Hybridization

It has many meanings, depending on what field you're looking into.

• In genetics, it usually implies combining different varieties or species to form a hybrid (a new species that falls between the two original species
• In linguistics, it occurs when one language begins to blend into another, typically characterized by "loan wording", where a foreign word becomes mainstream in a different culture (cliche from French) (see an incredibly interesting article from Wikipedia on the different ways to formulate words here)
• In globalization theory, this refers to the time when cultures become increasingly blended through interaction or proximity- and this is the closest to what I mean when I say hybridization

 It's okay though. Since this is my blog, I'm pretty sure one of my "powers" is to make up new meanings willy-nilly if I so choose. Today's topic though, "hybridization" centers on something that I'm sure all of us have experienced, but maybe just didn't know what to call it.

Economic Hybridization (cite: myself) is when existing players, services or stakeholders begin slowly transitioning, expanding and transforming themselves to become hybrids of many different companies. Similar to how globalization refers to the expansion of companies across cultures, this is an expansion of companies across services- creating these hybrid creatures that no longer securely fit in one category.

Let's talk about those that are trying to get into anything- complete random jumps. On the surface, they don't make sense, but actually conceal a much deeper strategy. Let's look at some examples. Zong, for example, the company with the meteoric rise in the mobile payments community, recently announced that they were going to expand their payments platform to TVs, gaming consoles and tablets.  They already have a partnership with Facebook as a payment provider for their alternative currency, so why expand outside of a sure thing in the small virtual goods arena? Well, there's a lot of competition for one, with Boku moving into the Facebook space as another potential provider. It also just makes sense for Zong to move into a more comprehensive space- in all likeliness, its possible that the process by which Zong and Boku work (confirming payments by texting a PIN) will be phased out soon if they can't compete. The process is efficient, but doesn't hold a lot of promise for anything else other than small virtual purchases, and frankly, there just isn't that much volume going through the small virtual purchase world for Zong to continue to be profitable (especially in the light of all the new competitors popping up). Enter a new revenue source. By integrating with TVs, gaming consoles and tablets, we see a natural progression. TVs offer streaming video, gaming consoles offer gaming add ons or additional levels, special in-game capabilities. Tablets offer video, gaming add ons and the app world. In these new platforms, we see a huge variance in cost of product, desirability from the customer and popularity. However, the one things they all have in common is that they cater to high frequency digital adopters (those first movers who want to do everything virtually) and could potentially be a source for new income in the future (tablets begin to offer tablet-specific gaming, gaming consoles allow you to buy or rent games through the console, the home shopping network takes on a completely new meaning).

Another example that I've spoken about before is Starbucks. They have one of the most successful closed-loop mobile payment systems around. Consumers can pay for their purchases with their mobile phones at over 6,800 stores. Starbucks recently announced that over 3 million customers have used the mobile payment system since it's January launch! By focusing on the customer experience, Starbucks has quietly made its way onto the mobile payments scene and is now posing a serious threat to traditional players. What if they decide to partner with other merchants? Could a Starbucks/Target/Jewel Grocery partnership mean the beginning of a huge surge of adoption in mobile payment users? I'm sure that the thought leaves traditional issuers wondering, How can I get in on that early? I want to be the top card in the wallet when that begins to happen."

And alternative players- what's happening there? Google has developed (officially) the most popular operating system for mobile phones in the world and definitely in the U.S.- they're not known for hardware! But that isn't enough- now they're looking to play in the mobile payments space with Apple. Apple, long known for its hardware, is now also rumored to be moving in that direction-potentially through their iTunes platform. And what about traditional players, are they becoming alternative? What about Amex and their announcement about the e-wallet? It's not a new concept surely, being able to link multiple accounts to one card (Capital One has a decoupled debit card, PayPal essentially does the same but through the online channel) but it definitely means the idea of a mobile wallet is taking shape, being accepted into the mainstream. There will certainly need to be intermediary steps between today and our mobile wallet future, and the new offering from American Express is definitely one of those steps.

Categorization, although it makes me more comfortable, is becoming more and more difficult. Possibly this is a new way to think about the future of technology-to make us acclimated to how the future will be- where things bleed into one another. Maybe in that future categorizations just won't be necessary- as long as we know the general goals of these companies.