In order to fully understand the buyer power involved in thee American entertainment industry, a macro environmental perception has to be incorporated to understand its three primary levels that affect one another. But to try and understand how American entertainment industry relates to Oprah, we will focus primarily on viewers of visual media rather than music and other forms of entertainment.
1. Bargaining Power of Buyers
Viewers of the entertainers buyer power with entertainers themselves , high buyer power - In the case pertaining to Oprah’s article, this would fall under the category of TV viewers watching her show. The viewers of TV shows in general, especially day time television talk shows gives viewers an opportunity to have a high buyers power because of the multitude and high quantity of talk shows made available by modern day technology. Viewers are no longer limited by cable television, but now have the opportunity to use satellite, broadband, and he internet to access talk shows in higher quantity in order to match the viewers taste. Even other forms of entertainment are taking away TV talk show viewers with music, internet, movies, and other more easily accessible and higher quality entertainment made available through technology. As more countries become more developed, TV talk shows must be diversified and expanding in order to meet the demand, and networks will provide this for them, ultimately forcing entertainers to compete with one another rather than an industry.
Entertainer’s buyer power with networks, low buyer power
Talk show entertainers in the States have very low buying power. Networks base success off ratings and popularity and can practically take anyone they feel off the air. In the case of Opera, she her own boss and her buyer power is extremely high. But in the case of an everyday talk show host, the buyer power is low and a majority of the talk show hosts are under contract and the high supply of people is high in quantity and the slots are minimal.
2. Bargaining power or suppliers
High demand - Poeple have very high demand in American entertainment industry, both inside and outside the country itself. It has spread and become so powerful that it becomes the global entertainment industry. For example, entertainers or musicians who are famous and well branded will have more powers to engage in the industry.
Differentiation -The suppliers, in this case, entertainers in the industry, have unique characteristics and identities that can influence audience in different ways. Therefore their bargaining power is high for example, Opra Winfrey inspires people throughout the world, and even making impacts on countries. However, this doesn’t apply to the new face or new comers to the industry, these entertainers will need time to gain fame and brand themselves. When they could position themselves as the front line entertainers, they could successfully negotiate premium prices for their values.
Substitutes- although there are many substitutes for example, actors, actresses, entertainers but take into account that they are differentiated individuals.
Switching cost - since switching cost is so high in the entertainment industry it has made the bargaining power of entertainers fairly high. The cost doesn’t involve only with the actual money loss if switching from one entertainer to another, it also means the loss of audiences - tar get groups, who personally follows the entertainers themselves.
3. Threat of New Entry
Threat of new entrants depends on:
- Access to technology. ------> HIGH Threat of entry. Nowaday every minuet new inventions and technology are in progress if not launched. It is kind of a standardised product so the fact that a new firm is new to the industry doesn’t mean they would be less competitive or their disadvantages in acquiring new technology.