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The first music channel to broadcast music television in Asia was the American music channel MTV. It entered the Indian market in 1991 via Star TV’s satellite. But two years later, over a disagreement regarding the amount of local programming it left the scene and a new player emerged in the form of Star TV’s own Channel V. this was after Rupert Murdoch’s News Corporation acquired Star TV. Since the MTV’s approach to the market was global, channel V emphasis on local artistes and VJs and for a while enjoyed a monopoly position in the market. But this monopoly was not for long, MTV reentered the Asian market in 1995 with new strategies to gain competitive advantage and brand image. Since then the growth of MTV in the region has been tremendous.
In 1999, the rivalry manifested itself in an escalating war of words between Steve Smith of Channel V and Frank Brown of MTV with each alleging that the other was misrepresenting distribution figures. The case documents this feud and its effect on advertisers in the context of the emerging Asian market for televised music.
The Music Television Channel, MTV was created in collaboration of Media Company Warner Communication and Credit Card Company American Express on 1st August 1981. Within the next 10 years MTV had become a popular culture icon among the youth. It became a launch platform for artists and became a whole lifestyle in itself. MTV popularized music and changed the way audience conceived it before.
Whereas Channel V, an international music channel chain, owned by Star TV network and is aired in many countries around Australia, Asia and the Middle East, played both mainstream and alternative music. There approach was local. Their target was the 15-24-age set, where it currently trails with its competitor, MTV. This funky channel is a craze among music loves and the young generation.
The case also talks about the initial success of channel V which lead to a shift in MTV’s programming mix and the various steps adopted by MTV that enabled it to become the market leader at the cost of channel V.
INDUSTRY ENVIRONMENT ANALYSIS
Analyzing the case based on the porter’s five force model :-
A supplier’s influence is defined by its ability to bargain price and influence availability of materials. Other strengths of the supplier include their ability to
- increase prices without suffering from a decrease in volume,
- reduce the quantity supplied,
- organize in a formal or informal manner,
- compete in an environment with relatively few substitutes,
- provide a product/material that is a critical part of the end product or service,
- impose switching costs on their customers when they depart,
- integrate downstream by purchasing or controlling the distribution channels.
As such, every company that depends on the services and materials from key suppliers need to be sensitive on the variables that are highly important and considered by the suppliers.
MTV and CHANNEL V – Medium to high for record companies, music producers, and movie companies. The supplier is the music industry which provides content and programming. The decision-makers of the company should have a clear understanding of the business dynamics in which suppliers are directly involved in. These include the suppliers’ concentration or their focus and core business interests, variety of products and design offered, and the alternative resources that are available. In this light, it is most appropriate to build win-win relationships with suppliers or arrange the use multiple suppliers in order to protect the interests of both ends.
It describes the impact customers have on an industry. Stronger the buying power stronger is the influence in determining the price. The bargaining power of buyers increases when they have the ability to
- make agreements with other companies providing similar products and services,
- purchase a product that represents a significant fraction of the expenses incurred by the company,
- purchase of a product that is undifferentiated,
- incur low changes in costs when they change vendors,
- be price sensitive by bearing in mind the options available, and
- Integration to purchase the goods of the suppliers.
MTV and CHANNEL V- Teenagers to young adults, advertisers, satellite Cos, TV channels.
Barganing Power of Buyers – High for advertisers, satellite/TV channels especially due to the fierce competition between the two.
The competition is determined by the number of new companies entering the industry. Success can be determined by evaluating the methods of entry and exit for a new player. Although any company should be able to enter and exit the sector, each industry presents different levels of difficulty influenced by economics. These unique characteristics of the each industry are referred to as barriers to entry which may come from different aspects of the business ranging from supplies to technology. They seek to reduce the rate of entry of new entrants which leads to maintenance of a level of profits for the existing players.
MTV and CHANNEL V -To enter in music TV channel industry needs huge investments to set up a TV channel. There are also strict government regulations especially in Asia on TV content. indeed the barriers to entry are low as more music channels are beginning to emerge.Several companies are pitching in with all the new digital platforms widely propagating in the entertainment industries. MTV’s competitors can only multiply through substitute platforms that will attempt to topple down MTV due to viewing alternatives. Cheaper means to present music has since multiplied thanks to wireless solutions.
