How well placed is HBO to sustain its recent success in the entertainment industry?
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This document critically evaluates how well placed HBO is to sustain its recent success in the entertainment industry. It discusses strategic decision making, three dimensional strategic analysis, first mover advantage, product and process innovation, and sustaining competitive advantage. Recommendations for HBO's future success are also provided.
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CORPORATESTRATEGY 1
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Table of Contents Component 1 is in Poster......................................................................................................................3 Component 2........................................................................................................................................3 Critically evaluate how well placed is HBO to sustain its recent success in the entertainment industry........................................................................................................................................3 Strategic decision making...........................................................................................................3 Three Dimensional strategic analysis..........................................................................................4 First mover and first mover advantage........................................................................................4 Product and Process Innovation..................................................................................................5 Sustaining Competitive Advantage.............................................................................................5 Recommendations...............................................................................................................................6 References...........................................................................................................................................7 2
COMPONENT1ISINPOSTER COMPONENT2 Critically evaluate how well placed is HBO to sustain its recent success in the entertainment industry Strategic decision making As per the recent articles placed on HBO, it has been identified that HBO is facing complex, ever changing climate with more innovative competitors than before. Though the channel is critically acclaimed, widely popular and highly profitable, still it needs to adjust the telecast according to the changing market for TV entertainment (Cai, Jo and Pan, 2012). HBO has become known for setting the standard for smart and intense telecasts and through this, channel's TRP has been increasing continuously. Hence, as a result of this creative freedom, HBO has been working as a creative playground that represents all the telecasts of Hollywood channels. There are basically three factors that leads the channel into pressure and all the three factors are mentioned in the below section: Eroding consumer buying power: Income level of middle class American households has been increasing and that leads people to pay less for TV serials and movies (Marshall, 2013). As per the reviews, Americans pay less for entertainment at home; thus this has dropped television demand for the first time ever. Many Americans are looking to cut spending in any way they can and cable TV are often at the top of the list for spending cuts. The end of the home box office: The number of movies telecasting at HBO has been increasing and due to that, a large part of programming at HBO hampers (Yousafzai, Hussain and Griffiths, 2014). People have more choices than ever for how to watch movies as soon as they release in theaters and they do not need to subscribe to HBO anymore. Thus, according to market trend, HBO is able to acquire box office benefits from all the telecasts. New competitors for premium TV: At the same time, HBO is also facing intensifying competition in the original TV production business. Showtime and Starz have created acclaimed TV series of their own like Dexter and Weeds. HBO is a very strong brand; however the brand alone is not enough to help companies overcome their challenges. Therefore, the brand can lose relevance with the customers for all sorts of reasons that are often beyond the control of the brand managers. Thus, in order to manage these strategic aspects, HBO has informed all its investors that they would be offering a stand-alone digital subscription to customers outside of the usual cable distribution model (Thompson and et.al., 2013). In such context, Time Warner has indicated that the firm would be targeting typical millennial who have the capability to pay for such subscribed 3
channels. Media and entertainment is a rapidly changing industry; thus in response to that, IBM solution provide market leading analytics capabilities to ensure a sustainable consumer experience. Three Dimensional strategic analysis The three dimensional strategic analysis of the HBO which make it television network wide in the entertainment industry. The following are the three dimensional strategic analysis are - Financial Strength– The financial strength of the HBO is increasing as their financial capacity is to gain growth in the entertainment industry. The TRP of this network is increasing as thechannelprovidesvariousserieslikemovies,TVserials,realityshows,comedyacts, documentary based series and concert shows (Purce, 2014). The other channels are also subscribed to this channel to produce their broadcast in a better way. All this factors lead to the financial strength of the HBO which increase their financial profitability in the entertainment industry. Relative Market Share– The market share of HBO has been increasing since the channel is able to telecast all sorts of serials. HBO includes upgraded information on mobile application for the easier access to those internet users who don't buy TV package channel. The profit margin of HBO is increased which lead to many opportunities in the international markets. Relative Market Strength- The market strength of HBO is that it is the latest Hollywood blockbuster in the entertainment industry. Over 150 countries, HBO broadcast its series. It also have special characteristic of involving in the merchandising actively. The features of movies, serials, documentary based series, comedy acts, concert shows, boxing shows make it made for cable channels more effective to gain the market share (Marshall, 2013). The kind of series produce by this television network enhance their viewers and it also underpins their position in television network. First mover and first mover advantage First mover is the advantage gained by the initial and significant occupant of a market segment and it may also be refereed to as technological leadership. Not all the first movers are rewarded and if the first mover does not capitalize on its advantage, its first mover disadvantages leave opportunity for new entrants to enter the market. This is also essential in terms of competing more effectively and efficiency than the first movers (Lee, Singal and Kang, 2013). HBO has been managing success aspects as first mover advantage where in chief emphasis has been given towards technological leadership. As per the concept, the diffusion of innovation can diminish the first mover advantages over time through workforce mobility, publication of research and informal technical communication. HBO has been involved in telecasting range of movies and TV serials and this enhance revenue of the channel; thus as a result, different production houses have been 4
