Uncertainty in the markets is causing businesses in just about every sector to look for new ways to increase their profits and build a sustainable future. In what industries do product spin-offs or corporate spin-offs make the most sense?
The Effect of Spinning Off Popular Products
There’s long been a tradition in the food and soft drinks industry of creating new products based on a brand’s most successful items to keep their produce range fresh and interesting. A look at the ever-changing Kit-Kat range reveals how they’ve got a huge variety of bars based on the original, with festive versions leading the range at the time of writing. The key in this method is that the original is still available as a classic version, contrasting with the new releases.
This is a strategy we can see in other areas, such as when you play online casino games at Paddy Power. Slots including Age of the Gods, Big Bass, and Starburst are among the games that performed so well that new versions or sequels have been created. Live game shows provide another way of doing this, with Gonzo’s Treasure Map based on a popular slot and Deal or No Deal Live inspired by the TV show of the same name. Again, it’s a low-risk approach to diversifying and making sure that customers get something fresh to enjoy.
Why London Spin-offs Work for TV Shows
You’ve presumably seen this effect in other areas like TV shows. It’s common for a long-running series to create spin-offs or special episodes that freshen up the concept by taking the cast somewhere new and introducing new characters and situations for them to deal with. London is a popular destination for this type of spin-off, as we’ve recently seen with the rumours of the Power universe from Starz coming to the UK capital.
Billions is another show with good audience figures that the producers are looking to expand in a new direction. Billions: London is one of four planned spin-offs and should delve into the world of British finances. In the past, we’ve seen spin-offs of Doctor Who, Coronation Street and EastEnders have mixed results, so it certainly isn’t a guaranteed recipe for success, but moving the characters to a big city like London remains a popular choice.
The Benefit of Corporate Spin-offs
While the previous examples cover a business spinning certain products or shows, some companies decide to go further and spin off a large part of their company into a separate entity. A study by Tilburg University of UK spin-offs suggests that restructuring, greater financial transparency and a tax or regulatory reason are among the key factors that cause companies to consider this approach.
With the current economic climate, it seems certain that at least one of these reasons is sure to appeal to many business leaders looking for a more stable view of the future. Among the recent moves in this area, Haleon was listed on the London Stock Exchange after separating from the giant GSK, creating one of the biggest new listings in the European markets in the last ten years or so. Melrose Industries PLC provides another recent example, with their automotive unit being spun off to leave them concentrating purely on the aerospace business.
This is a low-risk strategy for companies with a successful product that they want to ensure remains attractive and interesting. For companies that want to change the way they operate, a spin-off is a much higher risk and more complex, but it can prove to be an excellent way of facing up to difficult market conditions and new challenges.