MBA dissertation

DIGITAL AVATAR- The Strategies for Digital Convergence

099018609

University of Leicester

8/26/2010


Digital Avatar- The Strategies for Digital Convergence

Student Number: 099018609

August 2010

Dissertation submitted to the University of Leicester in partial fulfilment of

the requirements for the degree of Masters of Business Administration

(MBA-Full Time) Sep 2009-2010

MBA Dissertation by Student no. 099018609 Page 2


DIGITAL AVATAR- THE STRATEGIES FOR DIGITAL

CONVERGENCE

TABLE OF CONTENTS:

CONTENT PAGE NUMBER

Cover page……….……………………………………………….……………………1

Title Page………………………………………………………….……………………2

Table of Contents……………………………………………………………………..3

Acknowledgements ………………………………………..............................8

Executive Summary………………………………………………..………………11

Chapter 1

1.1 Introduction for dissertation………………………………………………..14

1.1.1 Scene Setting: The making of Digital Avatar……………………….…14



1.2 Changing Market Place………………………….................................15

1.3 Objective of the Research …………………………………………………..19

Chapter 2……………………………………………………………………………20

2. Literature Review…………….……………………………………………………20

• 2.2.1 Literature Review on Digital Convergence…..…………………21

• 2.2.2 Literature Review on Strategy Perspective….…………………25

• 2.2.3 Literature Review on Strategic Alliances………..………………26

• 2.2.4Literature Review on Bundling…………………….………………34

• 2.2.5Literature Review on Integration Strategy………..……………43

• 2.2.6 Emerging Questions: Research Questions ………….…………49

Chapter 3……………………………………………………………………………51

3. Research Methodology……….…………………….……………………………51

Chapter 4

4. Data Analysis: Views on transformation of Digital Avatar………….....57

4.1 Data Analysis –Strategic Alliance……..……………………………………57

• 4.1.1 Strategic Alliances- Nature of strategic alliance..................59

• 4.1.2 Strategic Alliance & cross-media participation………………..71

• 4.1.3 Social Marketing due to Strategic Alliance……………………..78

• 4.1.4 Telcos seek a solution through Strategic Alliance…………….81



• 4.1.5 Conclusion………………………………………………….………...88

4.2 Data Analysis -Bundling Strategy………………………………………….89

• 4.2.1 Attractiveness of Bundling…………………………………………90

• 4.2.2 Bundling strategy to retain customer base………….………..98

• 4.2.3 Bundling eases audience hyper-targeting……………….……104

• 4.2.4 Conclusion……………………………………………………….….107

4.3 Data Analysis -Digital

Integration…………………………………………………………………………109

• 4.3.1 Integrate to create synergies……………………………………110

• 4.3.2 Organisational challenges with Integration Strategy……….120

• 4.3.3 Marketing Communication currently is disintegrated………122

• 4.3.4 Conclusion………………………………………….……………….127

Chapter 5…………………………………………………...........................128

5.1 Discussion: Analysing the transformation of Digital Avatar…………128

• 5.2 Discussion over critical review of Digital Convergence…….…129

• 5.3 Discussion over Bundling Strategy……………………………….130

• 5.4 Discussion over Strategic Alliance………………………………..137

• 5.5 Discussion over Integration Strategy…………………………….140

• 5.6 Conclusion of Discussion……………………………………………..144



Chapter 6…………………………………………………………………………147

6.1 Recommendations……………………………………………………………147

6.2 Limitations of the research…………………………………………………151

6.3 Conclusion of Dissertation: Digital Avatar transformed...………….153

Chapter 7………………………………………………………………………….156

7.1 Bibliography……………………………………………………..……………156

7.2 Conferences attended………………………………………………………182

7.3 References of Interviews.........................................................183

7.4 List of Websites Accessed………………………………………………….185

Chapter 8

8. Appendix………………………………………………………………………189

Annexure 1: Contents of the DVD ………………………………………………….……189

Annexure 2.1: Profile of 20 Senior Professionals interviewed………………190

2.2 Complete set of questions………………………………………………………………201

2.3 Sample of Consent Form…………………………………………………………………205



2.4 Consent Form……………………………………………………………………………………207

2.5 Supplementary Charts……………………………………………………………………..210

2.5. a) Thematic Chart for Strategic Alliance ………………………………………210

