I have been watching the way a new company, with new ideas, seems to invade an industry, and within a couple of years the industry has changed or merged with another to give rise to a third industry. The nimble companies have survived or grown to be the leaders of the new industry. The losers usually fall into oblivion very slowly, a shadow of their former selves, limping along, and clinging to their former glory until they disappear.
Usually, the big players jockey for position and create what they need with investments and try to buy what they cannot invent. Case in point, Media companies and cable companies have been merging for the last few years. Once Netflix proved they had a profitable business model in streaming, the rest of the pack has been chasing it. Then, Netflix added original content to their library as they found that both TV and movie titles were running out. They have sunk billions into creating their library from scratch. The others such Amazon, Google, Apple and HBO have followed suit. But Netflix was first to market and remains the 800 pound gorilla in the space.
You can see media companies such as Fox and Time Warner have been chasing the disruption as well to ensure they are not left out. You can see the merging of Media and streaming already. Every time a Streaming company makes original content for streaming, they blur the lines between media content ownership and streaming services.
Enter ATT and its merger with Time Warner. Once the case was approved by a judge and allowed to proceed, you saw a flurry of merger related activity by Verizon and Disney trying to get Fox’s media business. The disruption of another industry is happening before our eyes. Cable companies are acquiring media to ensure they are not left behind by the disruption of the entertainment space.
Since Netflix started its business in 1998 and the subscription model in 1999, it has decimated the DVD rental industry, now the streaming, media and possibly cable industries. A disruptor or two change the way the business is conducted with customers and if their model is adopted, they are very successful at changing a customer’s habits. Industries merge or fall by the wayside, also-run companies who choose not to change disappear (i.e., Blockbuster) and only the victors emerge on the other side. Bigger, stronger and ready to continue growing.
Hopefully, the customer is the winner in all of this; I believe so. Just imagine: the films, VHS tapes, and DVD’s that you had to buy or rent once upon a time; sometimes for a lot of money. The rentals were $3-$5 each and we had the tape for a day. Now we can join Netflix and for $15 a month, we can watch as many movies and shows as we like. It has helped us see what we want, when we want it and binge watch, if we want. The consumer is the winner.
The engine that made this happen was technology and the ability to access the server for the videos without a physical need to ship, store, buy, etc. New technologies allowed companies to stream, store in the cloud, and share it at point of need without ever shipping a disk. The consumer was able to choose and play the title without ever leaving the couch. The technology that makes this happen has destroyed as many companies as it has created.
That is the beauty of disruption and may it continue to deliver more services to the masses.