The Two Faces of Disruption

There are two kinds of business disruption.  One is where your systems go down, or a supplier fails, or your head office burns down.  For that you need resilience in the form of back-up and business continuity plans and arrangements.  The second type is where a new entrant to your market, or possibly a competitor, disrupts your business model by doing something radically different.  It is harder to plan for that type of disruption, other than to keep close to innovations in your market and to keep on innovating yourself.  Both types of disruption can destroy your company.

Google has just announced that it is going to enter the $135bn-a-year online gaming business with a streaming service called Stadia where players will be able to click on a link from a YouTube video to get into the game, and will bring new gaming experiences that cannot be matched by current hardware.  200m people a day currently access YouTube just to watch gaming-related videos.  Stadia will run on Google’s cloud computing platform and on their own fibre-optic cable rather than relying on the public internet backbone.  With a shift to cloud, gaming specific consoles would not be necessary, and that is the disruptive element.  Sony and Nintendo’s share price fell on the announcement.

Not all disruptions work for the disruptor.  Cloud gaming has been tried before and the company, OnLive, went bust seven years ago with patchy streaming and a lack of financial backing.  Google believes it won’t suffer from those problems.  But even then, the disruptor has to be careful not to be disrupted itself. It is believed that Amazon and the Chinese tech company TenCent are not far behind with something similar…

 Source: Financial Times


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