The launch of several streaming services by studios (Disney+, Warner Bros), Apple and more to compete with Netflix, Hulu and the streaming innovators made me realize there is a disruption model that isn’t talked about too much that I’m seeing playing out in Mobility as well, 2-3 years behind Media.
In a disruptive trend, usually only a few of the new players make it out alive, and have a 5-10 head start on traditional players who eventually come around. Only a couple new players earn the right to play ball with the big players by achieving enough escape velocity to truly compete with the traditional players once they turn their eyes on the prize.
The pattern I’ve observed goes like this:
1) The disruptor reveals the soft underbelly of the traditional model, and spends 5-10 years feasting on relatively uncompetitive markets. For Netflix it’s a whole new way to deliver content while the studios and producers of that content are focused on their traditional cable bundles.
2) The traditional players are more than happy to partner with the disruptor, it’s not DIRECTLY competitive with what they do, so why not – if it’s “just another distribution channel” what do they have to worry about?
3) The level of disruption becomes evident – both sides realize it’s not “just another channel” it will likely be the ONLY channel one day.
The disruptor and the traditional player eventually realize they are way too dependent on each other. Netflix’s viewers mostly are watching Friends, owned by content producers they don’t control, and Netflix worries they could start losing negotiating leverage. That content producer notices the rising number of people who are viewing Friends through Netflix, and starts worrying they could lose negotiating leverage and be completely dependent on Netflix.
4) The disruptor and the traditional player start fortifying their positions by plugging their holes – Netflix starts producing original content at a faster pace than a studio, and the traditional studios all start working on streaming services.
You are seeing this with mobility as well. Sidecar and many other regional rideshare players went out of business, but Uber & Lyft survived in the U.S., and to a regional extent, Via and Gett/Juno.
What is interesting though is the almost weekly announcements about a traditional car company teaming up with some sort of other technology partner, with plans of launching their own robotaxi service in a year or two (optimistic)
GM Cruise delays Robotaxi Service Launch
Hyundai Teams with Aptiv for Robotaxis
Ford plans to Launch Robotaxi service with ArgoAI
Uber & Lyft have scrambled to grow as quickly as possible so they can earn their spot at the table, investing in mapping and autonomous technology and locking down a car manufacturer or two to fill their gaps. This is the equivalent of Netflix investing in original content, the new disruptor filling the gaps of what they are still dependent on the old traditional players for.
And the traditional car companies, car rental companies were more than happy to strike deals with these mobility players. Hertz & Avis Budget all supply cars to Uber drivers. Every car company sought ways of selling their cars for cheap to wannabe Uber drivers through creative leasing programs, often run in conjunction with the rideshare partners themselves – after all, it was just another distribution channel, just like traditional car services like Addison Lee would buy several thousand Mercedes or the NYC Taxi Commission would greenlight the purchase of thousands of Ford cars, Uber was “just another distribution channel.”
Eventually the traditional car manufacturers and car rental players realized Uber and the new innovators weren’t “just another distribution channel” but would likely be the ONLY distribution channel one day if they didn’t do something about it.
The traditional players then kicked into gear and realized they would be WAY too dependent on those channels and started building out their own distribution channels.
Uber/Lyft had a 5-10 year head start, but the ingrained advantages of being a huge company like Ford or GM allows them to be late, and still have a huge advantage.
There are a lot of caveats to this “theory,” if you can even call it that. The most obvious question to ask is “what about Blockbuster and Taxis, both of which were decimated?”
I think this only applies when the disruptor isn’t targeting your business first – you better not be located on the beachhead to their invasion.
Uber disrupted taxis short term, car ownership long term. Netflix disrupted video rental short term, cable and content distribution long term. Both of the second categories will be ok as they are figuring out how to use their heft to defend themselves, both of the first categories are not.
The last big question is – what about outside players that are neither traditional or new, just launching services because they have the user base and firepower to? Amazon Prime launching streaming, Meituan (China’s eBay) launching a car service, Kakao (Korea’s chat app) launching a mobility app, Apple launching autonomous cars and a streaming service, Zomato launching a streaming service are all examples of this.
I think that’s a separate article.