This evolution in consumption patterns disrupts the existing business procedures and affects the incumbent players’ performance, generally due to the irruption and eventual success of the new players that have caused it.
Some conservative activities, (such as insurance or maritime shipping) that remains relatively unchanged along time. On the other hand, the show business, comprising all forms available of massive entertainment, has been exposed, since its development, to constant innovations, from the first public movie screening by the Lumiere brothers in 1895, to the irruption of Netflix as an alternative to linear pay television in 2007, after launching a DVD rental and sales operation in 1997. Netflix’s success with Hollywood inventory resulted in the demise of Blockbuster when this company refused to deal with online content delivery, now a classical example of technology evolution mishandling.
The Technological Generations Theory divides the history of each industry --be it video content consumption, air travel or any other activity subject to monetization-- in “generations”, where each “generation” is defined by the device used by consumers to exert their usage. The evolution of computer operation is another typical example of the generations involved. The first computers where “mainframe”, to the point that in 1943 IBM President Thomas Watson was quoted believing that the world market would amount to ‘about five computers’. IBM narrowly escaped from this misjudging and remained a leader until the emergence of desktop. Ken Olsen, founder of Digital Equipment Corporation, has been quoted saying in 1997 that he saw ‘no reason anyone would want a computer in their home’, despite the fact that Bill Gates and Paul Allen had been already working on this issue for two years. In spite of Watson’s and Olsen’s belief, data computing promptly migrated from the mainframe (corporate) “generation” to the desktop (individual) “generation”, with the help of IBM letting Microsoft get the pole position at the race to market the DOS software developed by Tim Patterson at Seattle Computer Products.
What TGT proposes is that “when any industry migrates from a certain form of predominant usage of its product (defined by the device applied by consumers to its usage, not the content used), the dominant players at the former generation will be replaced by newcomers. In many cases, the former dominant player will have to struggle in order to survive under the new business generation”.
As it happened with Blockbuster with the conversion of Netflix to a streaming company and IBM with Microsoft with the migration from mainframe to desktop computers, there are dozens of other cases of industry incumbents struggling or that just disappeared under the new circumstances: RCA (Radio Corporation of America), Ampex (founder of the videotape industry in 1955), Polaroid, Blackberry, AOL, Nokia, the music recording companies and so on.
Indeed, the Apple case reinforces TGT: after Steve Jobs proved unable to compete against Microsoft with the Macintosh, he moved to designing a device that would change the way users have access to music (the iPod) and later came up with the iPhone, a new generation in access to telephony and data. Despite its resources, Microsoft has been unable to respond to this challenge; Samsung and other manufacturers from Asia became Apple’s major contenders. Yet, Apple efforts to enter the delivery of television content have not been remarkable so far, probably because in this case it is just joining a fray and has been unable to impose its AppleTV device as a new consumption resource, in a market dominated by Smart TV sets and competing Internet-television interfaces.