Why "Winner Take All" is So Common

Winner take all is the adage describing market leadership in most application categories, but also might be said to apply in capital-intensive industries such as the telecom business. Some might argue that structure describes most markets, over time, including retailing, transportation, and information technology.

The percentage of total revenue at publicly-traded U.S. corporations earned by the top 100 firms was 53 percent in 1995, for example, growing to 84 percent over the next two decades.

The difference share makes is clear in big markets, especially.

Others would say the “winner takes all” market structure is particularly apt to occur in two-sided markets (transaction markets linking buyers and sellers; media markets or markets largely supported by advertising).

Some will note that markets with network effects also tend to produce the “winner take all” pattern, since such markets are built on value that increases disproportionately with the number of potential connections. In the old telecom business, that was exemplified by the “anyone can call anyone” level of scale.

It is easy to illustrate the fact that mobile app usage is highly concentrated on the supplier side, illustrating the winner take all pattern, where the leader in a category has 40 percent market share, or greater.

"The continuous growth of messaging and social apps mean that the total app time is becoming dominated by just a few sectors, with the top three categories accounting for 78 percent of all mobile app time spent," says Dr. Hannu Verkasalo, Verto Analytics CEO.

The point is that “winner take all” is surprisingly common, in many markets other than content or applications. In fact, it might be considered the “normal outcome” in any competitive market.

source: Constellation Research whW
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