Co-Opetition - Adam M. Brandenburger [17]
There’s more. The Guggenheim might borrow a painting from MOMA or lend MOMA a painting to create a special show. Then the Guggenheim becomes a customer and supplier as well as a competitor and complementor to MOMA.
The position in the Value Net merely represents a role someone plays, and the same player can have multiple roles. It’s counterproductive to typecast someone as just a customer or just a supplier or just a competitor or just a complementor.
Jekyll and Hyde
People are so accustomed to viewing the business world in warlike terms that even when other players are both competitors and complementors, they tend to see them as only competitors and fight against them. They focus on the evil Mr. Hyde and overlook the good Dr. Jekyll.
In the early 1980s, when sales of videocassette recorders took off, the movie studios were convinced that people might not see a film at the movie theater if they knew they could rent or buy it in the future. Although the studios would make money from videos, this business would so significantly eat into their big-screen profits that they would end up worse off. So studios priced their movies sufficiently high that rental stores could only afford to buy a few copies each. Almost no movies were sold directly to consumers.
The studios’ concern over cannibalization had merit. Some people did indeed skip going to the movies and were content to wait for the video release. But there was a much more important complementarity effect. Movies that did well in the theaters whetted people’s appetite to rent or buy the movie. Those who enjoyed the movie might themselves rent or buy it to see it again, or tell others who missed it on the big screen to be sure to see the video.
Now that the studios have caught on, they have begun offer ing videos for sale at prices below $20 rather than selling only to video rental stores for $69.95. As a result, the combined market for movie theaters, video rentals, and video sales is far greater than in the days before video. In 1980 the industry revenue from theatrical releases totaled $2.1 billion while home video brought in another $280 million. By 1995, theatrical releases were up to $4.9 billion; even better, home video rentals and sales totaled $7.3 billion.16
Just as the movie studios feared the home video market, traditional bookstores see electronic publishing and the Internet solely as competitors. Once again, they see only half the picture. What bookstores fail to recognize is that sales in one domain may stimulate demand in the other. According to McGraw-Hill CEO Joseph L. Dionne, “In ten instances when we created an electronic version of the print edition … [demand for] the print version grew, too.”17
By helping the entire market grow, booksellers on the Internet, such as Amazon.com and BookZone, stimulate traditional book sales. Although sometimes people buy books from Amazon instead of a traditional bookstore, Amazon provides a place to buy books on the spur of the moment—at 2:00 A.M., say. This extra sale helps enlarge the pie, but that’s not all it does. Books are sold by word of mouth; one sale can create a chain reaction. If the Amazon customer likes the book and tells friends about it, they might then buy it at a traditional store. Or people may buy a book in the bookstore because their interest was piqued by an electronic book review on the Internet. And, ultimately, if the Internet helps sell more books, authors and publishers will produce more books, which is good not only for booksellers but also for customers.
In an article in Publishers Weekly, BookZone president Mary Westheimer responded to the cool reaction she received at the 1995 American Booksellers Association convention:
If, instead of fighting futilely, these threatened booksellers looked through the other end of the telescope, they might see that what they perceive as competition is actually a complement.… Together, we can create an appetite that feeds our industry.18