When your firm is the first mover in a new market, you have a huge advantage over any competition that may develop later – as long as you continually dominate it.
The First Mover Advantage is a business concept that identifies the unique collection of advantages a firm has when it is the first to enter a market. Among these are market share and brand recognition/loyalty.
In terms of market share, when your firm is the first entrant into a previously empty market you do not have other firms that you will be competing against. You are, in effect, dominating the market until new firms venture into the space to begin competing with you for customers. While alone in this space, you have the opportunity to gain a large share of customers who will likely remain loyal to your brand into the future. This makes it more difficult, but not impossible, for new entrants to gain traction.
Take Netflix (NFLX) for example. Netflix moved very swiftly into the internet video streaming market once consumer internet download speeds were high and reliable enough to handle the large amounts of data transfer that high quality video requires. Because they were the first mover in the video streaming market they did not have much competition to worry about, could commit their customers with a subscription model, and had the ability to, in effect, drive the direction of the industry.
With Netflix’s first mover advantage essentially solidified, it became very difficult for new entrants into the market until years later. While large competitors now exist (Amazon Prime Video, Disney+, and Apple TV+), Netflix is not likely to experience any major disruptions in in its business model from new entrants. Its business now depends on continuing to provide a large selection of high quality, reliable video and original content to retain customers. This is much easier to do than enter a market to take customers away.
“When you dominate the game early – you should also dominate the game late.”
Kobe Bryant, The Kobe System (Nike)
Speaking of Netflix’s new competitors, we can transition into one of the first mover disadvantages. While it is difficult for any newly formed firm to successfully compete with Netflix, established and well-capitalized firms do have the ability to enter the marketspace after having observed Netflix’s operations for years.
They have had the ability to allow Netflix to use its capital to create the market and learn from Netflix’s actions by emulating what Netflix has done correctly and improving upon things it can do better. By doing this, they have been able to enter the market without many of the startup costs or (especially) risks that Netflix had in its early growth phase.
In summary, while being the first mover into a new market does have major advantages, there are also advantages for late movers and you must consider both when entertaining the idea of entering a previously unoccupied market. If you are the first mover and do not do things right and create proper value for your customer, then a late mover may come in and take over the market and leave you in their corporate dust.
Christopher Padilla 
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