As barrier to entry is low, MTV and channel V can definitely expect threats from other competing channels from all over the world. The government also will get in the way by regulating the channels entering their countries.
“Substitute products” as those that are available in other industries that meet an identical or similar need for the end user. Due to the availability and affordability of more substitutes, the demand becomes more elastic since customers have more alternatives. Other concerns in assessing the threat of substitutes include the presence of new technologies that can contribute to competition though more diverse and economical substitute products and services. A segment is unattractive when there are actual or potential substitutes for a product.
MTV and CHANNEL V- Medium to high, people can enjoy music from other means like DVD, CD, and Radio etc. New cable networks had been fast emerging ever since the 1980s. Cable networks would enjoy enormous growth during the 90s to the dawn of the 21st century and they provide viewers, audience and markets other viewing options.
Firms strive to secure a competitive advantage over their rivals. The intensity of rivalry varies within each industry and these differences can be important in the development of strategy. Industries that are “concentrated,” versus “fragmented,” often display the highest level of rivalry. In pursuing an advantage over its rivals, a firm can choose from several competitive moves:
- changing prices,
- improving product differentiation,
- creatively using channels of distribution,
- exploiting relationships with suppliers.
MTV and Channel V-Duopolistic competition among MTV and Channel V.
Globalization has opened competition especially in the case of local channels. There is new technology to be exploited that will expand broadcasting capabilities. Locally produced material has become the goals of every TV channel in order to truly suit the personal tastes and sensibilities of the viewers. Governments also encourage local materials. Globalization has opened the doors for other entities internationally to join the competition as they are able to access new markets. Competition will perceivably become stiffer in the growth of new competition and rivals all around the world.
STRATEGY OF MTV – “I Want My MTV”
MTV came up with a loyalty concept, a slogan that targeted the 12-34 age segments. The idea of “want” and “my” gives off the idea of a personalized desire that can be met by MTV. It’s the individuality of this segment that wants them to declare it proudly. Therefore consumers seek for this distinctiveness and want to take part of the MTV revolution. Cable networks and advertisers alike can’t help but to include MTV among its ranks.
MTV can possibly capture a wider market share even beyond their 12-34 demographics, by forming more spin offs such as MTV dance and through channels like VH1 and Nickelodeon.Through VH1 they can reach out to the market older than 34, they are reportedly a group of loyal consumers at the same time they can win the appeal of those younger than 12 through the Nickelodeon channel and the online game called Neopets. To achieve all this, they can work towards mergers, alliances and acquisitions which leads to the next strategy.
BUSINESS LEVEL STARTEGY
Channel V had already established itself quite well by the time MTV re-entered Indian market. Commenting on Channel [V] becoming popular in MTV’s absence, Peter Jamison, the then in-charge of MTV Asia commented, “I feel like the father who went to war and has come back to discover that his place in the family has been taken by another man.”
In 1997, MTV was forced to announce a strategic shift in its programming mix and started airing Hindi film songs by the Channel [V]’s growing popularity. However the MTV sources refused to accept this.
MTV cashed well its more focused approach by understanding the pulse of the Indian music market in terms of programming mix whereas Channel V lost its focus and failed to do so. But we cannot hold the channel solely responsible for it. There were certain problems inherent in the organizational structure. The channel had a centralized structure, wherein almost all the programming decisions were made at the headquarters in Hong Kong. As a result, the channel found it difficult to track the latest popular songs and modify its programming mix accordingly.
Channel V’s image as a music channel become so popular that it acted as a barrier while projecting its new image as a channel for youth and to change this perception by offering non-music programs was a big task. They had adopted this new concept but had no benchmark to judge its programs. MTV’s programs attracted audience across all segments whereas Channel V’s programs appealed only to one section of the audience at a time.
The ‘Back to Basics” strategy was initiated by the Star TV network which had a majority stake in Channel [V]. According to this strategy, the channel decided to take off all non-music programs off the air, as producing them was very costly compared to the music-based programs. Moreover, advertising time on Channel [V] was sold as a package along with other Star TV channels at a discount. For instance, an advertiser advertising on channel(s) under the Star TV network was offered spots on Channel [V] at concessional rates. As Star’s channels such as Star Plus and Star Movies were very popular, Channel [V] hoped to cash in on their popularity.
