Outsourcing and Overseas Manufacturing

QUESTION
Do players in your industry manufacture overseas? What aspects of their operations do they outsource?


SUMMARY
In the media industry (particularly for media providers), it is near impossible to "manufacture overseas," as the companies usually provide services rather than products. For example, Netflix recently began offering its services to customers in Canada and Latin America, but all services are provided by Americans in the United States. On the other hand, Verizon is a good example of a media company that outsources to other nations in "Europe/Middle East/Africa, Asia/Pacific, and Latin America." But Verizon outsources its customer service, not its production. In short, different media companies choose to operate solely in the US or all over the world depending on the types of services they provide.

OPINION
For some companies, it is profitable to outsource operations such as customer service. (This is why there's often a foreign employee on the other end when you call your cable provider for help in the middle of the night.) Having customer service employees in different parts of the world also ensures that the proper language and time zones are represented--meaning more customers can receive help.
Verizon, self-described "global leader in communications," has buildings in different countries so that its customers can always reach a representative when there's an issue. Netflix does not provide this service because it operates mainly within the US, and its services are very different (Netflix doesn't do phone/internet/wireless).
Some companies would benefit from establishing overseas bases but other would not. Traditional providers like Time Warner, Comcast, and Verizon would stand to benefit from outsourcing customer service. Other companies, such as Netflix, Redbox, and Hulu, don't need to outsource because they provide a service that isn't usually consider a necessity (whereas television/cable is crucial to most people's comfort). In other words, online media providers don't need to manufacture abroad/outsource, but more traditional media distributors oftentimes do to help the bottom line.

SOURCES
http://www22.verizon.com/jobs/whoweare_vzbglobal.html
http://ir.netflix.com/#
http://www.webosroundup.com/wp-content/uploads/2011/04/verizon-world-phones.png

Global Media

France Telecom, Deutsche Telecom Launch Joint Purchasing Venture

Question:

What non-US companies are key players in the industry?

Summary:

France Telecom and Deutsche Telekom announced on Friday a new joint venture called Buyin through which they hope to save millions of euros per year on purchases of telecoms, network, and software equipment. The companies have previously worked together in U.K on a joint venture called Everything Everywhere. Buyin will start operation in Paris and Bonn this Monday (Oct 17, 2011). This plan was first announced in March and is predicted to save at least 3 billion euros by 2015, in part due to partnerships with competitors in the market.

Analysis:

Global involvement by media broadcasters differs greatly. For example, according to its website, Comcast provides service exclusively in the United States. This is a trend followed by many cable companies. DirecTV has a slightly wider geographical range, offering service to the US and latin america. Newspapers/journals, such as the Wall Street Journal and the Economist have a global presence despite being focused and associated primarily with one location. This difference may be in due to the difference in purposes that they serve - the latter category deals in large part with affairs that concern businesspeople around the world, while cable is targeted more to people within a specific geographic region.

The two telecommunications companies dealt with in this article likewise have a huge global presence. As mentioned, while they are based in France and Germany, respectively, they have worked on a project in the U.K.. The two are some of the largest telecommunications companies in the world. France Telecom services countries in Europe, Africa, and the Middle East, while Deutsche has a world-wide presence. T-mobile, a name most Americans are familiar with, is owned by this German media company. Since telecommunications is meant to make communication easier across the world, it makes sense that the large players would be strong internationally. This distribution of globality supports the idea that its the purpose of a specific branch of media that influences whether many companies within it deal internationally and to what extent.

Note: All information was found on the official sites of the companies mentioned.

Differentiation in the Media Industry

Question:

How do companies in this industry differentiate themselves from one another?

Note: 

This post is essentially exactly what I wrote for my section of the draft paper. It's about how different media providers market their services/products (specifically how they choose to price them).

Summary*:

This article sums up Netflix's new marketing move: dividing online streaming and DVD sales into two separate services, each for $8 instead of the 2-for-1 package for $10. Customers, shareholders, and stockholders were not happy. Netflix stock dropped after the announcement, and the vast majority of Wall Street Journal readers said in an online poll that the marketing move will harm the company.

The most intriguing quotation in the article came from Wedbush Securities analyst Michael Pachter: "...streaming-only customers are more profitable to Netflix than its DVD customers. But he believes that state of affairs won't last as studios charge Netflix more for the digital licensing deals it relies on. 'On the DVD side the studios have zero ability to raise price. [...] On the streaming side, the studios have 100% leverage.'"

