I’ve been following the business side of things here in the aquatics business for some time. Just last week we had the biggest news in the history of the hobby. Two major competitors were joining forces: Ecotech Marine and Aqua Illumination. Why would a business deal like that make sense? There are of course several factors at play here. But first a little lesson on how these two companies came about.
History of Ecotech Marine
Ecotech Marine was founded way back in 2003 by three entrepreneurs with a dream on changing how we moved water in our glass tanks. That dream became a patent. In time the company started to look at other channels of revenue outside the reef industry because they realized they could only sell so many water pumps.
Then in 2011, Ecotech marine announced their new Radion XR30 led light. Alas, Ecotech Marine had a new revenue source that they could cross-market in other vertical industries. While we all might love the aquatics business, in reality, the business is quite small with estimates of total industry worth of less than 750MM. The bulk of that going to the folks that just have freshwater aquariums. Boring.
History of Aqua Illumination
Aqua Illumination had an entirely different path to market. In 2007, Aqua Illumination introduced their first light for aquariums. They had no water pumps only lights. Back in 2008, a huge breaking news story happened in the industry…Orbitec sued Solaris PFO, which at that time were the only ones, making a mass market LED lighting contraption and selling a lot of them at $20,000 a pop. We all wanted one.
Because of the 2008 patent scandal, it was widely guessed that Aqua Illumination licensed the patents from Orbitec. Orbitec, if you don’t recall was a weird company that made interesting gadgets, mostly for the now defunct space program. But one of the patents they held was for over the tank LED lightning for aquariums. Payday.
Why would Ecotech Marine and Aqua Illumination Merge?
Exit Strategy
Nobody wants to be running their company forever. Eventually, you’ll get sick and tired of it. It’s human nature. Even Steve Jobs got tired of running the operations at Apple and hired now CEO Tim Cook to iron out all the important details. I would guesstimate that both the founders of Ecotech Marine and the investors of Aqua Illumination would love to cash out. Now, since merging what a nice enticement to have a large product portfolio, distribution system and marketing alignment to a large pet company such as United Pet Group or Hagen. It’s worldwide led/water pump domination in a box!
Market Share
Now one company controls a large chunk of the marketshare for both water pumps and aquarium lighting. In fact, it’s not just market share. It is the cream of the crop…high end aquarium lightning where we don’t mind paying $800 or more for these fancy LED setups.
Other Business Verticals
As I mentioned earlier, the aquatics business is very small. What other markets could the new company target to increase revenue? You can only do so many things with water pumps but we all need lightning. The advanced lightning systems these two companies produce could target different industries for growing plants, lighting offices or even perhaps the streets we drive at night. Merging together would give valuable resources to focus the time and the attention to different verticals.
Forward
Eventually, I would expect to see the two companies looking at a gap analysis model and discontinuing products that compete with one another or have small user base installations. Then they will follow one of the above strategies for merging. If it does in fact have something to do with plants. I have a personal request. If you could make a light to keep an orchid alive I would gladly buy it. My fiance can’t keep one alive for the life of her. As bonus you could market this to every big box retailer in the US and Canada. I’ll gladly take a 1% idea commission fee. Plant builders anyone?
Disclaimer: Both companies have advertised with Reef Builders since its inception in 2006.
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