Is OTT Disrupting Television?
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Is OTT Disrupting Television? Is OTT Disrupting Television? A case study on OTT’s impact on the Swedish Television value chain Carl Waldenor Master Thesis in Business & Economics Marketing and Media Management (30 ECTS) Abstract This thesis uses value chain analysis to investigate the recent OTT (over-the-top) developments’ influences, consequences and strategic implications on the Swedish television value chain. The purpose of this study is to provide a better understanding of the recent OTT developments in the Swedish television industry, and thereby give industry actors (primarily broadcasters) a “road map” to support strategic choices for future investments. A case study research design is used and empirical data was collected from interviews with employees of Sweden’s largest commercial TV company TV4-Gruppen. Several influences, consequences and strategic implications for members of the entire television value chain are found and analyzed using theories from three areas: value chains, disruptive innovation and strategy, and IT impact on strategy. The main conclusions are focus around that the OTT development is substantially different to other historical technological advancements in the television industry, in that it is separated from traditional distribution infrastructure. It thus has a direct impact on the structure of, and power in the television value chain, as it opens up for disruptive innovation in some parts of it. Keywords: Television; Television industry; Disruption; Disruptive innovation; Value chain; Value chain analysis; Strategy; Over-the-top; Case studies; Digital media Advisor: Christopher Rosenqvist Opponents: Sebastian Bergendorf & Frédéric de Goÿs Examinor: Patrik Nilsson Defense: Stockholm, June 7th , 2013 1 Is OTT Disrupting Television? Table of Contents 1. INTRODUCTION ................................................................................................................................... 4 1.1 THE PROBLEM ..................................................................................................................................... 5 1.1.1 Over-the-top (OTT) distribution .................................................................................................. 5 1.1.2 The television value chain ........................................................................................................... 6 1.1.3 Industry complications ................................................................................................................ 7 1.2 PURPOSE AND RESEARCH QUESTIONS ................................................................................................. 8 1.3 DELIMITATIONS .................................................................................................................................. 8 1.4 TERMINOLOGY AND DEFINITIONS ....................................................................................................... 9 1.5 DISPOSITION ........................................................................................................................................ 9 2. THEORETICAL FRAMEWORK ...................................................................................................... 10 2.1 VALUE CHAIN .................................................................................................................................... 11 2.2 DISRUPTIVE INNOVATION AND STRATEGY ....................................................................................... 14 2.2.1 Disruptive innovation ................................................................................................................ 14 2.2.2 Strategy and IT .......................................................................................................................... 16 2.3 IT IMPACT ON VALUE CHAINS ........................................................................................................... 18 3. LITERATURE REVIEW .................................................................................................................... 19 3.1 OTT AND THE TELEVISION INDUSTRY .............................................................................................. 20 3.2 INDUSTRY LITERATURE ..................................................................................................................... 21 3.3 OTHER MEDIA INDUSTRIES................................................................................................................ 22 4. METHOD .............................................................................................................................................. 24 4.1 RESEARCH DESIGN ............................................................................................................................ 24 4.1.1 Selection of interviewees ........................................................................................................... 26 4.1.2 Supporting documentation and information .............................................................................. 27 4.2 DATA ANALYSIS ................................................................................................................................ 27 4.3 RESEARCH QUALITY ......................................................................................................................... 28 4.3.1 Credibility.................................................................................................................................. 28 4.3.2 Transferability ........................................................................................................................... 28 4.3.3 Dependability ............................................................................................................................ 29 4.3.4 Confirmability ........................................................................................................................... 29 5. EMPIRICAL FINDINGS ..................................................................................................................... 30 5.1 THE CASE COMPANY ......................................................................................................................... 30 5.1.1 A brief history of TV4-Gruppen................................................................................................. 30 2 Is OTT Disrupting Television? 5.1.2 TV4-Gruppen today ................................................................................................................... 33 5.2 INTERVIEW FINDINGS ON RESEARCH QUESTIONS .............................................................................. 35 5.2.1 OTT’s influence on the value chain ........................................................................................... 36 5.2.1.1 Content Creation................................................................................................................................ 36 5.2.1.2 Content Packaging I: TV4-Gruppen .................................................................................................. 36 5.2.1.3 Content Packaging II: generally ........................................................................................................ 38 5.2.1.4 Content Distribution .......................................................................................................................... 39 5.2.1.5 User Interface .................................................................................................................................... 40 5.2.1.6 End Users .......................................................................................................................................... 40 5.2.2 Value chain consequences of OTT’s influence .......................................................................... 41 5.2.2.1 Content Creation................................................................................................................................ 41 5.2.2.2 Content Packaging I: TV4-Gruppen .................................................................................................. 42 5.2.2.3 Content Packaging II: generally ........................................................................................................ 43 5.2.2.4 Content Distribution .......................................................................................................................... 44 5.2.2.5 User Interface .................................................................................................................................... 45 5.2.2.6 End Users .......................................................................................................................................... 45 5.2.3 Strategic implications in the value chain .................................................................................. 46 5.2.3.1 Content Creation................................................................................................................................ 46 5.2.3.2 Content Packaging ............................................................................................................................. 47 5.2.3.3 Content Distribution .......................................................................................................................... 48 5.2.3.4 User Interface .................................................................................................................................... 49 6. ANALYSIS