Digitilization of the broadcasting value chain and the consumer/viewer…

Posted on 11 Σεπτεμβρίου , 2006

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https://www.openbc.com/hp/Apostolos_Tsorakis/  

Fast and cheap broadband connections operated by easy to use low cost devices, modular content, and shared computing resources that provide mobility are having a deep impact on the global economy and its social structure. Customers becoming end users, increasingly take cues from one another rather than from institutional sources like corporations, media outlets, religions, and political bodies.

To prosper in an era where communities and individuals absorb technological evolution a broadcasting organisation should flirt with the idea of abandoning top-down management and communication tactics, enrol communities into its programming, enhance employees and partners as marketers, and become part of a living foundation of brand loyalists. To achieve though this contemporary future it basically needs to proceed with the first step of infrustructure upgrade and content digitalization.

There is no unique strategy though that succeeds for all organizations in all situations. Thinking strategically about any business many factors must be considered: the extent of product diversity and geographic coverage, the technologies at hand, the number of market segments served, the distribution and the marketing channels used, the role of branding, the level of marketing effort, and the role of quality.

It is also necessary to consider the organization’s approach to new product development in particular, as a technology leader or follower, the extent of innovation, the organization’s cost position and pricing policy, and its relationship to customers, competitors, suppliers and partners.

In today’s reality, change is occurring at an accelerating rate and under this perspective all companies will have to consider three new realities:
• Globalization will continue to affect businesses
• Technology will continue to advance and amaze people
• There will be a continuing push for deregulation of the economic sector

These forces have created new behaviours and challenges:
• Customers demand higher quality of service and some customization
• Brand manufacturers are facing intense competition from domestic and foreign brands
• Store-based retailers are suffering from an over saturation of retailing

Most economic turnarounds remarkably correlate with commercialization of innovations that connect economic growth. This happened with the servicization of operations back in 70’s and this is happening today with the proliferation of broadband networking and the introduction of digital asset systems in the media, telecoms and entertainment markets. When economies are interconnected value is multiplied, bringing people, goods, regions and societies together. Interconnection also provides equality; it is mass-consumed and available to all, impacting every strata of the society, providing ubiquitous (always-on-always-available) communications and transfer of valuable knowledge.

The concept of nationally detached markets is no longer relevant, except where strong differences in consumer tastes and cultural preferences exist and as a consequence, competition amongst suppliers is intensifying. Industry deregulation and the creation of the single European market have served to speed up and promote this trend.

In many sectors, market maturity has been reached, characterized by overcapacity and exacerbated by current recessionary forces. Margins are being driven down, calling for greater operational efficiencies and “value for money”. Under such conditions, the importance rests as much on retaining the customer as on attracting new customers. It also presents a new challenge, how to create and stimulate new demand to the marketplace, rather than be satisfied simply by competing purely on a market-share basis.

The concept of a value chain, defined as the coordinated series of activities leading to the creation and delivery of any product or service, is deeply embedded in the collective wisdom of today’s business leaders. This concept has shaped a generation of business models and enormous efficiencies have been gained by organizing and managing value chains. However, the next round of efficiencies will come from new processes companies’ institute. In other words, a greater emphasis will be put on how firms organize and manage the production, delivery, and use of the information on which value chains are built. Business processes no longer belong to a single business.

The modern value chain is far more complex than those of even a decade ago. New levels of connectivity, a relentless focus on cost-cutting and core competency, and market demand for innovation have created complex interactions between enterprises. Even Michael Porter, who first coined the term “value chain,” has said, “Organizational structure in most firms’ works against achieving interrelationships.” It should be added further that many repositories of information on which value chains rely work against interrelationships not only within, but among enterprises.

The challenge, however, is that information and the technology applications that host it have become fragmented over time. The usual result is a limited free flow of activity among employees, partners, suppliers, and customers. The problem is often that the systems and infrastructure needed to support this partnering are home-grown, proprietary, fragile, extremely difficult and costly to support, or simply unable to keep pace with shifting demands (especially in a global context, where transactions often lack high levels of standardization and predictability).

Asset management, once limited to managing archives, has evolved significantly to the point where it now plays an integral role in the broadcast-delivery chain, a process that involves the acquisition, production, and distribution of content. The factors behind this evolution are two-fold.

First, advances in technology are reducing the costs and improving the capabilities and performance associated with how assets can be stored, accessed, and processed. Secondly, business needs are forcing the administrations to find new ways to unlock the hidden value of the company’s assets through new and alternative distribution.

To do so, an organisation should consider implementing a more systemic approach of managing assets throughout the broadcast-delivery chain. A simple consideration is to design an interoperability layer which will become the driver of this migration.

And it’s not that simple to integrate technologies from different manufacturers to achieve a systemic approach of managing assets; therefore open standards become essential for the migration to advance. Broadcasters have unique needs: compound integration with networks, equipment and devices and complex workflows. They need help to break down the process of “going digital” into phases that can be approached systematically. They may also need assurances of supplier longevity to support multi-year implementations.

Of equal importance to the systemic approach of migrating to digital, and offering opportunities for both savings and improved revenue, are the traffic systems that handle inventory management, scheduling, and accounts receivable. The traffic system is the only system that touches a station’s entire revenue stream all the way from order entry to scheduling to invoicing. And this leads to the centralcasting discussion that revolves around master control operations and technology including automation, spot insertion, program playback, and networking. This is due to the fact that the consolidation of engineering operations offers the greatest opportunities for controlling expenses and achieving economies of scale.

In the centralcasting environment, sales operations are being removed from the central business and administrative functions. This will necessitate though some form of sales force automation. If a firm decides to integrate such a system to streamline the sales process, a sales force automation package should be integrated to the centrlcasting environment.

Framing the customers’ perspective it is useful to notice that the exponential growth of processing power and storage capacity they administrate puts unprecedented power into their hands. With this power, not only can individuals do more for themselves, they can also do more to support one another. This has a direct impact to the entertainment markets; sharing resources via file exchanges and content networks allow nodes of individuals in the network to sustain one another and rely less on institutional support. (P2P media assets exchange, create big losses in music and video industries)

A direct outgrowth of the technology explosion in information handling and communications has been the switch out of a single-product approach to business, to systems thinking. The shift from selling ready-made, tangible products to selling by reputation and on capability to manufacture according to exact client specifications, on an “as needed” basis, is one of the most fundamental challenges facing businesses today. It promotes the importance of forging longer term relationships with customers and being more customers committed.

Customers therefore, have both latent needs — which lead to disruptive innovation — and explicit needs, leading to sustained innovation. This limbo creates fickle consumer taste and faster product cycles. As analysts suggests media firm’s new products fail within the first three years. But if more media firms, had continuous discussions with communities and influencers, sharing online prototypes or previews, they would feel the pulse of the market and increase their hit rate. Production will incur less waste as they better predict product demand — using Web site interactions as a proxy for planning or analyzing data from Web intermediaries.

From the brand equity perspective the landscape may also be blurring. Since 2000, consumers are increasingly likely to say that price is more important than brand, and are less likely to stick with a brand, even one they like. This data does not say that brand is unimportant. It simply indicates that brands have to meet higher standards in order to ensure customer loyalty.

In a foreseeable future as researchers predict, empowered communities may not wait for the right proposition, instead they will be setting their own criteria and sort out brands that don’t meet them. In this future – Kotelr argues that major marketing developments can be grouped under the theme of “Connecting” – online “vertical communities” connected to the networks will be approached to agree on standards for sustainable growth and post these as requests for proposals to manufacturers. The result: Brands will be defined by the communities they serve.

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Posted in: Politicsonline