Market, Technical & Service Convergence in Media: Emerging Industry’s Hourglass Structure Shariq Faraz: Feb  2010 [email_a...
Contents   1. Background &  Research Objectives 2. Market, Technical & Service Convergence 3. Market Convergence: Expansio...
Background:  Contemporary Market Trends <ul><li>Each year- more media owned by less corporations. </li></ul><ul><li>Increa...
Research Objectives <ul><li>The purpose of this study is twofold: first to  identify the key emerging trends  in context o...
Contents   1. Background &  Research Objectives 2. Market, Technical & Service Convergence 3. Market Convergence: Expansio...
Convergence is: <ul><li>Blending of industries and activities in information society </li></ul><ul><li>Built upon assumpti...
Types of Convergence Market, Technical & Service Convergence
Convergence effecting media from various fronts Production Forces Automation, lower cost of production, digitization , bro...
Market, Technical & Service Convergence
Market, Technical & Service Convergence
Contents   1. Background &  Research Objectives 2. Market, Technical & Service Convergence 3. Market Convergence: Expansio...
Market Convergence: Expansion Strategies in International Media (Industry churn rate of 90% since 1980’s)
 
Significant 7 Mega-corporations inter-relationship √ √ √ √ √ √ Market Convergence: Expansion Strategies in International M...
Market Convergence: Expansion Strategies in International Media
Vertical integration strategies (related activities up and down the supply chain are integrated) are actively pursued by m...
Revenue by segments for fiscal 2009   Heavy Repackaging /repurposing of content  within the sister brands. Rebroadcasting ...
News Corp targets Middle East with  Rotana’s 10% stake Market Convergence: Expansion Strategies in International Media
Contents   1. Background &  Research Objectives 2. Market, Technical & Service Convergence 3. Market Convergence: Expansio...
All of the supply chain for media are interdependent. No single stage is more important than another i.e.  all are interre...
Contemporary Framework of Int’l Media Industry   (as a result of market convergence trends ) Hundreds thousands of small b...
Rivals are put in a considerable disadvantage Bottleneck if one player manages to monopolize any single stage in the value...
Contemporary Framework of Int’l Film  Industry
A ‘glass ceiling’ or bottle neck seems to make it difficult for small firms to develop into medium or larger-sized busines...
Contents   1. Background &  Research Objectives 2. Market, Technical & Service Convergence 3. Market Convergence: Expansio...
Market Convergence: Expansion Strategies in Regional Media Conglomeration & monetary trends are identical for US and Pan A...
Market Convergence: Expansion Strategies in Regional Media 1 3 4 2010 Rotana control’s 60% movies being shown in Arab worl...
Mutual synergies of cross media ownership 2010 Murdoch close to  20% stake in Rotana & LBC SAT   2009 Strategic partnershi...
Largest Pay TV subscriber base in the region; recently sold 6 channels of its fleet Market Convergence: Expansion Strategi...
Subhash Chandra   Market Convergence: Expansion Strategies in Regional Media Regional M&A activity
<ul><li>Vertical / cross media growth involves expanding  forward into succeeding stages or backward into preceding stages...
<ul><li>Horizontal/Mono-media  expansion strategies  where two firms at the same stage in supply chain or who are engaged ...
<ul><li>Diagonal  or lateral expansion strategies where media firms diversify into new business areas. For example, merger...
Zain Create, allows Zain's customers to download entertainment from Rotana Media Group   http://create.zain.com/ <ul><li>D...
Diagonal  or lateral expansion strategies: collaboration between telecom and media companies.  (DVB-H platform) Service Co...
Diagonal  or lateral expansion strategies: collaboration between telecom and media companies.  (New Media & DVB-H) Service...
Contents   1. Background &  Research Objectives 2. Market, Technical & Service Convergence 3. Market Convergence: Expansio...
Hundreds small business enterprises ranging from small SMEs to large network of Freelancers Heavy outsourcing of activitie...
A ‘glass ceiling’ or bottle neck seems to make it difficult for small firms to develop into medium or larger-sized busines...
Contents   1. Background &  Research Objectives 2. Market, Technical & Service Convergence 3. Market Convergence: Expansio...
Conclusion  <ul><li>Active converging market expansion strategies (market/service/technical) are being undertaken by both ...
Basic References   <ul><li>Arab Television Today : Naomi Sakr; 2007 </li></ul><ul><li>Alwaleed: Businessman, Billionaire, ...
