Let me start by saying that I know next to nothing about fluid dynamics. However, the little that I do know has helped to provide me with a great many insights of the 'digital customer' and by extension a very good vantage point from which to evaluate the future of digital entertainment convergence.
You see, I have painted a picture in my mind of the millions of digital customers as one massive stream of water rushing downriver while digital entertainment businesses are the dams whose turbines generate revenues as digital customers come gushing through them.
While I use the above analogy to gain a better understanding of some of the dynamics of digital entertainment convergence at the 'macro' level, I similarly apply it at a 'micro' level when evaluating a particular digital business offering and also at the 'nano' level to determine the level of 'fluidity' of a specific functionality for example. Here I will discuss mainly the macro level.
So let's look again at the key elements which form part of this 'digital stream'. We have water (digital customers), the dams (digital businesses) and the turbines (digital systems & processes). Each element has a particular function and objective. Water wants to flow to the 'other side' and it will pass through the dam's turbines to get there (digital customers want to use or purchase a digital offering); the dams want to contain as much water as possible to power their turbines (digital businesses will grow and thrive in proportion to the number of digital customers they are able to attract) and finally the turbines will attempt to use the flow of water as efficiently as possible so as to maximize the energy produced in the process (the more efficient a digital system is the more revenues it will be able to generate, the more profits it will derive and the faster it will thus be able to grow).
Assuming for a moment that two competing parties are targeting identical markets (the location of the dam and its associated water flows) and that their 'construction and engineering' teams have matching capabilities, the key issue will turn to which of these two parties is able to maximise the returns from its activities through the superior design of its systems and processes (the design and efficiency of its turbines).
Unfortunately, I have repeatedly come across situations where people believe that the mere fact of locating and building their digital business within close proximity to a large stream of digital customers will automatically grant them untold riches. There are two issues that they fail to properly take into consideration. Firstly, they are not operating in a void but have many direct and increasingly indirect competitors who will fiercely attempt to divert as much of the digital stream for themselves. Secondly, they spend significantly more time looking at the big picture of the water and the dam than the minute details of the turbine where all the energy will actually be generated.
Again, I am often faced with instances where managers are not immediately concerned (or worse, aware) that while their dam may be generating 400 megawatts their competitor is also generating 400 megawatts but failing to recognise that this competitor is able to achieve the same level of output with a dam that is two thirds the size of theirs through the use of more efficient turbines. Within the context of a dynamic digital environment there is little doubt that the more efficient operator will rapidly eclipse the other.
In conclusion, while many digital businesses are in the right location and have developed a digital offering of one kind or another the ultimate winner will be determined by which player is able to design the most efficient and fluid system to exploit the Digital Stream.
I would like to thank my good friend Stephane K. for the many conversations which have greatly stimulated my thinking on this as well as other issues.