Digital Disruption Is Happening, Get Ready To Adapt!

In 2010, 43% of American adults owned more than 3 devices connected to the Internet, according to Forrester Research’s North American Technographics Consumer Technology Survey. Connected devices include things like game consoles, laptops, tablets, and ereaders. A year later, in 2011 62% of US adults own more than 3 connected devices. That’s almost a 50% increase in a single year! Thanks to rapid technology adoption, consumers are changing how they read, watch, listen, play, communicate, and shop. Their evolving digital behaviors are unleashing innovative new competitors into every industry. These “digital disruptors” threaten to make industry incumbents obsolete by delivering more compelling product and service experiences. This information (and more) was shared by Forrester Research, Inc. Senior Analyst Peter Sheldon in our brand new webinar, Digital Disruption Is Happening. Content & Online Service Providers Must be Ready to Adapt. Available on-demand.

Digital disruption started with subscriptions

According to Peter, subscriptions are the backbone of the digital disruption business model:

• Software publishers have long used subscriptions to tie customers into multi-year relationships. But now subscriptions are increasingly important as software publishers like Intuit move to SaaS-based (software as a service) product portfolios.
• Consumers are rushing to embrace alternative video services from the likes of Netflix, Hulu and Amazon, and cutting their cable TV subscriptions.
• From Zune and Rhapsody to Pandora One, subscription music services already have a significant share of the listener’s wallet.
• Amazon’s Prime brings all-you-can-eat to the world of ebooks, emulating the public library. Kindle owners who subscribe to its $79/year Amazon Prime program are now able to download one free ebook a month from a selection of 5,000 titles.

• Digital newspaper and magazine subscriptions are still in their infancy; however, momentum is growing led by Gen Y readers.
• Subscription gaming is also nascent and currently limited to PCs and smartphones.

Now consumers want more access options

However, consumers are increasingly looking for alternative ownership models beyond subscriptions:

• Freemium and trials
  Subscriptions and trials are like Batman and Robin; one rarely goes without the other. Freemium models are increasingly popular across a wide array of service providers like Skype and LinkedIn.

• Time-based access
  Time based business models allow content distributors such as cloud gaming platform OnLive to rent access to content.

• Metered usage
  Pay-as-you-go usage, commonly used by telcos and utilities, can give individual users and small businesses access to enterprise-class features. For example, OpSource Cloud Software offers popular Microsoft and Oracle software offerings and Google's App Engine provides web application infrastructure on a pay-per-drink basis.
• Marketplaces
  Online marketplaces like Learnable are enabling new business models for the distribution of community created content.

Firms that fail to experiment with these and other innovative digital business models will fail to survive.

Consumers also want a seamless experience across their devices

Today’s connected consumer expects to access content and online services across multiple devices … but they also expect to be able to transact and manage their accounts within the context of the touch point they are currently using. What this means, in effect, is that channels no longer exist.

Commerce APIs are the key to enabling contextual commerce experiences across all of a consumer’s various devices. Mobile and social commerce opportunities are the likely first ways in which these APIs will be leveraged. Ralph Lauren’s solo sponsorship of The New York Times iPad application in September with commerce from Ralph Lauren Magazine is just one example. Tesco’s Homeplus mobile grocery shopping solution for South Korean commuters is another. With commerce APIs and an ever connected consumer, commerce will soon be embedded throughout the web and within products like automobiles, appliances and even pill bottles that support auto-replenishment. By providing buying experiences tailored to both the individual consumer and the device they are using, content providers and other businesses can start to build on-going relationships with their customers. The Holy Grail is a compelling, never-ending revenue generating experience.

Looking for help with digital commerce?A recently released Forrester report provides tactics for selecting digital ecommerce solutions and looks at some of the key platforms available in the market today. Get your free copy of Market Overview – Digital Commerce Solutions 2011 here.

Looking for help with ecommerce strategy? Contact the Elastic Path Research & Strategy team at consulting@elasticpath.com to learn how our ecommerce strategy services can improve your business results.