Well, as with most aspects of entrepreneurship, there isn’t one right answer to your question.
Whether it is worth starting another venture in an area that already has other players will depend on a number of aspects about the environment that you are going to operate in. I have tried to outline a few thoughts, but there will be many, many more aspects that others will have a perspective on.
Size and nature of the market opportunity
Is the market large enough to support multiple players? Is the nature of the industry predominantly fragmented (e.g. restaurants – many can co-exist) or is the industry dominated by a few large brands (e.g. e-commerce).
Do you have experience or competence that makes you particularly suitable to lead a venture in that space
Even in a market with some established brand leaders, it may be possible for an entrepreneur with deep industry experience to create a successful brand. E.g. in a crowded space of organizing/aggregating healthcare in India, someone with deep healthcare industry experience with an existing network and understanding of the challenges and opportunities can create a very successful venture, even if the existing players are dominant in the market. In fact, because of the person’s understanding of the industry’s challenges and opportunities, and BECAUSE there are a few large brands whose market share the venture can snap at, it may be an easier task for this experienced entrepreneur to consider a venture in that space.
Doing it differently
Even with existing players in the market, it is possible to create a distinct identity for the brand. Either on a service differentiator (same product, better service) or on a concept/value proposition differentiator (same concept, differently positioned) or a price differentiator (lower price/higher value or even higher price/premium positioning) or targeting a different target audience (younger or older or different income bracket, etc.) even a brand personality differentiator.
How satisfied are customers with existing options
If there is a serious level of dissatisfaction among customers/consumers, and complacency among established players, there will be good opportunities for newer ventures to capture that market.
Where do you do it?
Let me illustrate with an example. In India, there are 100s of companies that have attempted to do ERP for doctors or Clinic Management Systems (CMS). Almost everyone failed. Most attempted these in either Delhi NCR or Mumbai and a few in Bangalore and Hyderabad. Clinics in these cities are fed up with startups coming to them to be beta customers and are unlikely to entertain them as most past experiences have been a waste of time – either the product was bad or the startup shut shop.
However, there is a large untapped market in tier 2 cities across India where no one has approached those clinics with a CMS. If you target that market, despite it being a product already available, you could have an opportunity.