Why Netflix, PayTm, Zomato, Uber, Ola, hotstar would not exist 10 years from now?
Everyone of these app suffers from a problem of distribution. Netflix is thriving on access to movies from many creators. Zomato, Swiggy both loss making companies and I feel they will never make profit because they are following the same road which was once followed by Ola. Ola entered into electric vehicle market because they don’t have any profit to show to it’s investor and that’s why jumping on some other market segment seems like a good option to elude the temper of its investors. Every one of the app which I listed suffers from one single problem that is distribution rights in one form or other. We will discuss each one of them.
Case Study 1: Zomato and Swiggy
Both are the leading market share in food delivery segment. Both are loss making companies. They are pumping investor’s money every quarter to provide salaries to employees, coupons to customers etc. But, if we think that a day will come when they have to increase the delivery charges or subscription fee and start making profit (just like what JIO did), but that will not happen. Restaurants till then will have their own delivery apps and would not like to share a cut with other intermediator in their distribution of food. Why would I take subscription of all the restaurant apps when their is only one app which lists all the restraunts, you must ask? I will answer this shortly.
Case Study 2: Netflix, Hotstar
Netflix is thriving on the content of other creators which means that they are just an intermediatory (like we saw above Zomato,Swiggy). These creator which are big enough have created their own platform so that they don’t have to take a cut and pay some amount to Netflix. For example — Disney+ have launched its own subscription based app which has all the Disney made (and other companies which Disney own) movies, content, series and all. Not only that platforms like hulu, lionsgate, primevideo, apple movies have already made some punches on the face of Netflix. As soon as Netflix increases the subscription fee, customers will move to other platforms and majority of the platforms are the distributors of their own content like Disney+, Discovery+ etc. Netflix fall will start from that day (or maybe already started). Now, let’s come to the hotstar which is only surviving because they have distribution rights of IPL, Indian cricket matches and Premier League (most lucartive league on our planet). Remove Premier League distribution rights and their goes half of their customer base. Now, Premier League if want to start their own platform for all Asian countries, they can do that but the power of distribution rights is slowly transferring to the individual clubs. Manchester United have their own app which shows all its matches live. Now again, same question you must ask me — Why will I subscribe to individual apps made by clubs/league when their is one specific app which provides me them for nominal fee?. I will answer that shortly, just wait a little bit. However hotstar will live as long as they have IPL and Indian Cricket matches distribution rights plus they are creators too not only distributors. See, that is why Netflix is making so much of movies lately because they want to shift from a distribution of movies buisness (created by someone else) to a holywood studio or we can say that they want to become creators too like Disney, 20th Century Fox(again owned by Disney 😂) etc.
Case Study 3: Uber, Ola
This is one of the case where the application is suffering from the disease which the apps I talked about till now will suffer from one day. Ola, you already know about it. Uber, they cut 30% or more from the customer fee and the rest is paid to driver. Customer is charged more and driver is paid less because an intermediatry between them wants to make the profit. And now enters into the game — the new (local city) apps which pays directly the whole amount to driver so in this case customer has to pay less and don’t have to bear the fees of intermediatry between them. But if they want to survive too they have to take a cut too, you must ask me? then my answer is recursion will happen.
Case Study 4: Paytm, PhonePe
They are the worst amongst all. Inspite of the loss making companies they want to switch to other market like creating a bank (what PayTm is doing with PayTm payments bank). They are in the UPI buisness as long as mercy is shown to them by Indian goverment. Eventually, a day will come when government will charge a small fees for every UPI transaction. From then on, PayTm, PhonePe will start falling and government’s own app (which charges less fees) will rise.
What is the one common thing amongst all the above companies?
That is they all are intermediatories. They are distributors of someone else’s content. And slowly they want to transition from distribution buisness to other profit making buisness. Now, I have already answered the first question why will customer use restaurant’s indivdual app instead of Zomato, Swiggy (one distribution platform)? Because for the same reason why Netflix is making content today.
At the end content creators are kings/queens and the decider of their content distributor.
Note: The 10 years I stated above is not guranteed that after 10 years it will happen for sure. For some, it’s already happening and for some it will happen later.
Now, I suppose it’s time I should put down my pen.
