Why so many companies are moving into other industries

A social media company moving into education- A telco company dabbling in mobility. An insurance company setting up healthcare clinics- A retailer trying out streaming. It’s not exactly new, but it’s definitely an accelerating trend. So why is this happening more and more? And who has recently been jumping (even more) on that boat?

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October 4, 2022
Strategy

These examples can also be found in our latest trend ebook, read that here.

Why this? Why now?

One big reason why we see organizations increasingly experimenting in other industries is because there is safety in diversification. In a fast changing and uncertain business environment - increasingly at the mercy of global challenges like climate change, unstable geopolitics, lockdowns, natural catastrophes, etc. - it might be wiser to distribute risk over several sectors. If one or two industries suffer, chances are that others might fare better. The trick here is probably to find industries that are (currently) pretty essential, like health, wellbeing, energy, food, smart cities, education and finance.

And a second reason is obviously data: a lot of the magnetic platform companies are chasing service models where they will be able to harbor a lot of useful and valuable data in data-intense industries like healthcare and smart home: Amazon, Apple, Google, Microsoft, Bytedance (parent company of TikTok) and even Uber (with Australian patient transport service Uber Health) to name but a few. A big part of their goal might be to gather as much data as possible now to create some kind of ultra convenient lock-in so consumers will practically be forced to give up their data when Web3 happens (read all about Web3 here).

Third, it’s just a sign of the times. The next version of the web – Web3 – is expected to be decentralized and distributed. That will make it more secure, more resilient and will offer more control to the user, among other things. If you extrapolate that, it makes sense that the industry model of today’s company will also become more distributed and decentralized.

And fourth, obviously it's also about following the money. Healthcare, for instance, is not only a very useful data industry, in the United States, it's also where people are spending a lot of their money, as the illustration below shows. That is probably a very big reason why we see Big Tech and other significant US based companies like Walmart moving into that area.

Image source: Preethi Lodha in this article.

Reading the patterns

If you look at all the industry-reshuffling activity, there are some interesting patterns surfacing. What I see:

  1. Many industries are moving into essential industries, because this is where consumers will keep investing money, even in a recession: examples are energy, health & wellbeing.
  2. Many seem to be venturing in useful data industries: examples are healthcare, smart home and smart city.
  3. Industries like energy, education and mobility are really popular because there is a LOT of room for improvement and growth and thus a lot of opportunities for disrupters.
  4. Commodity industries like telecommunications and grocery retail are looking for ways to diversify themselves in more “fun” ways (like video streaming).
  5. Tech & fintech seem to be attracted to education: that’s mostly about marketing & evangelization but who knows how this might pan out?

Some recent concrete examples

  1. British fintech company Revolut has been moving into the education space, offering a free crypto course 'Learn & Earn' which has been completed by over one million people in the first month since they launched the feature.
  2. In the same space, Web3 developer infrastructure startup Alchemy - often referred to as the Amazon Web Services (AWS) of Web3 - acquired a startup in the education space: ChainShot, which runs coding bootcamps for aspiring web3 developers.
  3. Meta is moving into education by helping 10 universities launch campuses that will be built on metaverse “soil” (duck pond included!).
  4. Retailer Walmart is investigating how to build its own streaming service and is talking to some big-name content players about which shows and movies it can offer to Walmart Plus subscribers. To quote The Verge: “Amazon Prime Video — but make it Walmart”. Prior to this it has also frequently been venturing into healthcare with for instance its Walmart Health Centers for primary care.
  5. Several social media platforms are also diversifying, mostly into adjacent services: YouTube is launching a dedicated podcast page and TikTok parent ByteDance filed an application with the US Patent and Trademark Office for “TikTok Music” in May - which will also support podcasts and digital radio content.
  6. Streaming company Netflix has been investing in mobile gaming. With around 1.7 million people playing daily, it has a long way to go, but its efforts are on an upward trajectory. Netflix's plans may actually include building its own cloud gaming infrastructure (we know what happened when Amazon did that). It has acquired several game studios to help it expand and better understand the space.
  7. Telecommunications provider Proximus intends to cash in on the future of mobility and vehicle electrification, planning to install 15,000 EV charging points by 2028.
  8. Media companies like the BBC and Belgian newspaper De Tijd have been offering training courses to their audience.
  9. Music streaming service Deezer is testing a meditation app.
  10. Telecom company Telenet has invested 3 million euros in de energy start-up June Energy, looking into new growth opportunities and broadening its offer.
  11. Online retailer Amazon is one of the biggest and fastest acquirers in healthcare, smart home and financial services (from payments and lending to insurance and cash deposits) industry for the moment. In healthcare, it has acquired Pillpack (2018), Halo (2020), Teladoc Health (2022) and One Medical (2022) and launched several coronavirus testlabs (2020) as well as Amazon Care (2021). At the time of writing this, it was also included in a bidding war for Signify Health, together with UnitedHealth Group Inc and CVS Health Corp. In the smart home environment Amazon now has Alexa, Ring, Eero and Roomba (2022), which basically allows it to know every nook and cranny inside ànd right outside a user’s home.
  12. Telecom giant AT&T bought entertainment giant Warner Brothers. In fact, getting into entertainment and streaming is a very popular move among telcos to protect them from the ‘dumb pipe’ syndrome, seeing that, from a cellular service point of view, they are essentially indistinguishable from the competition: T-Mobile’s offers its customers Netflix for free and its best customers will get free access to Apple TV+. Verizon offers its customers the Disney bundle of Disney+, Hulu and ESPN+ as well as six months of Discovery+. AT&T offers HBO Max to some long-standing wireless subscribers (although it has stopped offering it to new customers).
  13. Tech company Apple recently published a nearly 60-page report outlining its health features and partnerships with medical institutions to argue that these offerings are the key to its future.

Has your company already diversified to other industries? Or are you planning to? Let us know over the socials. We’d love to know!

WRITTEN BY
Laurence Van Elegem
Laurence Van Elegem
Laurence has more than 10 years of experience in marketing, communications and disruptive innovation. Passionately curious, she is fascinated by the impact of technology and science on the way we work, consume and live our lives.
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October 4, 2022
Strategy