Long Tail 28#
Instead of concentrating on blockbusters, the main bulk of revenues is generated through a 'long tail' of niche products. Individually, these neither demand high volumes, nor allow for a high margin. If a vast variety of these products are offered in sufficient amounts, the profits from resultant small sales can add up to a significant amount.
Examples: Iconic Cases
How they do it: On Steam, Valve’s game publishing platform, users can download (for free) or purchase access to 781 million different games, as of 2018. This includes large blockbuster titles, as well as very obscure games published by hobbyists. Most distinctly, a large portion of all games published on the platform (or, as much as 450 million games) were never downloaded or played. In 2018, Steam introduced a $100 fee for publishing a game on its platform, to curb abuse of the system.
Learn more about Valve Corporation →
How they do it: Instead of offering their advertising solutions to few companies, through Facebook all kinds of companies and initiatives ranging from small to big in advertising budget can use the platform to target their audience. Although individual small customers may don’t have a big advertising spend, the amount of companies adds up to significant revenues.
Learn more about Facebook →
How they do it: Blockbuster, at the peak of its powers in 2004, operated about 9,000 stores globally. For the first Blockbuster store, $800,000 were invested in order to outfit the store and its movie title inventory. At its opening, customers were spoilt for choice, as the store already then made around 10,000 titles available for rent.
Learn more about Blockbuster →
How they do it: Apple offers its customers a wide variety of music in its iTunes store. Revenue with individual songs might be small but through the sheer mass of songs users download it generates a substantial amount of revenue.
Learn more about Apple iPod/iTunes →
How they do it: Amazon Kindle has a library of millions of digital books. A new Kindle e-book is published every five minutes. Amazon Kindle is offering bestsellers and a vast majority of niche publications on its platform while ensuring that they are competitively priced. Hence it allows them to adress a big audience of potential customers through its wide offering and good prices, rather than few high margin products. Individual margins might be low but the sheer majority of transactions add up to a significant revenue.
Learn more about Amazon Kindle →
Below, the top industries for the pattern "Long Tail" are displayed, in order to get insights into how this pattern is applied across different industries. We've collected data from 5 firms using this pattern.
Top Industries
50% of firms using pattern
17% of firms using pattern
12% of firms using pattern
All Industries
Below, the pattern "Long Tail" is analyzed based on co-occurrence, in order to get insights into how this business model pattern is applied in combination with other patterns within the firms we studied.
Top Co-Occurrences
7 pattern co-occurrences
7 pattern co-occurrences
7 pattern co-occurrences