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Market, Technical & Service Convergence in Media: Emerging Industry’s Hourglass Structure

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  • © 2004 Capgemini - All rights reserved
  • © 2004 Capgemini - All rights reserved
  • Sustainability involves the ability to continue current operations, products/services, and performance It involves the ability to maintain existing business models It also involves the ability to innovate, rejuvenate, and adapt to survive new products and new business models
  • © 2004 Capgemini - All rights reserved
  • © 2004 Capgemini - All rights reserved
  • So how is work organized? Key structure of the global media industries: HOURGLASS. Here an example of the music industry MAP courtesy of Chase Martin, IU graduate student
  • So how is work organized? Key structure of the global media industries: HOURGLASS. Here an example of the advertising industry PUBLICIS: LA HOLISTIC DIFFERENCE
  • © 2004 Capgemini - All rights reserved
  • © 2004 Capgemini - All rights reserved
  • So how is work organized? Key structure of the global media industries: HOURGLASS. Here an example of the advertising industry PUBLICIS: LA HOLISTIC DIFFERENCE
  • © 2004 Capgemini - All rights reserved
  • Market, Technical & Service Convergence in Media: Emerging Industry’s Hourglass Structure

    1. 1. Market, Technical & Service Convergence in Media: Emerging Industry’s Hourglass Structure Shariq Faraz: Feb 2010 [email_address]
    2. 2. Contents 1. Background & Research Objectives 2. Market, Technical & Service Convergence 3. Market Convergence: Expansion Strategies in Int’l Media 4. Contemporary Framework of Int’l Media Industry 5. Market/Service Convergence: Expansion Strategies Regional Media 6. Contemporary Framework of Regional Media Industry 7. Conclusion
    3. 3. Background: Contemporary Market Trends <ul><li>Each year- more media owned by less corporations. </li></ul><ul><li>Increased consolidation trends ( fusions: mergers & acquisitions, joint ventures) in media world. </li></ul><ul><li>Increased conglomeration framework (globally and regionally). </li></ul><ul><li>Contemporary Int’l commercial media markets dominated by seven oligopolists. </li></ul><ul><li>Economies of scale and scope being exploited as never before. </li></ul>
    4. 4. Research Objectives <ul><li>The purpose of this study is twofold: first to identify the key emerging trends in context of market, service and technical convergence phenomenon in the media sector. </li></ul><ul><li>Second establishing change in industry framework as a result of the converging trends. </li></ul><ul><li>Methodology: Desk Research </li></ul>
    5. 5. Contents 1. Background & Research Objectives 2. Market, Technical & Service Convergence 3. Market Convergence: Expansion Strategies in Int’l Media 4. Contemporary Framework of Int’l Media Industry 5. Market/Service Convergence: Expansion Strategies Regional Media 6. Contemporary Framework of Regional Media Industry 7. Conclusion
    6. 6. Convergence is: <ul><li>Blending of industries and activities in information society </li></ul><ul><li>Built upon assumptions of synergy and critical mass </li></ul><ul><li>Based in linking the value chains of different products and services </li></ul>Market, Technical & Service Convergence
    7. 7. Types of Convergence Market, Technical & Service Convergence
    8. 8. Convergence effecting media from various fronts Production Forces Automation, lower cost of production, digitization , broadband channel, spectrum abundance, digital storage Market Forces Reduce fixed and variable costs: Lower barriers of entry resulting in too many players in the market Social Forces- Audience adoption to technology: Need of content ‘where and when and how they want ’ Media Sustainability Managerial Forces M&A activities, Shrinking organisations :Job cuts; reengineering processes Market, Technical & Service Convergence
    9. 9. Market, Technical & Service Convergence
    10. 10. Market, Technical & Service Convergence
    11. 11. Contents 1. Background & Research Objectives 2. Market, Technical & Service Convergence 3. Market Convergence: Expansion Strategies in Int’l Media 4. Contemporary Framework of Int’l Media Industry 5. Market/Service Convergence: Expansion Strategies Regional Media 6. Contemporary Framework of Regional Media Industry 7. Conclusion
    12. 12. Market Convergence: Expansion Strategies in International Media (Industry churn rate of 90% since 1980’s)
    13. 14. Significant 7 Mega-corporations inter-relationship √ √ √ √ √ √ Market Convergence: Expansion Strategies in International Media
    14. 15. Market Convergence: Expansion Strategies in International Media
