Disruptive Innovation and the Comcast-Time Warner Merger

I was recently driving in the car listening to NPR when the host of this particular show introduced a guest who was there to talk about the Comcast-Time Warner Merger.  This guest’s opinion was that this was a terrible thing.  This merger would result in no competition in most markets, make upstart alternatives non-existent and result in a third-world network for content delivery in America.  The only medicine to fix this would be to stop the merger or give that market a heavy dose of regulation to in order to police it.  A listener to this particular discussion would come away in fear of this potential merger.  However, I came away with a much different thought.  I believe the Comcast-Time Warner merger is an opportunity for alternative disruptive innovation in the content delivery market and that this merger would be more beneficial to the consumers and to the market for content delivery.

When a market has matured, companies in that particular market will see a slowdown in organic growth.  In order to continue to grow, those companies will start merging or acquiring other companies in the market to obtain growth (albeit inorganically).  However, when a market consolidates, this opens up room for innovative startups to bring disruptive innovation into that market.   The content delivery market has already seen some of this innovation take place, but I believe this market is ripe for more innovation.   For instance, most adults in their twenties and early thirties have already given up the idea of paying for cable.   Cable is costly to have and you end up paying a lot for content that you will never actually watch.  Most people in this age demographic have turned to alternative methods for their content delivery, like Hulu or Netflix.   More alternatives are in the works or are being put to market, like Aereo.  And there is still room for even more new innovation to deliver content.  The “threat” of less choice for consumers or the “need” of more regulation in the light of this proposed merger could not actually be further from the truth.  This merger will only open more doors for innovative companies to disrupt the market and bring needed innovations to the market.

I believe any time a merger or acquisition by two big players in market happens; it opens up the market to disruptive innovation.  Whether its content delivery or airlines or restaurants or taxi service, there are disruptive innovations that are trying to gain a foothold in the market.  With many players in the given market, it may make it harder to gain that foothold.  However, when the many players in the market start to merge with each other, it opens up more room in the market to bring the innovation in and change the market.   When consolidation like Comcast-Time Warner happens, consumers will naturally look for another option.  That makes that market prime for a disruptive innovation to gain acceptance and grow.

I am sure there will be plenty more news articles and commentary about the ills of this type of merger happening in the market over the next couple of months.  However, instead of fearing this type of activity, we should be excited to see the new innovations that come from it.