Media Convergence & Media Management 1

Media Convergence  Convergence  Nicholas Negroponte, Founder of MIT Media Lab Founder of MIT Media Lab  In 1978, Nicholas Negroponte began popularizing a theory called convergence - the process by which the work of the various media industries in the late 1970s was beginning to intersect - the process by which the work of the various media industries in the late 1970s was beginning to intersect 2

Media Convergence Media Convergence  The concept of media convergence is broad and has multiple meanings.  Convergence is known broadly as the coming together of computing, telecommunications, and media in a digital environment.  Three types of convergence - Technological convergence - Technological convergence - Economic convergence - Economic convergence - Cultural convergence - Cultural convergence 3

Defining Convergence  Definitions of media convergence focus on technological convergence, functional convergence, competitive/complementary convergence, and strategic/industry convergence. 4

Convergence in Substitutes/Complements Convergence in Substitutes/Complements  (e.g.) Complements – coffee & sugar (e.g.) Substitutes – coffee & tea (e.g.) Substitutes – coffee & tea  The extent to which the boundaries between industries are beginning to converge or dissolve  Competitive convergence (i.e., 1+1 = 1) - “A new single industry” will emerge - “A new single industry” will emerge  Complementary convergence (i.e., 1+1 = 3) - New synergic products and/or markets emerge in which the amount produced exceeds the “sum of the parts” (e.g.) broadband industry - New synergic products and/or markets emerge in which the amount produced exceeds the “sum of the parts” (e.g.) broadband industry 5

Media Convergence: Example - Smart Devices 6

Smart Devices-Smartphone Smart Devices-Smartphone  Smartphone: A mobile phone offering advanced capabilities, often with PC-like functionality (PC-mobile handset convergence).  A mobile phone built on a mobile operating system (OS) with advanced computing ability and Internet access (PC Magazine, 2011). 7

Smart Devices-Tablet Smart Devices-Tablet  Tablet:  Tablet: A mobile device with a touchscreen interface, screen sizes ranging from 5 to 14 inches, color displays, WiFi and/or 3G Internet connectivity, and advanced operating systems  Mobile OSs: Apple iOS, Google Android, Windows 7, BlackBerry 8

Mobile Applications!!! Mobile Applications!!! Mobile apps are expected to generate $38 billion by 2015!!! Mobile apps are expected to generate $38 billion by 2015!!! Worldwide revenue of mobile application stores surpassed 15 billion dollars in 2011 (Gartner, 2011) Worldwide revenue of mobile application stores surpassed 15 billion dollars in 2011 (Gartner, 2011) 9

Mobile Applications!!! Mobile Applications!!! According to Nielsen (2011), games, weather, social networking, maps/navigation/search, and music are the top five popular categories of mobile applications used by U.S. smart device owners. According to Nielsen (2011), games, weather, social networking, maps/navigation/search, and music are the top five popular categories of mobile applications used by U.S. smart device owners. 10

Global Smartphone Market Share Global Smartphone Market Share 11

Global Tablet Market Share Global Tablet Market Share 12

Media Convergence & Strategic Management Media Convergence & Strategic Management 13

Blue Ocean Strategy & Convergence Red Ocean StrategyBlue Ocean Strategy Compete in existing market space. Create uncontested market space. Beat the competition.Make the competition irrelevant. Exploit existing demand.Create and capture new demand. Make the value-cost trade-off.Break the value-cost trade-off. Align the whole system of a strategic firm's activities with its choice of differentiation or low cost. Align the whole system of a firm's activities in pursuit of differentiation and low cost. VALUE INNOVATION 14

Generic Strategies (Porter)  Differentiation  Differentiation strategy & media convergence 15

Resources (Resource-based View of Strategy)  Reputation (or brand name) and financial resources are internal resources of a media firm. internal resources of a media firm. (e.g.) Google and Apple selected a strategies that best utilize the their resources (tangible or intangible) and capabilities. (e.g.) Google and Apple selected a strategies that best utilize the their resources (tangible or intangible) and capabilities. 16

Broadband & Net Neutrality 17

What Is Network Neutrality? What Is Network Neutrality?  A policy that prevents restrictions on the delivery of online content or websites, under the idea that all traffic that flows through the Internet should be treated the same. 18

What Is Network Neutrality? What Is Network Neutrality? 19 Everyone should have equal access to the Web!!!

Net Neutrality Proponents Net Neutrality Proponents   Operators should not be allowed to discriminate and prioritize traffic according to source or owner   Competition is not yet sufficient to allow market forces to decide.   Prioritization means that traffic from some sites will be degraded.   Operator charges could shut out new Internet companies   Diversity & innovation 20

Net Neutrality Proponents Net Neutrality Proponents 21 Control of data!!! The Internet was designed with no gatekeepers over new content or services. Allowing broadband carriers to control what people see and do online would fundamentally undermine the principles that have made the Internet such a success. - Vint Cerf -

Net Neutrality Opponents Net Neutrality Opponents  Internet companies should not get a free ride.   Operators must have a right to charge to get a fair return on network investments.  likely to reduce investment in the network  Net neutrality rule is likely to reduce investment in the network.   No risk that operators will block or degrade content.  Net neutrality is a violation of the property rights of Internet service providers because they produce and own access to the Internet. 22

Any questions? 23