    15. 16. Vertical integration strategies (related activities up and down the supply chain are integrated) are actively pursued by media moguls. Market Convergence: Expansion Strategies in International Media
    16. 17. Revenue by segments for fiscal 2009 Heavy Repackaging /repurposing of content within the sister brands. Rebroadcasting the same content to get as wide an audience as possible. Market Convergence: Expansion Strategies International Media
    17. 18. News Corp targets Middle East with Rotana’s 10% stake Market Convergence: Expansion Strategies in International Media
    18. 19. Contents 1. Background & Research Objectives 2. Market, Technical & Service Convergence 3. Market Convergence: Expansion Strategies in Int’l Media 4. Contemporary Framework of Int’l Media Industry 5. Market/Service Convergence: Expansion Strategies Regional Media 6. Contemporary Framework of Regional Media Industry 7. Conclusion
    19. 20. All of the supply chain for media are interdependent. No single stage is more important than another i.e. all are interrelated. Performance of every firm involved in the supply chain will be threatened if a bottleneck develops (which is currently happening in the industry- see next slides) Production Packaging Contemporary Framework of Int’l Media Industry (as a result of market convergence trends ) Huge global mega-corporations “ Hourglass effect” SMEs/Freelancers Bottleneck if one player manages to monopolize any single stage in the value chain. Packaging Distribution Distribution
    20. 21. Contemporary Framework of Int’l Media Industry (as a result of market convergence trends ) Hundreds thousands of small business enterprises/freelancers Heavy outsourcing of activities Heavy reliance for sponsorship Huge global mega-corporations “ Hourglass effect” Emerging ‘Hourglass’ shape of media industries (i.e. many small businesses and some very powerful large businesses, but few medium-sized firms).
    21. 22. Rivals are put in a considerable disadvantage Bottleneck if one player manages to monopolize any single stage in the value chain. Global Market share Contemporary Framework of Int’l Music Industry
    22. 23. Contemporary Framework of Int’l Film Industry
    23. 24. A ‘glass ceiling’ or bottle neck seems to make it difficult for small firms to develop into medium or larger-sized businesses Contemporary Framework of Int’l Advertising Industry
    24. 25. Contents 1. Background & Research Objectives 2. Market, Technical & Service Convergence 3. Market Convergence: Expansion Strategies in Int’l Media 4. Contemporary Framework of Int’l Media Industry 5. Market/Service Convergence: Expansion Strategies Regional Media 6. Contemporary Framework of Regional Media Industry 7. Conclusion
    25. 26. Market Convergence: Expansion Strategies in Regional Media Conglomeration & monetary trends are identical for US and Pan Arab media “ Lot of them will hire a room in Media City with three cameras and have their TV station…but big boys will remain few” Abdlel-Rahman al Rashed-Manager-Al Arabiya as cited in Sakr, 2007 Regional FTA TV growth illustration
    26. 27. Market Convergence: Expansion Strategies in Regional Media 1 3 4 2010 Rotana control’s 60% movies being shown in Arab world and 80% of music business. and contracts with top 100 Arab artists 2005 Rotana collaborates with Al Wataniya Telecom of Kuwait to provide ring tones, video clips on mobile phones to customers in Algeria, Tunisia, Kuwait and Iraq In 2004 EFG sells all rights through its subsidiary to Rotana 1999 Citicorp buys 20% stake in EFG- Hermes 2 1993 Al Waleed buys 25% stake in Rotana followed by 48% stake in 2002 and in 2003 took 100% ownership 2000,EFG acquires copyright to 3,200 Arab movies made since 1935 1991 Al Waleed buys stake in Citicorp: Current stake 5% 2004 Rotana acquires ownership of 3,200 Arabic movies through EFG 1 3 4 2
    27. 28. Mutual synergies of cross media ownership 2010 Murdoch close to 20% stake in Rotana & LBC SAT 2009 Strategic partnership uplink with Rotana Media Services 1997 Alwaleed second largest stakeholder in News Corp, with 5.7 %shares 2009 Rotan and Fox Int’l signed a US$ 26.7mn content agreement with Walt Disney Alwaleed has undisclosed stake in Disney Market Convergence: Expansion Strategies in Regional Media
    28. 29. Largest Pay TV subscriber base in the region; recently sold 6 channels of its fleet Market Convergence: Expansion Strategies in Regional Media Mutual synergies of cross media ownership
    29. 30. Subhash Chandra Market Convergence: Expansion Strategies in Regional Media Regional M&A activity
    30. 31. <ul><li>Vertical / cross media growth involves expanding forward into succeeding stages or backward into preceding stages in the supply chain. </li></ul>Market Convergence: Expansion Strategies in Regional Media Dallah Media Production Arab Digital Distribution Company Arab Media Corporation ART Network Production Distribution Packaging
