Cross Industry Ownership occurs when companies own other businesses in a different industry.
There are many advantages for companies who branch out into various industries, including diversification, data exchange, market research and development and also rights control. The company itself is also protected by essentially not keeping all it’s eggs in one basket. If you are a travel company who also own a successful business in the media industry, and the travel industry suffers major fall back, you will be protected by having investments elsewhere outside of the suffering industry. Cross Industry Ownership also creates lots of opportunity for business development and it’s staff by creating large pools of resources which are easy to exchange and tap into.
An Example: Google
If it isn’t on Google, it doesn’t exist – Jimmy Wales
One of the best examples of this is Google. Originally a search engine founded in 1998, Google have diversified into many industries and currently own over 200 companies in various sectors. Their product itself now spans various industries including search (the original Google, cloud based storage (Google Drive), geolocation applications (Google Maps). data (Google Analytics and Trends) amongst many others.
Google also own Android, a mobile phone operating system which is Apple’s market leader, the iPhone, largest rival. Google also own YouTube, which allows them to dominate the online video business and create revenue streams via short ads at the beginning of content.
An Example: Disney
I only hope that we never lose sight of one thing — that it was all started by a mouse. – Walt Disney
Another example of Cross Industry Ownership is The Walt Disney Company, which has diversified far beyond a cartoon mouse driving a steamboat. Disney currently own companies in industries such as broadcasting (radio and television), theme parks, online media channels and web portals, movie studios (such as Pixar, Marvel, LucasFilm and 20th Century Fox), video games and merchandise to name a few.
The advantage of Cross Industry Ownership for Disney in particular is they have a large control over the current entertainment industry, affording them some stability in a fast moving sector and the ability to easily target new audiences and navigate potentially difficult rights ownership issues. Disney are also easily able to diversity their products within similar industries, such as licensing character usage for both merchandise and video games. This can lead to interesting crossovers such as The Avengers crossing paths with classic Disney characters:
Of course, there are disadvantages to Cross Industry Ownership too. But that’s not the focus of this post so we won’t go into it. Yet.