Opinion:

There are many companies that offer similar services to those of Netflix. I will describe their differences here (in almost identical language to the opening paragraph of my Marketing section draft).

Since Netflix, Inc. was founded in 1997, companies in the media distribution industry have all been following its example by offering easy DVD rental delivery to their customers. The fad today is to offer online streaming of movies and television programming for a monthly or yearly fee. Netflix was the first to do this, charging $10 per month for both services—DVDs and streaming. Blockbuster caught on—too little, too late—and began offering the same delivery service in 2004, also for $10 per month.

Redbox, founded in 2002, lets customers rent movies from kiosks in supermarkets and drugstores and return them in any convenient kiosk for as little as $1 per DVD. Websites, such as Amazon.com (e-commerce) and Hulu.com (online streaming) have also caught onto this trend: In 2011 Amazon launched Amazon Instant Video to customers already paying the Amazon Prime fee, and Hulu introduced Hulu Plus for $8 per month, to offer more services and maintain a higher profit margin.

Sources:

http://www.amazon.com/gp/help/customer/display.html/ref=hp_3757_wipiv?nodeId=200572880

http://latimesblogs.latimes.com/entertainmentnewsbuzz/2010/09/blockbuster-files-for chapter-11-bankruptcy-sets-plan-to-reorganize.html

http://www.hulu.com/plus

ttp://ir.netflix.com/

http://www.redbox.com/history

https://www.blockbuster.com/signup/m/plan

http://www.theklaus.com/images/portfolio/editorial_cartoons/Netflix_Defeats_Blockbuster.jpg

*http://online.wsj.com/article/SB10001424053111903374004576581000189433470.html

Regal Vs. AMC

Question: How do companies in the media industry diffrentiate themselves from one another?

Summary: (Excerpt) "These days, it seems like everyone has an affiliation program of some sort. Airlines have had them for years (probably decades), and car rental companies have them, though they usually just award airline miles. Hotels give you airline miles or points towards free stays (some even give you both). One of the more recent entrants into this arena is for frequent movie goers. Some of you might realize that I watch movies, so this holds some interest to me, even if I don't always go to the movies to see them. So which is better - AMC's MovieWatcher or Regal's Crown Club?"

Analysis: Today's media market is all about competition. Television programs compete with each other, nwspapers and magazines compete with each other, movie theatres compete with each other -eveyone competes with someone else. As of right now, I want to focus on the latter - the movie theatres. The two main movie theater industries that constantly compete with each other are the Regal Entertainment Group and AMC Theatres. Because the main product of these two theatres is the same - movies - it is hard to keep coming up with new ideas to bring more audience in. They would need smething that would not only attract new people, but also something that would insure their customer's loyalty.
So what did AMC and Regal do to "stay afloat" and stay afloat with a "full boat of loyal custmers"? They each created programs that would provide their customers with some kinds of benefis. Regal now has Crown Club Rewards and AMC has MovieWatcher Rewards. Although the names do sound similar (at least the last parts do), they each have different perks.
For example, with a Crown Club Rewars, you can get free popcorn on tuesdays but with the MovieWatcher Rewards, you get discounted prices on Fridays, Saturdays and Sundays before noon. Then in Regal, in order to get a free poporn, yu have to earn 40 points, but in AMC you only need 10 for the same thing.
So two different companies have different ways of luring peole in, but in the end both of them have approximately same number of advantages and disadvantages, so they still get about the same number of people coming in everyday.

Sources: http://www.cxliv.org/2007/07/10/amc_moviewatcher_versus_regal_crown_club.php

Recent Consumer Behavior Trends

Articles in this blog post:

“In the Living Room, Hooked on Pay TV”

http://www.nytimes.com/2010/08/23/business/media/23couch.html?ref=consumerbehavior

Question: What are some recent consumer behavior trends that are influencing the industry?