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sponsoring the channel for more telecast of serials and reality shows. Product and Process Innovation HBO can be regarded as a innovative service provider since the channel telecasts all sorts of serials, movies and reality shows. In terms of product innovation, HBO has been entering into diverse episodes so that all types of programmes can be displayed. From last many years, HBO has been telecasting major TV serials such as Friends, The Larry Sanders Show, The Sopranos and Six Feet Under (Johnson and et.al., 2013). Among these serials, HBO has also entered into comedy shows so that all types of serials can be displayed to the customers. Hence, in such respect, it can be said that the cable channel had developed a slogan to highlight the differentiation factor of the original programming that it has been putting on the channel. In terms of product innovation, HBO has been introducing high definition serials which helps in acquiring deals from numerous production houses. Sustaining Competitive Advantage HBOhasbeenmanagingitsbusinesspositionincompetitivemarketplacethrough telecastingreality TV serialsandothermovies(Hacklin,Battistiniand VonKrogh,2013). Apparently, 3D animation movies have been affecting the entertainment industry because it brings numerous changes to the specific industry. At the same time, the level of competition is also increasing since there are varied technological drivers that manages the industry and it also assists the channel to broadcast popular TV shows. 3 D animations firms cover the wide area in the entertainment industry (Fisher III and Oberholzer-Gee, 2013). It is based on the computer animated films appear three dimensional on the film screen. The advancement of technology in making the 3D films and the graphic and web designing of the films make it unique in the film screen. HBO is a television network which consists of theatrically based movies, television series, documentaries, boxing series, and concert specials. The impact of 3D animation films require the advancement of technology but for HBO it is not possible to produce many of the shows on 3D. HBO offer its viewers 3D films as a part of the television network. The production of the 3D films is more complex which is difficult for the HBO to produce its television network in complex way (Christopherson, 2013). For HBO, it would face the high satellite cost and reducing their bandwidth requirements. HBO is not intent to repeat the broadcast to face the competition when high definition was enter the market with the standard definition. The another impact of 3D animation films on HBO is the technology catch up with the network. In broadcasting the series and movies, there are multiple formats which are follow but the 3D films make their films in a more magical way and the graphic designing of the films appear in the film screen (Cai, Jo and Pan, 2012). The broadcast of the 3D 5
films handled correctly for the better quality of movie which have an impact on HBO to handle the broadcast correctly. If they are not handled correctly, the result might hamper efficacy of the channel. For making the 3D contentfor television is not easy for HBO and cost of producing the series is very high. To test the distribution infrastructure on 3D have an impact on the HBO. RECOMMENDATIONS ï‚·HBO should make more innovation in the networking aspects where in the channel should subscribe to other telecasts. ï‚·Since 3D and animated films are increasing; therefore HBO must emphasize on telecasting HD films. This can assist HBO to acquire attention from the clients because most of the clients prefer to watch high definition serials. ï‚·Hence, as a overall service provider, HBO should implementing wide range of changes in the channel chiefly for the purpose of customer convenience. ï‚·The more creative risk in the market increases its content in the next few years (Negus, 2013). The innovative ideas of broadcasting the various series increases their market share in the entertainment industry. Thus, chief emphasis should be given towards innovative and creative aspects. 6
REFERENCES Cai, Y., Jo, H. and Pan, C., 2012. Doing well while doing bad? CSR in controversial industry sectors.Journal of Business Ethics,108(4), pp.467-480. Christopherson, S., 2013. Hollywood in decline? US film and television producers beyond the era of fiscal crisis.Cambridge journal of regions, economy and society,6(1), pp.141-157. FisherIII,W.W.andOberholzer-Gee,F.,2013.Strategicmanagementofintellectual property.California management review,55(4), pp.157-183. Hacklin, F., Battistini, B. and Von Krogh, G., 2013. Strategic choices in converging industries.MIT Sloan management review,55(1), p.65. Johnson, G. and et.al., 2013.Exploring strategy text & cases. Pearson Higher Ed. Lee,S.,Singal,M.andKang,K.H.,2013.Thecorporatesocialresponsibility–financial performancelinkintheUSrestaurantindustry:Doeconomicconditions matter?.International Journal of Hospitality Management,32,pp.2-10. Marshall, L., 2013. The 360 deal and the ‘new’music industry.European Journal of Cultural Studies,16(1), pp.77-99. Negus, K., 2013.Music genres and corporate cultures. Routledge. Purce,J.,2014.Theimpactofcorporatestrategyonhumanresourcemanagement.New Perspectives on Human Resource Management (Routledge Revivals),67. Thompson, A. and et.al., 2013.Crafting & Executing Strategy 19/e: The Quest for Competitive Advantage: Concepts and Cases. McGraw-Hill Education. Yousafzai, S., Hussain, Z. and Griffiths, M., 2014. Social responsibility in online videogaming: What should the videogame industry do?.Addiction research & theory. 7
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