Distribution Is King
Dominant companies across different eras all discovered the same basic truism of capitalism: if you control the entire supply chain, you can print money while your competitors slowly die gasping for air.
Carnegie Steel pioneered this in the 1870s-1890s with the realization that steel is more profitable when you own everything from the holes in the g
... See moreDespite skepticism, gaming is big & rapidly growing: $152bn and ~10% CAGR. Netflix said “We compete with (and lose to) Fortnite more than HBO”. Very few business models work in gaming other than simply building successful games: most of the money in the industry stays with the game developers/publishers and the major gaming/streaming platforms.
NFX • What VCs Don't See: Why We're Bullish on Gaming Startups
In 2020, I started to realise that building products was getting commoditized, and that distribution was becoming more valuable.
The Company As An Organism
Every few years within the consumer ecosystem, new waves of distribution open. Businesses experiment with and exploit these emerging distribution channels, and then these avenues of growth become crowded and far less attractive for new entrants.
Talia Goldberg • Distribution and conversion models for consumer startups
Once consumer spending switched toward digital distribution and the adoption of new devices, the overall competitive value of these new technologies became clear, and all major game makers moved to adopt new innovations and strategies. Rather than selling individual units to consumers and emulating the product model, the service-based approach has
... See moreJoost van Dreunen • One Up: Creativity, Competition, and the Global Business of Video Games
In fact, the general model for successful tech companies, contrary to myth and legend, is that they become distribution-centric rather than product-centric.