffered with the rise of the Internet. But, hey, this was only the beginning. Smart phones are going to reach a tipping point in 2012, while tablets will penetrate a second wave or users, further accelerating the revolution of any content, any interaction, anywhere. This is what I call the ‘RTC’ world for Read-Transact-Connect. The power of the cloud (infinite storage & computing power) combined with the power of social, and the ease of use & access of any device, anywhere, will further erode the power of many traditional industries (ie where the ‘Transact’ part occurs).
Here are the concerned sectors – in B2C (not necessarily exhaustive, please add in comments):
- Traditional Newspapers are going to further erode with the competition of ebooks & tablets, leading to the loss of those who did not negotiate early enough the ‘digital turn’ & put in place a strong monetization system
- Bookshops are already closing at unprecedented rate. As they get closer to break-even, many more will close, forcing the remaining customers to change their habits even more – this all will unfortunately lead to more closure. Tobacco is still there to help, but for how long ?
- Photography printing & distribution has already completely changed. Photo shops, with the competition of high quality photo to anyone & easy Internet-based printing, are losing out.
- Music industry is still looking for another model. Recent hesitations of smaller labels, and the pressure they put on streaming business such as Spotify or Deezer, prove it abundantly
- DVD rental is slowly but surely dying, in face of legal & illegal film downloading, digital TV boxes with Video on Demand, competition for attention by tablets (which favor even more casual watching in the evening)
- TV Broadcasting is the next target of the Internet….or its future winner ? The long promised Internet-TV is slowly coming, but there is a long way to go. Delivering it too late might be a tragic mistake, as share of attention is slowly moving away from it (again, Tablets will further accelerate this, as shown by our own research)
- Movie industry is not performing so badly, granted. Yet, I was disappointed by the dismal offer in the recent release of the ‘itunes movies renting’ (in Belgium). If Majors fail to understand new consumption models, they will follow quickly the music industry – consumers will have moved on by the time they decide to adapt.
- Consumer games are at a turning point. The rise of cheap, casual games in app stores & social network is not good news for everyone. Traditional electronic games producers will find it increasingly hard to sell games at EUR30 to 50 when you can have fun for a couple of euros. Offline games will further suffer from competition of online. The promise there is to move from ‘hard core’ gamers to casual gaming, of much broader appeal, and compensate what is lost in unit margin by higher volume. Maybe multiple times. We cross our fingers for them.
- Traditional commerce is under question. Will traditional commerce suffer from e-commerce ? Maybe. Will it suffer from the increased price transparency brought by Internet ? Surely. What has already happened in consumer tech (who would now buy a TV or mobile without checking it out on the Internet, first ?) is moving now to many other sectors, from furniture to apparel, and others. A chance for the nimble attackers, a threat for all others. Hang on!
- Mail – this time it’s coming – or is it? It’s been 20 years that the threat of Internet has been posed to them. Who needs mail when you have email? So far, they did not perform so badly. Let’s keep in mind that customers of the mail companies are mostly large companies targeting consumers. The rise of direct marketing has saved them..so far. Again, the competition of attention of mobiles & tablets, combined with more powerful multimedia experience will further erode the power of direct mailing. This could be seriously disruptive to them.
- Payment needs innovation. The combination of smart phones, NFC & tablets is creating disruption caused by start-up like Square, which offers a free payment device to be attached to smart phones or tablets. Payment has always been a high tech but expensive & slow moving industry, due to huge infrastructure costs and difficulty to reach critical mass for innovations. If NFC chips, protocols, apps on universal devices like smart phones reach that critical mass of merchant & consumer adoption (a difficult chicken & egg issue), they will at some point become the next killer apps, providing cheap, convenient & even fun experiences to both merchants & consumers. When ? Anytime from next year till 2025…
Many companies in those sectors have long understood those threats and acted upon it. Many more did not do anything.
The most admired company (to my eyes), Amazon, has been capable of not reacting but preempting the threat. Jeff Bezos (its CEO) saw that traditional book distribution was an old model of transmitting what is essentially information, and ebooks would be the future – when ebooks were still emerging. But what do you do if you believe your ‘core assets’ is about a great sales & logistics machine ? Most business have done nothing, they contemplated the threat & thought how to ‘defend’ their existing paper-based business through incremental improvements.
Amazon did not do that. They preempted the threat by creating the Kindle, and a business model attached to it. They sell now more Kindle books than traditional books in the US. Competitors like Barnes & Nobles are playing catch up.
I wish all companies would think like Bezos. The point is not to focus on your ‘key assets’, what you’re good at, like your great network, products, logistics, patents, even people. But to focus on the value added you provide to consumers. An ebook offers the power of convenience of purchase, ubiquity, and small storage & transportation costs for consumers, plus many other benefits. For many that’s more value added than a traditional book.
Your business is only a vehicle of some value added. If that vehicle is no longer the best possible to maximize the value added, change it while you can, or invest into a new vehicle on the side. If possible, do it even before it’s even relevant, so that you can drive it with a great business model. Like Amazon.
How to define that new vehicle? Do more exploratory research, and tap into consumers, focusing on the frustrations of existing solutions, the challenges, the creativity of what could be a different vehicle. Like we do with our clients.