Silverado: Issues and Recommendations
In 2001, internet based company Silverado launched the Live Trivia Game Show to showcase its recently developed technology, the Event Matrix. This technology allowed millions of people to interact with each other simultaneously. To attract millions of people to its website, Silverado hired the advertising agency Holland Mark Edmund Ingalls (HMEI) to develop and implement a $15 million marketing campaign. To support a large audience in its website, Silverado bought and geographically distributed more than 100 servers throughout the US. As a result, about 500 000 people had visited Silverado’s website and registered with the company by the end of the third weekend (game took place on Sunday evenings). Since Silverado did not charge a subscription fee its primary source of revenue was advertisement. Advertisers wanted to be associated with a well known internet brand. The more people visiting the event and clicking on ads, the more advertisers would be willing to buy ad space. Silverado faced stiff competition when it came to using heavy advertising campaigns to attract consumers to their event portal. There were plenty of dot.com rivals such as WebMD.com, Kozmo.com, Hotjobs.com, Monster.com, Kforce.com who were using the Get Big Fast factor to draw more advertisers. The company was relying too much on advertising to increase their primary source of revenue. Expenditures in advertising and investments in infrastructure were high, After the initial success of their Event Matrix Technology, showcased by the Live Trivia application, Silverado faces the issue of what direction they should take. They have several options that they could take using their technology. They can continue promoting the Live Trivia Show, scale it back, or abandon it. The company is also trying to figure out if it should expand into other vertical opportunities such as online live auctions, iTV, and distance learning, all of which could be supported by the event matrix technology. From the Macro-Environment perspective, Silverado was among the many new firms that were funded by venture capitalists. Despite the NASDAQ composite index drop in April, venture capitalists’ confidence in new companies was sky rocketing as they were investing over $1Billion dollars a week in them. In addition, there were a lot of dot.com companies on the rise, as 95% of the competing business plans in the Harvard’s fourth annual plan contest were internet ventures. On the consumer side, individuals were making online transactions of over $7 billion worth of goods and services. Nevertheless, consumers were more aware and accepting of the non-traditional means of watching events and spending money. People were accessing the internet to watch online fashion shows and music concerts. In 1999, Victoria secret held an online fashion show in which it attracted 1.5 million people. Technology advancements were fueling such change. By 2000, approximately 110 million people in the US as well as 250 million world-wide had internet access. There were newer and faster internet services such as broadband. Although broadband was available to 30 million households, only 2.5 million used the service. This represents roughly 2.2% of the households with internet access, meaning that over 97% of households had low speed internet. (Refer to exhibit 1 for more detail). This clearly indicated that there was an opportunity for Silverado’s event matrix technology. People were interacting on the internet a lot more as technology advanced. Individuals were spending 13 hours per week online, and culturally, it was becoming increasingly acceptable to use the internet for entertainment, moving away from the traditional mass media. Moreover, the venture capitalist intense funding meant that competition was not too far away to internet related industries. Silverado’s primary vision was to provide an internet service to the...
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