I need to put some thoughts down in writing and I would love to hear your thoughts.
A few "modern tech companies / startups", in an attempt to pursue profits or profitability are introducing changes to their business model. The examples I have in mind are:
- Netflix (re)introducing subscriptions with advertising and expecting it will be the most profitable
- Amazon Prime Video doing the same with advertising
- Uber extending into more traditional "car rental"
The pressure for profitability or at least the pressure companies feel to show they have a plan to be financially sustainable is understandable in the current economy. High interest rates, make borrowing expensive and reduce the appetite for high-risk investment for VCs and the like. So companies looking for financing need to show their numbers are solid.
Amazon does not seem to have "profitability issues" overall, and maybe this move only applies to streaming services. What about Uber?
What I find surprising (but at the same time is to be expected) is that companies that have been "disruptive" turn to more traditional ways to secure revenues: i.e. advertising as on TV.
Maybe this was a long time in the making or it is the first response in a time of crisis where investors and shareholders would respond more favourably to a business model that they understand and it is has been proven to work in the past.
Or maybe these companies have failed to create new ways to secure revenues and be profitable and the current economy has just accelerated a return to "old ways" that was already inevitable.
I using the word "traditional" here for lack of a better one. I use it to designate business models that have been around for decades like advertising on TV and have been proven by incumbent companies.
What do you think?
Do you have more examples of this trend or examples that go against it?
Do you see the same trend? Do you think it is here to stay or is it only a temporary response?
Is this a sign that when companies become mature they do not have much choice but to conform to "traditional" business models?