    31. 32. <ul><li>Horizontal/Mono-media expansion strategies where two firms at the same stage in supply chain or who are engaged in the same activity combine force. </li></ul>Market Convergence: Expansion Strategies in Regional Media
    32. 33. <ul><li>Diagonal or lateral expansion strategies where media firms diversify into new business areas. For example, merger between telecom communications operator and TV company (New Media platform). </li></ul>http://shahed.mbc.net/mediamanager/ 8 million videos have been viewed by over three million visitors, of whom 65% are from the Middle East Service Convergence: Expansion Strategies in Regional Media
    33. 34. Zain Create, allows Zain's customers to download entertainment from Rotana Media Group http://create.zain.com/ <ul><li>Diagonal or lateral expansion strategies: collaboration between telecom and media companies (New Media platform). </li></ul>“ The strategic ambition of most of these players is to create vertically integrated businesses that control the gateway across TV, phone and wireless networks, offering customers a single bill, a single brand and a single EPG” Huges, 2003 Service Convergence: Expansion Strategies in Regional Media
    34. 35. Diagonal or lateral expansion strategies: collaboration between telecom and media companies. (DVB-H platform) Service Convergence: Expansion Strategies in Regional Media “ Ultimately there will be no difference between broadcasting and telecommunications” (Styles:1996)
    35. 36. Diagonal or lateral expansion strategies: collaboration between telecom and media companies. (New Media & DVB-H) Service Convergence: Expansion Strategies in Regional Media
    36. 37. Contents 1. Background & Research Objectives 2. Market, Technical & Service Convergence 3. Market Convergence: Expansion Strategies in Int’l Media 4. Contemporary Framework of Int’l Media Industry 5. Market/Service Convergence: Expansion Strategies Regional Media 6. Contemporary Framework of Regional Media Industry 7. Conclusion
    37. 38. Hundreds small business enterprises ranging from small SMEs to large network of Freelancers Heavy outsourcing of activities Heavy reliance for sponsorship Huge regional mega-corporations “ Hourglass effect” Contemporary Framework of Regional Media Industry (as a result of market convergence trends ) AGI Holding Company
    38. 39. A ‘glass ceiling’ or bottle neck seems to make it difficult for small firms to develop into medium or larger-sized businesses Contemporary Framework of Regional TV Industry (as a result of market convergence trends )
    39. 40. Contents 1. Background & Research Objectives 2. Market, Technical & Service Convergence 3. Market Convergence: Expansion Strategies in Int’l Media 4. Contemporary Framework of Int’l Media Industry 5. Market/Service Convergence: Expansion Strategies Regional Media 6. Contemporary Framework of Regional Media Industry 7. Conclusion
    40. 41. Conclusion <ul><li>Active converging market expansion strategies (market/service/technical) are being undertaken by both Telecom and Media companies in the Middle East </li></ul><ul><li>Because of increased consolidation & concentration in media fuelled further by converging technology, the regional industry is emerging in an hourglass structure analogous to its western cohorts. </li></ul><ul><li>Today majority of players in Pan Arab markets represent the burgeoning digital media platform find themselves in the lower half of the hourglass phenomenon; inasmuch being hugely dependent on big corporate located in the upper half of the hourglass for their survival. The Big corporate too are hugely dependent on the smaller companies in the lower half given the heavy outsourcing trend rampant in the industry. </li></ul>
    41. 42. Basic References <ul><li>Arab Television Today : Naomi Sakr; 2007 </li></ul><ul><li>Alwaleed: Businessman, Billionaire, Prince : Riz Khan; 2005 </li></ul><ul><li>Entertainment Industry Economics : A Guide for Financial Analysis : Harold L. Vogel; 2007 </li></ul><ul><li>Media Work (Digital Media & Society): Mark Deuze; 2007 </li></ul><ul><li>Managing Media Companies : Harnessing Creative Value: Annet Aris, 2005 </li></ul><ul><li>Media Management in the Age of Giants: Dennis. F, Herrick; 2003 </li></ul><ul><li>The Economics and financing of Media Companies : Robert G. Picard ;2002 </li></ul><ul><li>Rotana signs pact for Disney content; Digital Broadcast Middle East; 2010 </li></ul><ul><li>http://issuu.com/itpbusiness/docs/db_84_01012010 </li></ul>
    42. 43. Thank You

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