Bottom of Form
LEVELS OF DIVERSIFICATION
In order to establish themselves as the winner and sustain the position both the channels adopted new channels of diversification:-
- In 1998 – channel V signed a deal with ALMA TV, to beam there international channel to 50000 homes in Kazakhstan.
- Brand extension by MTV in the form of record compilation such as “unplugged” series and the CD “MTV alternative nation” released by Seagram’s.
- MTV’s deal with Singapore telecommunication for licensing.
- MTV logo featured on merchandises in Philippines.
- Channel V’s brand extension includes albums and t-shirts which were showed in INDIA but there scale of licensing activities were considerably less than of MTV.
- MTV joined hands with CBS Corporation and was able to reach exposure through CBS’s advantage in news, sports and distribution.
- The Multi-domestic strategy- MTV Asia associated with National Broadcasting Company of the Philippines in order to establish a terrestrial channel on the country. In doing so, NBC is able to impart their mastery in distribution and operational expertise in the Southeast Asian country.
- Through its Music awards it is also able to attract big time sponsors such as PepsiCo and Ford Motors. This would even attract more market. In PepsiCo’s case, its food and drink consumers and through Ford, car consumers.
- It has also been endorsing the channel through political and social causes for poverty and AIDS.
MTV expanded by telecasting local contents whichalso allowed them to divide and reach individual markets who will want a music channel who knows not only their music interests but also their locale. MTV then acknowledges its slogan “I want my MTV” as it is able to give consumers the MTV they really want based on their culture and not merely western or European. The consumers are clearly interested to a channel that knows them enough to speak their own language and sensibilities.
It is an integral procedure and a very powerful tool for organizations and businesses to instigate effective marketing plans. It aims to comprehend the environmental as well as the organizational influences that surround a particular business establishment. There are actually two types of situational analysis that are both equally significant. One is the external analysis and the other focuses on the internal environment. When conducting an external situational analysis, the business’ customers, market and competitors are analyzed.
Whereas, internal situational analysis focuses on the identification of the company’s distinctive competencies, expected growth, their assets as well as their liabilities. It also illustrates the core values of a company so that these value can be enhanced or beneficial to the market. The evaluation of the internal environment of the company involves the analysis of the company’s structure, culture and resources. When a strategy is selected for implementation, it must be appropriate given the way the organization is structured or the way an organization must be restructured. The strategy must be consistent with the organization’s culture. Finally the organizational resources must be available to actually implement the strategy that was formulated. Without the proper people, skills, abilities, finances and physical resources, the strategy cannot be implemented (Buhler, 1994).
The success of the business organization entails detailed understanding and examination of political, social and economic factors that influence the growth and continuous operations of the company. Studying the important consideration relevant to the organization to serve the purpose and objectives of the company will determine its success. Consequently, decision-makers of the company should be sensitive of the general trends and changes that are taking place in their industry. This will include efforts to maximize the opportunities available while reducing the risks that confront the business organization. The strengths, weaknesses, opportunities and risks that characterize the operations of MTV are detailed in the discussions that follow.
- MTV dominates the young adult population who are some of the strongest money spenders due to its association of popular culture.
- MTV appealed to the population not only through the music but also through its coverage on lifestyle, film, fashion and other forms of leisure and entertainment that captured this market.
- MTV is a channel that has a personal appeal that cable networks and advertisers come knocking on MTV’s door.
- MTV positioned itself as it gives the young adults what they want and at the same time, this market determines what MTV should show them.
- It was percieved that MTV is an empowering vehicle to the young adult market, which allows them to have a more pronounced self-esteem, power and personality which allows MTV to constantly claim the dominating position.
- One of its strength also MTV’s appeal to its advertisers. During its many programs such as the Music awards, MTV has received sponsors from many companies that are confident to enjoy exposure in MTV’s sought after programs.Ex- PepsiCo and Ford.
- MTV has been served as a launch pad of present favorites and successful artists.
- It expanded and exploited other media and entertainment forms other than music such as those brought by films and video games.
- Its constant mergers with companies such as the Philippines’ National Broadcasting Company will further localize MTV and fit the interests of its audience and bridging cultural as well as regional differences.
- MTV has since expanded to India and China and has been continuing its move towards alliances and mergers for wider distribution and for tailored products. Partnerships will allow MTV to cement its influence in a fast moving insatiable consumer market.
