There is a fine line between competition and market saturation. Look at the online video market. In theory, YouTube has the market sown up, but no.
There are dozens of known, probably hundreds of unknown sites ranging from www.dailymotion.com (20 min videos), www.metacafe.com (short form 90 second videos), www.vimeo.com (720p HD video), www.veoh.com (US TV), www.joost.com (professional quality video ranked by recommendation), www.blip.tv (budding filmakers) and www.stickam.com (live footage)
These sites show that healthy competition shouldn’t scare you; healthy competition demonstrates there is a serviceable market. Every one of these sites has found a gap with a serviceable market and become the best at what they do.
Keeping a close eye on what the competition is doing can be difficult but it will help you stay fleet of foot and ensure you can continually differentiate and innovate.