Competitiveness in the digital age- how ready is Play2Live? (Part 3)
Play2Live is a start-up in the gaming and eSports streaming arena.
In Parts 1 and 2 of this series we looked at how well Play2Live was positioned to break into the fairly saturated market of gaming and eSports against traditional criteria for competitiveness and against emerging criteria for platform-based businesses.
Part 1 considered Play2Live against the traditional measures for competitiveness:
· Stay on top of and capitalize on trends
· Establish a niche and differentiate your product
· Solve problems within the industry
· Offer something better than the competition/ Add value
· Tap into change
In Part 2 we looked at how well it performed against the measures associated with platform-based businesses:
· Competitive measure #1: Porter’s 5 forces vs platform ecosystems
· Competitive measure #2: Choosing the right competitive strategy
However, Play2Live is occupying a technological space and faces threats of obsolescence and the rapid encroachment of new ideas and technologies.
So, this article — Part 3 of the series on competitiveness — asks whether Play2Live is ready to survive for the long term. Can it perform against the following measure:
· Competitive measure #3: Surviving the shark fin of adoption
Competitive measure #3: Surviving the shark fin of adoption
What is the “shark fin of adoption”?
According to an article in the Harvard Business Review, the speed (and shape) of penetration of new products into markets has changed dramatically.
The traditional bell curve had 5 groups of adopters of new products and services:
· early adopters
· early majority
· late majority and
These 5 groups have now been compressed into 2:
· trial users (who often are part of developing the product) and
· everybody else.
This can be seen in the following diagram, taken from the Harvard Business Review of January 2018.
The reason for this is “near-perfect market information”: digital channels and social media spread information so well that potential customers know all about your product — including what others think about it — before it is even launched. Those who want it, buy it immediately. Others will wait for the next newest and best product, from you or another supplier.
This phenomenon has led to the rise and almost immediate collapse of some new products. It also puts tremendous pressure on producers of new products to have a “second act” available, almost immediately, to retain customers.
Pokémon Go is a good example: 7.5 million players downloaded the game in its first week and, in week two, 28.5 million people played for an average of 1.25 hours per day. Nintendo expected the $35 million in revenue in the first month to continue, and investors added $23 billion to Nintendo’s market capitalization. By week 12, it was over. Fifteen million players left in just a month. And Nintendo lost nearly $7 billion in value. It did not have a replacement game available.
· Tesla pre-sold 400,000 Model 3’s in the two weeks after its unveiling, and only 200,000 subsequently. Work is now ongoing to fill these back orders, but there is not a new demand.
· Zynga reached a market cap of about $10.5 billion in 2011, on the back of its launches of Farmville and Cityville games, but it has been downhill since then, with no big new games.
· The game developer THQ was very successful with its drawing tablet for Nintendo Wii and expected growth in customers and market segments to continue. It committed to the manufacture of millions of tablets that remained unsold as the Apple iPad stepped in and changed the market. It never recovered and was forced into bankruptcy.
Technology companies are not the only ones suffering this fate. Richard Foster, of the Yale Entrepreneurial Institute, points out that the average lifespan of companies on the Standard and Poor’s 500 is 15 years, down from 67 years in the 1920’s. He predicts that in 2020 three quarters of the index will be companies not even heard about in 2010.
How to survive the shark fin?
There are multiple market forces to take into account, but the following criteria seem helpful:
Abandon a successful product before it runs out of steam
Those who survive the “big bang” of the first burst of success, are prepared to abandon a successful product before it runs out of steam. For example, Apple abandoned the super successful iPad for the iPhone, and Netflix moved from Blockbuster DVDs to internet-based movie delivery before the technology was ready for it.
Blackberry, on the other hand, was the market leader in smartphones, but stubbornly refused to let go of its physical keyboard in favor of a touchscreen. It sold 50 million devices in 2011 and only 4 million in 2016.