MTV’s constant support for social and political causes will allow greater relevance and presence. Its involvement with such issues strengthens its power and influence in the realm of entertainment media. Its expansion to other media forms will allow it to deliver more services other than just mere music. MTV’s VH-1 will allow MTV to maintain its dominant position among other markets.
MTV had encountered obstacles in reaching the local audience through their cultural misunderstandings therefore it started to lose its dominating power as there are other interest the markets and audience wants to be met. Thus MTV will need to find out what exactly these interests are and expand to this if they would want to maintain a dominating position. Cable Television offers several other choices that MTV is removed from its monopoly.
They must understand the cultural background they are penetrating by making appropriate aspects such as advertising, brand, and cultural contexts.
Thes channels have an opportunity to merge into mobile and Internet companies for the wider distribution of their products and better solution what the market demands. At the same time, MTV may enjoy visibility in wireless technologies allowing the market to “have its MTV” when they want it. MTV can give an enhanced on-demand viewing experience the web and mobile.
Globalization has helped MTV to get into international deals and the emerging markets such as China, India and Brazil having rich growth opportunities to venture into.Since two thirds of Asia’s population belongs to the 12-34 age group which is MTV’s Target market.It will be a large market to explore and cater toand also due to Asia having interest in Western Products.Data says that MTV has up to 54 million homes in China.
Other substitute and the emergence of Digital cable will be a threat to MTV’s current dominance. Germany had created their own local music channels that would be a threat to MTV. They have the advantage of their familiarity of the audience that MTV hardly has.
Many Digital platforms provide other alternatives for the population to spend their past time and thus MTV must know well to penetrate this. For MTV to continue setting trends, it must be open to other possibilities as its consumers are known to be demanding and possessing short attention spans.
New cable networks and channels have been eager to take a chunk out of MTV’s advertising share. However, the advertising revenue has been decreased as cable networks lose their appeal. The presence of new digital and media forms provide advertisers other new and emerging ways and alternatives in marketing their products.
The threat in MTV’s chosen market is that the young adult stage is a turbulent and short-lived stage and the young adult’s sensibilities and interests are quick to change.
Production of more channels as a result of technology development allowing local cable and satellite technology to create more and increase bandwidth.
MTV must continue its expansion of local content as competition and rivals decide to attack MTV through local channels. Globalization has only increased the chances for MTV to meet its hungry competitors and it is easy to have the means to try to top MTV through new digital and media platforms. MTV has already its share of imitations from countries around the world and people may not mind this. By integrating these technologies and continuing its expansions throughout the world especially in emerging countries found in Latin American and Asia, it may continue to meet success. MTV’s chance of success and survival is not as high in the 1980s and 1990s where MTV has been a pioneer of music television, and establish itself as a cultural icon.
MTV must first correct its weaknesses foremost of which is its need to reach out to a local audience by researching about the market they are entering. This can be repaired through alliances with local companies such as the Philippines’ NBC. It also needs to appeal to the governments. In each country there is an obstacle or challenge waiting like the limitation of pay television and the propagation of free channels which will discourage purchase of MTV.
The young generation or the 12-34 demographic is the hardest market to pin down due to changing trends and interests. They are inconstant with their desires and most likely, they would not be the slightest bit similar to the generation that popularized MTV. These are the children of digital and new technologies that would have a shorter attention span and fleeting interests. The 21st century is an even more distracting world. MTV must constantly reinvent itself and start something new in order to ride along the changes and the thirst towards innovations. In order to be the trend-setter it was in the past, it must be able to encompass or conquer its challenges of globalization and technology and create from here
COMPETING IN CHINA
China with its 330 million television sets is considered as the major growth market. Because of the vast size and growth potential both the channels actively competing for local partners in anticipation of reaping future benefits. But the Chinese market is strictly regulated by the central government, because of the communism in the country. Satellite broadcasts were officially banned so foreign satellite TV must be filtered through registered cable approved by state administration for film, radio and television. Unlike the road shows and dance parties in India, Chinese market has largely been in the form of hosting music award ceremonies (1999 onwards).
MTV has become a symbol of globalization. It adopted right international strategies and controls at the right time to regain its lost popularity, especially in non English speaking countries like India and Europe. The rationale behind MTV’s localized approach is to “get inside the heads” of the local population and produce programming that matches their tastes and preferences. Whereas Channel V lacked to achieve this target till great extend.
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