Annet Aris - New rules of game in the digital world
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Annet Aris - New rules of game in the digital world
- 1. 0 Annet Aris Brussels, May 22, 2014 Copyright 2014 Annet Aris. No part of it may be circulated, quoted, or reproduced for distribution without prior written approval from Annet Aris. This material was used by Annet Aris during an oral presentation; it is not a complete record of the discussion. New rules of game in the digital world: from strategic planning to strategic learning Sanoma Media Parade
- 2. My perspective on the media and internet value chain Content Creator Content packager Network operator Content bundler Hard-/ Software provider © Annet Aris * * Until 2011
- 3. 2 Impact of digitization Technological game changers Tipping point behavior Value capture by new entrants New rules of game for incumbents © Annet Aris The adoption cycle of digital technology
- 4. What are Technological Game Changers? © Annet Definition Game Changer: 1. Offers true new benefits 2. Easy to use 3. Affordable 4. Ecosystem in place © Annet Aris
- 5. Recent technological game changers Mobile telephony World wide web Search 1980s 2010s 1990s 2000s © Annet Aris PC
- 6. Recent technological game changers Mobile telephony Broadband World wide web Search 1980s 2010s 1990s 2000s © Annet Aris PC
- 7. Recent technological game changers Mobile telephony Broadband World wide web Search 1980s 2010s 1990s 2000s © Annet Aris PC Web 2.0, social
- 8. Recent technological game changers Mobile telephony Smart phones, tablets, apps Web 2.0, social Broadband World wide web Search 1980s 2010s 1990s 2000s © Annet Aris PC
- 9. 8 Impact of digitization Technological game changers Tipping point behavior Value capture by new entrants New rules of game for incumbents © Annet Aris Technological game changes are adopted exponentially
- 10. Old behaviour and preferences will not disappear but new behaviour will gain ground quickly Expert pre-selection (media companies) Social recommen- dations Usage based recom- mendations (e.g. col- laborative filtering) Search How do people find content? Old New? Per piece Subscription Free + advertising Piracy How do people pay for content? Old New? Entertainment Information Opinions Data What type of content? Old New? Employed Professionals Talent Communities Users How will content be generated? Old New? Freelance Professionals Mass (e.g. TV, newspapers) Behavioural targeting (e.g. search, Portals) Personal recommendations (e.g. social media) How will advertising evolve? Old New? Niche (e.g. magazines, cable TV) © Annet Aris
- 11. Smart phone adoption surpasses Internet adoption 10Source: Mary Meeker, www.kpdc.com/internettrends2013
- 12. 11
- 13. Household broadband penetration* and Internet advertising EMEA Percent 0 10 20 30 40 50 60 70 1 2 3 4 5 6 7 8 9 10 11 12 13 14f 15f 16f 17f 12 * Estimation for 2001-2007 Source: PWC Outlook, OECD, own analysis Household broadband Penetration (%) Internet Advertising Share (%) Year
- 14. Reach, frequency by segment Payment 13 Adoption barriers in advertising ecosystem Consumer Advertiser Media company Agency Digital Capa- bilities Measur ment/ ROI Quality of inventory Complex technology landscape © Annet Aris
- 15. 14 Marketeers late adopters of new technology Technology roll- out Consumer adoption Marketeer adoption Time Percentage Source: Annet Aris
- 16. 15 Impact of digitization Technological game changers Consumer/ advertiser Tipping point behavior Value capture by new entrants New rules of game for incumbents © Annet Aris The traditional media industry mostly in a reactive mode with regard to digitization
- 17. 16 New global giants are taking over the game in digital world
- 18. 17 http://www.businessinsider.com/alibaba-ipo- facts-2014-3 10 out of 25 “non-USA”, of which: • 6 from Asia • 2 from Russia • 1 from Latin America • 1 from Europe $150-$200bn?