ARTICLE SUMMARY: With the growing power of Netflix and other online video streamers, a new concept has emerged: dropping paying for television all together and just using online streaming. However, while this may seem cheaper and overall better, the number of Americans who have “cut the cord” has not been significant, with the number of subscribers to television being fairly consistent despite Netflix also rising. While many other industries suffered heavy losses due to the Internet replacing them, cable and satellite companies have two distinct advantages. First, several services, like sports games and channels like HBO, have avoided making contracts with online streaming companies, meaning that customers have to still pay for television; second, the companies have adapted to the internet age by letting consumers watch television on their computers and other electronic devices. Still, several people under the age of 45 have begun living without television and many more admit that they could possibly take that course of action also. While cable and satellite numbers remain strong, there is a possibility of big losses, and companies have still already a minor hit in the number of pay-per-view shows ordered.

My Opinion: For the most part, I agree with what the article states. While the likes of Comcast and DirecTV are still taking in revenue, they have to continue working hard to satisfy the consumer. As a college student, I lack a television and I typically watch shows that air through my Hulu Plus subscription and turn to Netflix for movies, as the television in my hall’s lounge is small and inconvenient to use. While streaming is convenient, there are still many restrictions: I cannot watch shows like The Big Bang Theory unless I watch an actual television, while some shows like The Simpsons, while available on Hulu Plus, wait more than a week before being uploaded to the website. Television is also convenient in its ability to have shows already recorded, while with streaming if I want to watch a show I typically have to wait for it to buffer or else the episode will lag – and if I want to rewind or fast forward, it takes a minute to buffer again. As such, there are many perks to television that I miss now that I am in college, though I do not fully know if, after college, those perks are worth the price of spending more for television.

What is the competitive landscape of this industry in the USA?

Question: What is the competitive landscape of this industry in the USA?

Summary: The media industry has been focusing on digitalization for the last decade or so. The competitive landscape is defined primarily by which companies are converting their traditional media methods into more digital ones.

Though broadcasting, advertising, and other media sectors have been engaging in this digitalization, the publishing industry has been the industry which has been the one most visibly going through the transition. Paper products, such as newspapers, magazines, and books, are the first products that come to mind when one discusses converting information into electronic format. Competitive companies have been those most quickly and efficiently joining the digital revolution. For example, Barnes and Noble has managed to survive in part by more quickly entering the ereader market with the Nook, while Borders failed, having been too late to become a part of the ebook market.

One of the companies investing in new, more digital methods of publishing and production is the Perseus Book Group. Recently, they have created a new branch to allow e-book authors to self publish, outlined in the article below;

http://www.nytimes.com/2011/10/03/business/media/perseus-creates-new-service-for-authors-seeking-to-self-publish.html?_r=1&ref=media

Also outlined in the article are publishing companies which have found their own niche in the e-book publishing industry. "Bloomsbury, a publisher based in Britain, said on Wednesday it had created a new publishing arm that would release digital-only titles. Companies like Open Road Integrated Media have successfully published digital editions of backlist books whose rights were not held by a publisher."

Opinion: The competitive landscape of the media industry is not being shaped by which companies are entering or leaving, but by where the currently existing companies are moving. To retain a place in the industry, publishing companies are moving into digital formats and into ebooks. The creation of these services by Perseus Media Group, Bloomsbury, and Open Road Integrated Media is one of the best ways for them to keep themselves alive through the digital revolution which has already claimed publishing and book giant Borders.

Current Events

YouTube Prepares to Launch Scheduled Channels

Question: What are some current events in your industry? What is the impact of these events on the industry?

Summary: The Google owned video giant is finalizing contracts for several "channels" to post regular videos on various topics. The channels are expected to launch in early 2012. As of yet, no specific information on the subject is being published by Google itself, however it is becoming clear that Google aims to create Youtube into a serious competitor of TV. YouTube is paying anywhere from a few hundred thousand to several million dollars to people creating content for these channels whose program format is going to be similar to that of TV, gathering required revenue from advertisements.

Opinion: While this is a very short article, I believe it is very illustrative of a trend currently happening in media. The prominence of traditional TV broadcasting is decreasing and its competitors on the internet have a significant advantage of being easily, inexpensively, and widely accessible. YouTube's foray into channel based content is not unlike Hulu's stealing of TV show audiences from cable TV. The question is, however, if YouTube will be able to break away from its homemade-movie image. While it is a form of entertainment that many, especially in the younger generations, enjoy, few associate it with the type of things one wants to get from TV channels. Nonetheless, whether it will be through YouTube or not, the future of video isn't cable - it's on the internet. If traditional companies want to survive in the long run, they should be making the effort now to establish their presence.