The Changing Nature Of Ownership
A look at four industries
In March I started a new job at NewMotion, Europe’s leading provider of smart charge points for electric vehicles (EV’s).
I began to think about which EV I would buy in the future, but the more I read up on ownership the more likely it is that I won’t own a car. Ever.
Urbanisation, technology, convenience, cost, regulation and a fluctuating economy have all played their part in the shift away from ownership in recent years. But how quickly are things changing now? From autonomous vehicles to apps that make lifting a finger the most strenuous thing you’ll do. Here’s a dive into four industries.
1. Mobility 🛴
A typical new car costs more than €30,000 and sits unused on average for 23 hours a day. Therein lies the problem and the opportunity.
The transition to EV’s is gaining traction and level 4 autonomous driving is being tested today by Renault. Combine this with the huge increase in demand for ride hailing apps and the car manufacturers are rightfully worried. So, what are they doing about it?
Take Volvo. They recently launched Volvo Care — a new alternative to owning or leasing one of their cars. It’s essentially a subscription service with all your insurance, maintenance, services and repairs included. According to Volvo:
“You won’t have to deal with the nuts and bolts of car ownership. Care by Volvo is convenient, transparent and hassle-free.”
The car companies know a weak economy makes big ticket purchases hard and younger generations are squeezed between an expensive education and low paying jobs.
“No one writes pop songs about Ferraris any more. The stereotypical boy racer appears a hopeless throwback. And in our cities, the use of cars is being overtaken by altogether greener, more liberating possibilities.” John Harris in The Guardian
Imagine future cities where congestion, pollution, noise and traffic incidents are dramatically reduced. Where autonomous vehicles zip around to pick-up their next customer. Where cars return to depots to switch out empty battery packs. Where parked cars become a thing of the past and are replaced with green spaces, markets and so much more.
It sounds idyllic and isn’t too far away.
2. Travel & Accommodation 🏡
The sharing economy is not new, but it has exploded in recent years thanks to consumers’ increased awareness of idle assets and easier ways to get them to market. The travel sector is one industry that is most affected by this shift. According to Skift’s ‘Future of Travel’ Report:
“Collaborative consumption, once an idealist niche for hitchhikers and backpackers, has grown into a multi-billion dollar industry thanks to the economic, social and technological changes of the past decade.”
The desire to travel like a local rather than a tourist at the luxury end of the travel market is on the rise. In fact, defining what ‘luxury travel’ means in todays world is much less about gold-plated taps and Michelin stars, but access to authentic experiences off the beaten track.
Of course with this shift comes new challenges. Trust between complete strangers becomes an issue. How do you foster trust when there isn’t an established brand? Airbnb knew how to tackle this problem well when they began life back in 2008 and it’s something I’ve written about in ‘Startups and Trust’. Self-regulation, single execution, social proof, incentives and a team that trusts each other are key:
Another trend that’s worth mentioning is co-living spaces. Take The Collective in London. It focuses on convenience and community and they want to change the way people experience cities:
“Everything you need to make the most of city life is included in bill; rent, concierge, super fast internet, all utilities and taxes, room cleaning, exciting daily events and gym membership. So you can do the living, and leave the rest to us.”
A collective way of living is something that’s gaining in popularity in cities and with WeLive (a part of WeWork), Soho House and others involved, the signs for continued growth are there.
3. Entertainment 🎬
Buying vinyl may be having a revival of late, but the days where people are buying DVD’s and CD’s are well and truly gone. Video-streaming services are causing a seismic shift in the entertainment industry, with some big casualties along the way. So what’s next for streaming services?
As the Observer mentioned in 2017, “Netflix is winning, but what will it do once it’s won?” Well, it hasn’t won outright yet but it continues to grow, having surpassed Disney’s market cap in May 2018: “Shares touched an all-time high of $346.73, giving Netflix a market cap of approximately $151.43 billion.”
Netflix has one main revenue stream, namely it’s monthly subscribers and it’s focus on exclusive Original Content is filling it’s funnel and swelling it’s numbers. It has pivoted once before, from DVD mailer to online streamer. So, how will Netflix continue the shift from content ownership to access for everyone, everywhere?
Some suggest it’s through new technology like VR, others say it’s through scaling it’s expertise as a services to other companies, similar to Amazon’s hugely successful cloud computing services — AWS. Whatever the next step is, exclusive content will continue to be the focus and it’s differentiator.
And what about the largest music-streaming service Spotify? They currently have 157 million monthly active users, of which 71 million are paid subscribers. The company has not only changed how music is consumed, it’s changed the way artists get paid and how they create their music.
And when it comes to turning a profit? According to Engadget:
“Revenues have grown from $2.37 billion in 2015, $3.6 billion in 2016 and $4.99 billion in 2017 which shows there’s potential — even if it could take some time to turn a profit.”
But they still aren’t in the black due to increasing operating costs and wafer thin margins. The majority of it’s revenues are sent back to artists, meaning the challenge for Spotify will be to keep building a lead over its competitors by bringing in new users and turning existing ones into paid subscribers.
It will be interesting to see how Spotify and Netflix use exclusive content and machine learning with tailored recommendations to keep ahead of the pack. Will this be enough to secure their futures and stay market leaders? Time will tell.
4. The Office 📊
Over the last 5 years, offices have become more comfortable and collaborative spaces. They are increasingly informal, airy and open. It is estimated that within 10 years many businesses will be built completely with virtual teams of online workers. That’s a huge shift and will have a profound impact on workers and businesses alike.
Throw AI and VR into the mix and we’re only just scratching the surface of what a modern office actually is. Remote working, holographic meetings, VR headsets will become a common part of working life. The flexibility these changes will give to workers is huge and will allow businesses to reduce overheads in rent and staff.
According to Adrienne Gormley @ Dropbox:
“There’s been a seismic shift in jobs. We need to start thinking about how we collaborate across an entire ecosystem. We need to start thinking about things like collaborative robots, or ‘co-bots’, in our workspace.”
Not only will the office continue to change physically, but technology will increase team collaboration where ideas and creativity can thrive. Businesses will need to adapt to new ways of working if they are going to retain the best employees. An office space is likely to become a luxury in the future.