Discussion slides on the challenges and opportunities in the media sector.

1. Business
Innova,on
and
Transforma,on:
Opportuni,es
and
Challenges
in
the
Media
Sector
Professor
N.
Venkat
Venkatraman
David
J.
McGrath
Jr.
Professor
of
Management
Boston
University
School
of
Management
venkat@bu.edu
Canal
+
France
Master
Class
June
23,
2010

2. Overview
Emergence
of
Network
Era
Illustra,ve
Cases
and
Concepts
Implica,ons
for
the
Media
Sector
(c)
N.
Venkatraman
[2010]
2

3. Imagine
life
without……
(c)
N.
Venkatraman
[2010]
3

4. Towards
Network
Era:
A
Brief
History
1,900,000,000
4,400,000,000
(c)
N.
Venkatraman
[2010]
*March 31, 2010
4

5. A
brief
history…
(con,nued):
YouTube
and
Hulu
generate
2X
traffic
than
the
en,re
Internet
in
2000
Source:
Cisco
(c)
N.
Venkatraman
[2010]
5

6. And
there’s
Facebook….
 400
million
active
users
 70%
outside
USA
 100
Million
access
using
mobile
devices
 50%
log
on
in
any
given
day
 500
billion
minutes
per
month
(c)
N.
Venkatraman
[2010]
6

7. But……Facebook
in
Media
and
Entertainment?
(c)
N.
Venkatraman
[2010]
7

8. And..
there
are
tweets…
*June15, 2010
(c)
N.
Venkatraman
[2010]
8

9. Tweets
seem
to
be
purpose-­‐driven
Link
(c)
N.
Venkatraman
[2010]
9

10. From
1995
,ll
today..
• Developments
in
informa,on
technology
have
been
drama,c
and
significant
• Shics
in
management
prac,ces
have
been
incremental
and
slow
• A
new
business
infrastructure
is
emerging
– Global
– Digital
– Connected
– Converged
(c)
N.
Venkatraman
[2010]
10

11. Towards
Global
Digital
Network
Era….
(c)
N.
Venkatraman
[2010]
11

12. Informa,on
technology
is
impac,ng
products..
(c)
N.
Venkatraman
[2010]
12

13. Products
linked
on
all-­‐IP
infrastructure
Towards
Products
40-­‐50
billion
on
IP-­‐ devices
network
(c)
N.
Venkatraman
[2010]
13

14. Impac,ng
next
genera,on
business
processes..
video
(c)
N.
Venkatraman
[2010]
14

15. Processes
designed
for
the
global
All-­‐IP
infrastructure
Healthcare
Logis,cs
Next-­‐
Energy
genera,on
processes
Media
&
entertainment
Financial
Services
(c)
N.
Venkatraman
[2010]
15

16. ….and
service
delivery…
(c)
N.
Venkatraman
[2010]
16

17. Services
delivered
on
the
All-­‐IP
infrastructure
Next-­‐
genera,on
Service
services
Delivery
(c)
N.
Venkatraman
[2010]
17

18. The
new
business
infrastructure….
Transact
Innovate
Live
Learn
Play
Work
Connect
Consume
(c)
N.
Venkatraman
[2010]
18

19. Let
us
introduce
three
technology
laws
Bandwidth
Law
Metcalfe’s
Law
Moore’s
Law
(c)
N.
Venkatraman
[2010]
19

20. And
look
at
them
together..
“Computer”
Moore’s
Law
Bandwidth
Metcalfe’s
“Cloud”
Law
Law
“Connec8vity”
(c)
N.
Venkatraman
[2010]
20

21. A
Working
Framework
on
Business
Innova,on
Bandwidth
Law
Metcalfe’s
Technology
Law
Domain
Moore’s
Law
Product
Process
Service
Business
Domain
(c)
N.
Venkatraman
[2010]
21

22. The
Alignment
Challenge:
Balancing
Innova,on
and
Implementa,on
Implementa,on
Business
I/T
Strategy
Strategy
Innova,on
(c)
N.
Venkatraman
[2010]
22

23. Overview
Emergence
of
Network
Era
Illustra,ve
Cases
and
Concepts
Implica,ons
(c)
N.
Venkatraman
[2010]
23

24. Seing
1:
Computer
Industry’s
Evolu,on
and
Imapcts
(c)
N.
Venkatraman
[2010]
24

25. Computer
industry
[circa
1980]
(c)
N.
Venkatraman
[2010]
Source: Bill Gates Testimony Source: Bill Gates Testimony
25

