I think it’s wrong that only one company makes the game Monopoly. Hasbro took ownership when it acquired Parker Brothers in 1991 and 30 years later, it is still the world’s most popular boardgame. The property trading contest gives an ironic framework to analyse the state of online commerce – which is amidst the genesis of a shift away from monopolistic marketplaces like Amazon and the iStore.
Any competition with dice is a game of chance, but there are 3 golden rules that will help you win at Monopoly every time:
- The first phase of the game is where it’s won and lost
- Buy railroads
- Always play as the car
I’ll explain each shortly, but first, let’s set the scene: Sky news recently broke a story about Sony PlayStation being sued for £5bn amid claims it ‘ripped off’ nine million consumers by charging a 30% commission on every digital game and in-game purchase made through the PlayStation Store.
It is another use case in a trending theme: merchant and customer get screwed over by the controlling market owner who distributes the product.
If you want to create or publish a game for the world’s most popular gaming console, you become a PlayStation Partner and your game is then sold on their marketplace, on their terms. But you could replace PlayStation with a host of even bigger online stores doing the same. You own your IP, they own the revenue (don’t worry, they give you some of it).
Sony is a big company, but only 107th on Forbes’ list of biggest companies by revenue ($85bn in 2021). Incredibly, 3 out of the top 5, and 5 of the top 30 have some form of online marketplace in their portfolio of products – Walmart (1), Amazon (2), Apple (5), Google (13) and Microsoft (26). And that excludes Alibaba (58) and Facebook (66).
There is no doubt that these online marketplaces are valuable – they open up global markets to eCommerce merchants, game & app developers and software businesses. You leverage their brand and network of consumers and let them do all the heavy lifting.
If these marketplaces are such a blessing, why is there a massive push by product creators to move off them and sell from their own website or online store?
That’s a discussion for another time, today I’d like to consider why players do use the marketplaces – it appears Big Tech took the 3 cardinal rules of the boardgame Monopoly to create their own monopolistic dominions.
1. Start trading immediately
It’s hard to catch someone who has had a good start in a game of Monopoly. From the first Begin, start buying and trading immediately. The faster you establish wealth, the greater your chances of winning.
Product creators have a similar mindset in business. The quickest way to have a successful product is to start selling it immediately – and using an online marketplace gives you instant access to an array of marketing channels and millions of buyers. In the age of lightning-fast tech innovation, you want your product first to market.
2. Own the distribution network
Everyone who plays Monopoly knows you want to own the railways, as they offer a very attractive, steady return on investment. But conceptually, wealthy people have known for hundreds of years how it pays off to own the logistics networks. Apple dominated music by owning the delivery of singles and albums on iTunes, Amazon changed the game of eCommerce with their FBA model and Facebook made it possible for any kid in her garage to sell an app globally.
Why bother having to find your own shipping company, or develop the tech to make your digital product downloadable or accessible on all devices – when you can simply piggyback off the existing reach, economies of scale, and technology offered by the marketplace? (We all know the answer to this one: there’s no such thing as free delivery)
3. The stats don’t lie
Most people who win at Monopoly play as the car. This third rule is a bit of a cheat, or more accurately what Nassim Taleb would call “Fooled by Randomness”.
The fact is that the car is the most popular token to play with – 1 in 4 players will choose the car ahead of the ship, dog, top hat, and whatever other pieces there are. Since most people play with the car, it must be true that most winners will be playing as the car (but this does not mean that playing as the car was a cause of victory).
When you start an online business, all you want is potential buyers. Most businesses will have faith in their product’s sell-ability, but it doesn’t help if no consumers have eyes on your prize. Solving marketing and distribution is harder than creating the product itself, so it makes sense to use an existing shop, with existing tech and place your product in the shop window where millions of eyes can see it.
The question remains: is it better to be one item on a shelf packed with billions of other products in a busy supermarket or the only item in a specialty store? Every product is different, but when you factor in that Apple takes a 30% cut from app developers and Amazon charges anywhere between 10% and 45% to their FBA merchants – it is vital to make sure the numbers add up.
Monopolies are a result of free markets, and there is no right or wrong. The great American business magnate, Howard Hughes, said it best when he was accused of having a monopoly on the oil-well drilling industry. “We don’t have a monopoly. Anyone who wants to dig a well without a Hughes bit can always use a pick and shovel”.