- 19. There is a difference between international scale effects and network externalities 18 Scale effects Network Externalities © Annet Aris
- 20. Facebook is one of main drivers of increased time spend on social media
- 21. Type of network externalities CONSUMER © Annet Aris
- 23. Type of network externalities CONSUMER PRODUCTS © Annet Aris
- 24. Google network effects Moreandbetterfreeservices © Annet Aris
- 25. Will Google drive the change in the advertising eco system? Adwords Adsense Admob Ad technology platform Unsold TV inventory In game advertising Intelligent display advertising Real Time Display Ad auction Search Display © Annet Aris Advertising optimization for publishers
- 26. Buildupofoperatingsystems Adwords Adsense Admob Larger and better advertising offering BIG Data analysis! Paid content services Moreandbetterfreeservices © Annet Aris Google network effects
- 27. The virtuous cycle 26 External network effects Cash © Annet Aris Dominant revenue positions Acquisition best start- up’s/ talents
- 28. Googles acqusitions since Motorola 27 Source: http://en.wikipedia.org/wiki/List_of_mergers_and_acquisitions_by_Google
- 29. Type of network externalities CONSUMER ECOSYSTEM © Annet Aris BIG DATA
- 30. Impact of digitization on industry structure 29 Key characteristics • No competition • High barriers to entry • High profitability • Low consumer benefits Monopoly Oligopoly Perfect competition • Limited competition • Medium barriers to entry • Profitability depends on industry conduct • Medium to high consumer benefits • High competition • Low Barriers to entry • Low profitability • Medium to high consumer benefits Examples • US telco’s/cable co’s • US local newspapers • Internet giants? • TV broadcasters • Magazines/ newspapers • Music majors • Independent TV producers • Free lance journalists • Book publishing Impact digitization © Annet Aris
- 31. • Search • Portals • Social networks • E-commerce • Telecom Impact of digital on industry structure • Mobile • Set top • PC • Websites • Applications • Consumers • Hidden talents • Crowds Content Creator Content packager Platform operator Content bundler Hard-/ Software provider Impact on Industry structure • More competion • More hypes • Competitive oligopolies • Functional monopolies? • Competitve oligopolies • Competitive oligopolies For discussion Unfavourable Favourable Mixed New entrants Role in value chain © Annet Aris User ? Content Creator Content packager Platform operator Content bundler Hardware provider • Pay TV • Cable operators Terrestial Satelitte Cable TV Game console TV channels Newspapers/ magazines Music majors Artists TV/Movie Producers Sport associations Journalists Industry structure Competition/ Oligoploy Friendly oligopoly Regulated monopoly/ competitive oligopoly Regional monopoly/ competitive oligopoly Competitive oligopoly
- 32. 31 Impact of digitization Technological game changers Consumer/ advertiser Tipping point behavior Value capture by new entrants New rules of game for incumbents © Annet Aris The traditional media industry mostly in a reactive mode with regard to digitization
- 33. 32 Traditional strategy approaches do not work in the current situation.. Levels of uncertainty 3 Adoption of internet services Range of possible out- comes around 2-3 key uncertainties A range of futures Portfolio of Big bets, Options to play, No regret moves Roll out of networks Description Example situations Can develop a strategically relevant forecast 1 A clear future 3-5 year strategy plans Strategic Approach 2 Sale of mobile licenses A few distinct outcomes define the future Alternative futures 1 2 3 Scenario planning 4 Next Technogical game changers Multiple dimensions of uncertainty; most difficult to forecast the future True ambiguity ? Strategic capability building? Source: Curtney, Kirkland and Viquerie, Strategy under uncertainty © Annet Aris
- 34. THE STRATEGIC BUILDING BLOCKS IN LEVEL 3 Large investment Small investment High risk Low risk No-regret move Big bet Safety net Real options Source:“Robust Adaptive Strategies,” by Eric Beinhocker, Spring 1999, Sloan , Management Review, Vol. 40, no. 3
- 35. KEY STRATEGY DECISIONS NETWORK OPERATORS 34 Network operators Upgrade network • Fibre • LTE/4G Regulation • Network Access • Net neutrality Internet services • Content • Payment • Cloud Data offering • Pricing • Customer service • Sales- channels © Annet Aris
- 36. KEY STRATEGIC INITIATIVES Large investment Small investment High risk Low risk No-regret move Big bet Safety net Real options Source:“Robust Adaptive Strategies,” by Eric Beinhocker, Spring 1999, Sloan , Management Review, Vol. 40, no. 3 • Network investments • Mobile/fixed integration? Internet services Regulatory agreements? Operational excellence (pricing, service, channels..) © Annet Aris
- 37. 36 Traditional strategy approaches do not work in the current situation.. Levels of uncertainty 3 Adoption of internet services Range of possible out- comes around 2-3 key uncertainties A range of futures Portfolio of Big bets, Options to play, No regret moves Roll out of networks Description Example situations Can develop a strategically relevant forecast 1 A clear future 3-5 year strategy plans Strategic Approach 2 Sale of mobile licenses A few distinct outcomes define the future Alternative futures 1 2 3 Scenario planning 4 Next Technogical game changers Multiple dimensions of uncertainty; most difficult to forecast the future True ambiguity ? Strategic capability building? Source: Curtney, Kirkland and Viquerie, Strategy under uncertainty © Annet Aris
- 38. Googles acqusitions since Motorola 37 Source: http://en.wikipedia.org/wiki/List_of_mergers_and_acquisitions_by_Google
- 39. New role of management: create an agile and learning organization 38 Strategy planning Strategic learning • Portfolio of intiatives • Do it, Try it, fix it • Capture learnings across organization © Annet Aris
- 40. THANK YOU!! 39