The story of Kodak’s slide into bankruptcy is well-known. It held onto its old-style cameras, even though it had actually invented the first digital camera in 1975 — and chose to ignore it. The story of the Swiss watchmakers is similar.
Build a platform or an ecosystem, rather than a single product
Another solution is to build a platform or an ecosystem, rather than a single product. A platform connects customers, suppliers and others, taking revenue from all of them and adapting as the market changes.
A Deloitte report highlight how platforms can aggregate, or bring together, a whole range of related items. This reduces isolation, cuts down on inventory and distribution costs, lowers the barriers to entry and increases collaboration. A “transaction platform” aggregates data, products and resources; it facilitates transactions; it connects users to resources.
Google, Amazon, Facebook and Tencent have made an art of this. Tesla is also a good example. It has used its position in an existing market (electric cars) to jump-start its position in a new market (battery-powered backup systems). The secret is that totally separate markets (in this case electric cars and home energy management) start to look like a single coherent opportunity. And it is likely to dislodge GE and Samsung who have been in the backup systems business for decades.
A company that didn’t do this was TiVo. They produced one of the first, and arguably the best, digital video recorders (DVRs) ever. But they didn’t work together with cable companies who were starting to develop their own. They sued the cable companies for patent theft and won — but customers thought they’d gone out of business.
Convert your initial product into a service
A third, and very effective, solution is to convert your initial product into a service. If the underlying infrastructure is robust enough, core tools and processes can be leased to others, sometimes for very different businesses.
As an example, Under Armour, a manufacturer of sports apparel, launched a line of fitness trackers. However, its platform allows customers to track data from any sources they want, not just from Under Armour’s own device, and to pull the information into a single dashboard. It now has a community of 200 million members. John Hopkins Medicine has recently joined as a partner and everyone now benefits from research-based health information on the platform.
Will Play2Live survive the shark fin?
If the 3 criteria for survival listed above are correct, then Play2Live looks set for success.
Criterion #1: Build a platform or an ecosystem, rather than a single product
Play2Live has deliberately set itself up as a “transaction platform” rather than a product. It is based on its blockchain called Level Up Chain, with an internal payment system in the form of LUC tokens. It provides the foundation that others can build on.
Play2Live has included all aspects of the gaming and eSports environment into its ecosystem. This includes streamers, viewers and tournament organizers on a primary level, but adds bookmakers, producers and designers of games, suppliers of in-game items, streaming of major tournaments, P2P CDN and cloud services.
Criterion #2: Convert your initial product into a service
The platform has been set up in such a way that all participants can benefit from monetization options — whether this is for an individual’s first streaming, a viewer voting for the format of a tournament or watching an advertisement, a seller of a game or a bookmaker. There are 15 different revenue streams on the platform, and 11 of them are shared with participants.
Interactivity is key. For example, the embedded crowdfunding option allows users to generate the content they want to watch and to issue tickets for exclusive events. A unique system of tasks means that viewers can influence the scenario of a stream or participate in it themselves. The more active a user is, the more LUC will be earned. Tournament organizers and providers of games, in-game items, or gambling services can use the platform to conduct their own businesses.
The main function of the platform itself will be implementation and maintenance of technical functionality.
Criterion #3: Abandon a successful product before it runs out of steam
The Play2Live platform is completely flexible, able to shift and adapt as needs change. The platform itself is designed to be robust enough to support completely different businesses in the future if required.
All of these features make Play2Live extremely competitive — not just in the gaming and eSports markets, but in any other market it chooses to move into, once it has grown its user base.
Play2Live is still in the alpha stage of development. A beta version of its platform is due in July 2018. It is still establishing its user base. However, it looks set to be very competitive in the marketplace and the investors who contributed to its $30 million ICO should be very happy indeed.
In Part 4 of this series we will look at some stories from the marketplace that answer the question: What are the chances are that a new entrant will actually break in and disrupt a marketplace?