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Similar to LINK - Discovery Communications
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LINK - Discovery Communications
- 1. Asaad Jaber Lu Jiang Gabriela Herrera Shirin Lamba Keshav Padia
- 2. DISCOVERY COMMUNICATIONS Core Brands New Brands International Free to Air New Genres New Platforms
- 3. TV MEDIA NETWORKS IN THE MEDIA INDUSTRY Content Producers Content Distributors & Network Providers General Consumer Market CONTENT Cable Service Operators DTH satellite service providers Telecommunication Companies On-demand & Streaming Platforms
- 4. SETTING THE STAGE FOR DISRUPTION Streaming Video Nonlinear Viewing 40%+Nonlinear viewing by 2018 - Digital Evolution
- 5. Exhibit 1. Executives who Anticipate Moderate or Massive Digital Disruption through 2016, by Industry Source: HBR.org
- 6. INDUSTRY IMPACT -2% decline in quarterly subscriber rate – Bloomberg Costing the industry $1 Billion in annual revenues - WSJ
- 7. PAY-TV BUSINESS MODEL: PROFIT FORTRESS BUNDLE DISTRIBUTION ADVERTISING increase in U.S. online advertising revenues from 2010 to 2015 7x Onli ne Chan nels VOD Advertis ers Spending Online
- 8. INDUSTRY SCRAMBLING TO DO WHAT? Consolidation NBC + Comcast Walt Disney + Netflix Fox + Hulu Time Warner + Turner & HBO Shifting content online Online channels TV-everywhere Content-craze Netflix 50-50 allocation scheme
- 9. DISCOVERY SCRAMBLING TO DO WHAT? Higher pricing models How sustainable is this? How long can they keep raising prices to keep revenues steady? Discovery GO migrate to Everywhere TV business model Strategic M&A and Licensing Deals
- 10. HOW SHOULD ENTREPRENEURIAL LEADERS RESPOND? Digital Migration Diversification Modify accordingly: -Marketing -Operations -Strategic resource allocation
- 11. DIGITAL MIGRATION PayTV Model TV Everywhere Model Universal Remote Distribution Disintermediation Marketing, Operations, Resource Allocation Implications
- 12. SCOPE OF IMPACT: TRENDS TO WATCH Behavior shift to mass customization AI, IoT, Big Data AR Technology
- 13. NECESSARY MODIFICATIONS Operations: - Enhance data capture process of supply chain Marketing: - B2B marketing targeted to school boards & teachers Investments in technology: - AR technology to bring the classroom to life
- 14. MEDIA AND EDUCATION COLLIDE Leverages reach to create loyal base Caters to student needs more effectively Increases teachers’ productivity Creates interactive collaboration among classmates
Editor's Notes
- Basic layout How the business is organized How discovery makes money How the business model works
- The impact of the disruptive factors… Decline in quarterly subscriber rate: -x% Total impact on industry: XX$ (WSJ)
- Key 1: Bundle business model VOD lets customers pay for exactly what they want to watch Key 2: Distribution system Dismantled. NETFLIX IN. COMCAST OUT. TECHNOLOGY-EMPOWERED: Coaxial Cable Broadband infrastructure Key 3: Advertising scheme: Advertising spending shifting from TV digital Bundling: to get at the milk, you have to buy the cow. What Netflix views as consumer inefficiencies, Discovery views as profits. “The bundle is the Gibraltar of the media business,” said Tim Wu, the author of “The Master Switch,” a history of media revolutions. “It keeps the entire ecosystem alive, which is why it is so heavily and successfully defended. But there are hairline fractures beginning to appear, and you are seeing alliances shift.” The advent of the Internet presented an existential challenge to bundles. Once consumers got their hands on the mouse and a programmable remote, they began to attack the inefficiencies of the system. When seeking information, they sought relevant links, not media brands. And DVRs put them in the control room of their own viewing universe - NYT The issue is that when you sell things in bundles you can charge for a whole bunch of things nobody really wants — customers will pay for the entire bundle in order to get the one or two things they actually want. This worked for years in cable television — give customers hundreds of channels they won’t watch but will pay for anyway in order to obtain ESPN or HBO. – HBR This rise of online and mobile viewing has had important implications for the traditional subscription-TV business. It has shaken the price-to-value relationship of the bundle, because less traditional viewing equals less value for the bundle. This has created an incentive for consumers to drop pay TV altogether (these are the “cutters”) or actively manage their cable bills downward (“thinners”). For many years, as consumers purchased more and larger video packages, average revenues per user rose. Now, however, consumers are disaggregating their video bundles. Our research suggests that the compounded effect of cord cutters, thinners, and “nevers” (people who never subscribe to cable) will not be just a few percentage points. Rather, it will be a few dozen percentage points. Nevertheless, we expect the decline to occur slowly over time—not unlike the drop in newspaper readership and magazine circulation and the demand for CDs - BCG
- “Branded TV content attracts higher valuation premiums than other forms of content,” says S&P Capital IQ equity analyst Tuna Amobi. – Fortune
- Are companies like Netflix really going to displace Discovery Communications? At the core of its business, Discovery remains a content producer, and a great one indeed. The question revolves around how to monetize the content given new industry changes. Companies like Netflix and Hulu bear the burden of proof to attract content from providers who are attached to the billions they receive from cable providers and are reluctant to engage with upstarts touting unproved business models. As Frank Biondi, former president of the media giant Viacom (VIA), puts it: "Why would [the studios] make a deal with a competitor to their largest customer and risk angering them?”
- The Universal Remote: a wealth of compelling content exists in the fragmented mosaic of broadcast TV, pay TV, and Internet-based offerings, but consumers can't access and stream all video content across pathways and devices using a single point of navigation. Companies that can become the go-to, anytime-anywhere access point for living-room TV, smartphone, and tablet viewing have an opportunity to gain a huge competitive advantage. Distribution Disintermediation: Networks with strong brands and top-tier programming -- or the rights to hit content -- can seize the advantage by delivering content directly to consumers. "Live" TV Online. One of the main reasons viewers don't cut the cord is that traditional television still offers live programming and content across all categories (not just entertainment, but news and sports as well). Online aggregators that integrate live content with their own on-demand offerings -- and price the package right -- can transform their value proposition for consumers.
- Caters to student needs more effectively Personalized content based on: Learning style, pace, learning disability, etc. Increases teachers’ productivity Creates interactive collaboration among classmates Leverages the demographics' interaction with technology Environment: end of physical textbooks era