Q1. Assess the entertainment content industry. How will this impact the strategy of businesses in this industry? What sources of competitive advantage does Viacom have or not have that will impact their strategy?
The entertainment content industries include Entertainment, Video/Music & Theme Parks, Publishing, Cable Television, Networks and Broadcasting. The industry is particularly sensitive to changes in the environment. Particularly, governmental influences that have enormous impact of market liberalization and fair-trading, and antitrust actions. This is a concern in the USA as well as in international markets.
Competitive structure analysis:
1. Intensity of rivalry: With many broad areas of service, the competition is intense and the companies face competition from many different companies in various industries. For example, Paramount Pictures, the main division of Viacom’s Filmed Entertainment segment, faces competition from Warner Bros., Disney, Fox, Universal, and Sony Pictures. However, the company’s cable programming faces competition both collectively from other media conglomerates like Disney and NBC Universal, as well as from individual networks.
Competition in the Media Entertainment segment is characterized by attempts to secure many viewers and a positive response in specific demographic markets as well as the ability to distribute and market product. Competition increases as public recognition increases as consumers can be fickle about entertainment, and their preferences are hard to predict.
Switching costs are low since entertainment media is widely available and consumers have access to many platforms of entertainment, such as cable television, video games or online content, as well as many options within each platform. Advertising money follows the end-user, since an advertiser’s main goal is to reach as much of the target audience as possible. Rivalry among media conglomerates and smaller companies for consumer attention produces a need for fast-paced innovation in content and delivery.
Both the video game industry and the online media industries have high levels of competition from several media companies. The online media industry in particular is characterized by competition because of the low barriers to entry. A major factor changing the landscape of media-related industries is piracy. Companies are finding that they must now compete with illegal Websites and bootleg copies of DVDs and video games those are free to consumers. This will be a significant threat to profits if consumers substitute away from purchasing products to acquiring them for free illegally. This has created a situation in which media companies face new rivals using their own content.
2. Threat of new entrants: The entertainment industries (media, film, etc.) are mature and have reached the stage of significant vertical integration. Content creation, production, marketing and distribution of a product are often carried out by companies under the same umbrella, that put large financial constraints on anyone hoping to enter these industries. The industry is highly consolidated and the distribution, marketing and advertising are often handled by the companies creating content, and when companies choose not to perform these functions in-house they occur through long-term and large-scale relationships. Without long-term relationships to negotiate good deals, new entrants will have significantly more difficulty promoting and distributing products. Distributor agreements are likely to be difficult for new entrants to secure because distributors may be unwilling to risk jeopardizing their current, lucrative relationships with existing firms to distribute lesser amounts of content they cannot be sure will be well-received.
Another barrier for new entrants is the lack of economies of scale that media conglomerates enjoy. Partnerships and relationships with other companies allow conglomerates to...
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