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Banking goes digital
Ten years ago, a person might have picked a bank by the nearest branch or the most ATMs. Setting the economics aside, the choice now comes down to which bank has the best digital experience. Companies that treated digital as a sidecar are finding it has become existential.
Streaming goes direct
HBO once sold its content through satellite and cable companies, using bundling to increase its share of the revenue. Now it sells direct to consumers and needs a digital experience that holds up. Disney could not go direct with a poor experience either. Disney Plus had to be great on its own merit to drive subscriptions, and it has been a runaway success. Both used their strength in content and back catalogs while competing on the new battlefield.
The pandemic leap
The numbers moved fast. Before COVID, US e-commerce penetration was roughly 15 percent, and it jumped a decade's worth in three months, though it is still not a third penetrated. In its latest quarter, 30 percent of Nike's revenue came from direct-to-consumer digital, which was its 2023 goal, so the future arrived three years early. The new goal is 50 percent.
Why did HBO sell through cable and satellite?
Cable and satellite providers already had the billing relationships and the set-top boxes in customers' homes. HBO sold itself as a premium channel add-on and received a wholesale fee for each subscriber. Bundling let it ride on those providers' reach. HBO began in 1972 as a pay channel, and its direct streaming service HBO Now launched in 2015.
Why did Disney Plus take off so fast?
Disney owned a large library of its own franchises, including Marvel, Star Wars, and Pixar, so it did not have to license a catalog from anyone. The service launched in the United States, Canada, and the Netherlands in November 2019 at a low monthly price. Disney reported more than 50 million subscribers by April 2020. The company kept its content exclusive to the service rather than selling it elsewhere.
Why does selling direct change a brand's economics?
A wholesale sale gives a brand only the wholesale price, while a direct sale keeps the full retail price. The brand then pays for shipping, returns, and marketing itself. Direct sales also give the brand each customer's purchase history, which retail partners usually keep. That data lets a company see which products sell and to whom.
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