26. Computer
industry
[circa
2002]
(c)
N.
Venkatraman
[2010]
Source: Bill Gates Testimony 26

27. Two
Key
Ideas…
Ver,cal
integra,on
giving
way
to
horizontal
layers
of
specialized
capabili,es
 When
and
how
do
new
layers
emerge?
1
 When
do
layers
disappear
or
morph?
 Can
you
disrupt
by
introducing
a
new
layer
where
you
hold
an
advantage?
 Can
new
entrants
succeed
by
introducing
a
new
layer?
(c)
N.
Venkatraman
[2010]
27

28. Two
Key
Ideas…
Winning
requires
domina,ng
a
layer
and
connec,ng
across
layers
 What’s
your
panern
of
connec,ons
across
the
layers?
2
 How
do
your
compe,tors
connect
across
the
layers?
 Do
you
have
an
advantage
in
network
connec,ons
across
layers?
(c)
N.
Venkatraman
[2010]
28

29. Wealth
Crea,on
and
Destruc,on
Across
Technology
Cycles
Desktop
Mainframe
Mini
Personal
Mobile
Internet
Compu,ng
Compu,ng
Compu,ng
Internet
Compu,ng
1960s
2010s
Each
cycle
required
the
leaders
to
ar,culate
and
architect
different
business
ecosystems
(c)
N.
Venkatraman
[2010]
Source:
Morgan
Stanley
(2009)
29

30. The
Computer
(I/T)
Industry
Today..
(c)
N.
Venkatraman
[2010]
30

31. The
Computer
(I/T)
Industry
Today..
Products
Solu,ons
Plaporms
Services
(c)
N.
Venkatraman
[2010]
31

32. Evolu,on
of
the
Computer
Sector…
(c)
N.
Venkatraman
[2010]
32

33. The
Computer
(I/T)
Industry
Impacts
Media
and
Entertainment…….
(c)
N.
Venkatraman
[2010]
33

34. The
Poten,al
Future
Impact
of
the
Computer
Sector…
(c)
N.
Venkatraman
[2010]
Source:
Morgan
Stanley
(2010)
34

35. Seing
2:
Apple’s
Innova,on
and
Transforma,on
(c)
N.
Venkatraman
[2010]
35

36. Music
in
the
analog
era….
Customer
Albums
and
tapes
borrowed
within
Network
friends
communi,es.
Sold
in
Physical
outlets
(general
and
Channel
specialty)
&
Mail-­‐order
Catalogs
Albums
offered
by
record
labels
Content
in
standard
formats
(33-­‐45-­‐78
rpm;
&
(music)
cassene
tapes)
Turntables,
cassene
players,
Hardware
tape
decks,
Sony
Walkman
etc.
(c)
N.
Venkatraman
[2010]
36

37. Music
in
the
digital
era…..
Precursor
to
today’s
social
network?
Customer
P2P
file
sharing;
personal
CD
burning
Network
and
sharing
with
friends
Sold
in
stores
(CDs);
Rise
of
Online
Channel
downloads
Digital
Rights
Apple
Fairplay;
Windows
Play
For
Sure
Management
Content
Major
lables
plus
rise
of
independent
(music)
labels
pos,ng
music
online
MP3;
itunes;
Windows
Media;
Socware
Quick,me;
Realone
etc.
Hardware
Digital
audio
players
(c)
N.
Venkatraman
[2010]
37

38. iTunes
in
the
music
ecosystem:
Closed?
Open?
(c)
N.
Venkatraman
[2010]
38

39. iTunes
History
(relevant
for
architectural
control
point)
• Versions
1
to
4.0.1
–
Supported
only
Macintosh
(,ll
October
2003)
• Version
4.1
–
Windows
2000
Support
(October
16,
2003);
1
million
downloads
• Subsequent
versions
support
latest
versions
of
both
Mac
and
Windows
OS
(c)
N.
Venkatraman
[2010]
39

40. Apple’s
orchestra,on
of
the
music
ecosystem
Complementor
Customer
Networks
Networks
Indirect
Content
iPod
Availability
Adop,on
Direct
(c)
N.
Venkatraman
[2010]
40

41. Music
in
the
network
era……
Customer
P2P
file
sharing;
personal
CD
burning;
Network
social
and
automated
recommenda,ons
Sold
in
stores
(CDs);
Online
downloads;
Channel
downloaded
to
phones;
Networked
streaming
Mobile
Mobile
network
for
accessing
music
Operators
Content
CDS
offered
by
major
labels;
rise
of
(music)
independent
labels;
Digital
Rights
Apple
Fairplay;
Windows
Play
For
Sure:
Management
Open
Mobile
Alliance
(OMA)
MP3;
Apple
itunes;
Windows
Media;
Socware
Quick,me;
Realone
etc.
Hardware
Mul,ple
network-­‐enabled
devices
(c)
N.
Venkatraman
[2010]
41

42. Network
of
Linkages
in
Music
Customer
Network
Mobile
Operators
Channel
Content
Applica,ons
Opera,ng
System
Hardware
(c)
N.
Venkatraman
[2010]
42

43. Apple’s
App
Store:
Extension
of
iTunes
Store
(c)
N.
Venkatraman
[2010]
43

44. From
iPod
to
iPhone:
Role
of
iTunes
and
App
Store
(c)
N.
Venkatraman
[2010]
44

45. From
iPhone
to
iPad:
Role
of
iTunes
and
App
Store
(c)
N.
Venkatraman
[2010]
45

46. iPad
and
Media
Consump,on
(c)
N.
Venkatraman
[2010]
46

47. iTunes
and
Apple
TV..
S,ll
not
fully
leveraged..
(c)
N.
Venkatraman
[2010]
47

48. iTunes
+
iPhone
have
been
cri,cal
for
Apple’s
Innova,on
and
Transforma,on
(c)
N.
Venkatraman
[2010]
48

49. And
there’s
the
Google
TV
Ecosystem
(c)
N.
Venkatraman
[2010]
49

50. Google
TV
Ecosystem
(c)
N.
Venkatraman
[2010]
50

51. While
Microsoc
had
an
early
lead…
(c)
N.
Venkatraman
[2010]
51

52. Media
1.0
Media
2.0
What
How
to
‘orchestrate’
content
to
the
consump,on
broadcast
of
media
for
when?
how?
different
consumers?

53. What
does
this
shic
mean?
Ac8vi8es
Media
1.0
Media
2.0
1.
Search
Printed
guide
or
Search
engines,
social
Electronic
Program
networks.
Links,
tags
Guide
(EPG)
etc.
2.
Access
Television
sets
Computers,
Mobile
Phones,
Tablets,
Televisions
3.
Consume
Watch
and
Record
Watch,
Pause,
Rewind,
Record,
Comment
etc.
4.
Store
Local
or
Networked
Cloud
Services
DVRs
5.
Share
Copied
on
Tapes
and
Emailed,
Embedded,
DVDs
Linked,
Tagged
(c)
N.
Venkatraman
[2010]
53

54. Two
Key
Ques,ons…
Who’s
architec,ng
the
emerging
media
business
architecture?
 Content
creators?
Channels?
Aggregators?
New
entrants
(Apple,
1
Google
and
others?)
 Where’s
the
value
created
in
the
new
architecture?
 Who’s
likely
to
capture
it?
(c)
N.
Venkatraman
[2010]
54

55. Two
Key
Ques,ons…
Winning
requires
domina,ng
a
layer
and
connec,ng
across
layers
in
the
new
business
landscape
 What’s
your
panern
of
connec,ons
2
across
the
layers?
 How
do
your
compe,tors
connect
across
the
layers?
 Do
you
have
an
advantage
in
network
connec,ons
across
layers?
(c)
N.
Venkatraman
[2010]
55

56. Overview
Emergence
of
Network
Era
Illustra,ve
Cases
and
Concepts
Implica,ons
(c)
N.
Venkatraman
[2010]
56

57. Winning
in
Networks
• Recogni,on
of
shics
in
locus
of
value
crea,on
and
capture
(‘cash
register’)
• Role
of
layers
of
capabili,es
and
connec,ons
across
layers
(‘reconfigura,ons’)
• Poten,al
of
cross-­‐network
disruptors
@
scale
(e.g.,
Apple,
Google,
Amazon,
Microsoc
and
Facebook)
• Winning
in
dynamic
ecosystems
through
a
porpolio
of
alliances
(c)
N.
Venkatraman
[2010]
57

58. Five
requirements
to
win
1. Construct
your
strategy
network
2. Examine
likely
shics
in
your
strategy
network
3. Evaluate
possible
connec,ons
(and
their
governance)
4. Assess
your
organiza,onal
capability
to
compete
in
dynamic
strategy
networks
5. Calibrate
and
monitor
posi,ons
on
your
network
scorecard

59. In
closing……
“The difficulty lies not
so much in developing
new ideas as in
escaping from old
ones.”
John M. Keynes
(c)
N.
Venkatraman
[2010]
59