2.5. b) Navigation Chart of key strategies ……………………………………………211

END………………………………………………………………………………….212



ACKNOWLEDGEMENTS

I am pleased to offer my sincere thanks and heartfelt gratitude to my

supervisor, Professor Steve Brown for his constant support, guidance and

motivation to successfully complete the dissertation. I can‘t stop myself

from saying that it would not have been possible without Professor

Brown‘s dedicated mentoring and encouragement. Professor Brown‘s

vision, immaculate thought process greatly helped me refine my ideas

and organize the emanating views into the carefully drafted dissertation.

My sincere thanks to the module leaders, faculty and staff members of

the School of Management, University of Leicester for imparting their

valuable knowledge and extending their continued support to make this

year an enlightening experience for me.

I have always had a passion for communications industry and thank the

opportunity to serve this industry for 7 years of my life, as a news

presenter and finance news journalist. Towards my contribution to the

academic world, I am highly obliged to present this dissertation to the


prestigious University of Leicester and thank the University for giving me

this opportunity to gain knowledge and conduct this research. As a

responsible professional, I take the opportunity to state that I will be

obliged to offer my contributions to the University of Leicester even in the

future.

I am highly obliged to the 20 Senior Professionals who have given me

their precious time and valuable information, without which this

dissertation would not have been successful. I hereby offer my gratitude

to: Andrew McGrath, Executive Director (Commercial), Virgin Media ;

John Denton, Managing Editor, TV Platforms, BBC London; Giuliano

Stiglitz, CEO, Orange Advertising (USA) & Global Sales Director (UK),

Orange-FT; Tim Hussain, Head of Mobile & Video Advertising, BSkyB; Paul

Cowan, VP, New Ventures, Syncapse Ltd.; Eric Elia, VP, TV Solutions,

Brightcove Inc; Tom Weiss, CEO, TV Genius Ltd; Harry Strasser,

Executive Partner - Digital Convergence and Innovation, Germany; Peter

Brimacombe, Former Vice President- Strategy at Disney UK- now an

independent consultant, London; Penny Power, Director, Ecademy UK;

Aaron Bogucki, Senior Digital Campaign Manager, Universal Music; Adam

Field, Head of Social Media, Media Contacts UK; Carolyn Morgan,

Managing Consultant, Penmaen Media; Oli Shaw, Digital Director, Oli, UK;

Triona Campbell, Company Director of CR Films Entertainment, Ireland;

Paul Armstrong, Social Media Director, Kindred Agency Limited; Craig



Elder, Online Communications Editor, Conservatives; Endaf Kerfoot,

Thinker-in-Chief, Brand New Adventures UK; Jack Willis, Accounts

Manager, Marketing Grin, UK and Edmund Chambers, Key Accounts

Manager, Affiliate Window, UK.

I offer my special thanks to the world of academia and the scholars who

have contributed to the fundamental research about digital convergence

and allied strategies that this dissertation has made an attempt to

research. I also offer special thanks to my parents and sister Vartika for

their constant support, guidance and encouragement.



EXECUTIVE SUMMARY

The 21st century is fast integrating the world‘s media, telecommunications

and information technology and online industries under a single platform.

Globally the communications industry is undergoing a transformation

owing to technological advancement and massive investment flows in the

aforementioned four industries, leading to revolutionary changes in the

digital eco-system. This dissertation researches the digital convergence

phenomenon that has been brought about by coming together (and clash)

of the eco-systems of four industries- media, telecommunications,

internet and technology. Such converging (and diverging) business

objectives are building interesting scenarios where vicious competition

and intense inter-dependence are co-existing. In order to capitalize

the separate yet converging business interests, the digital convergence



industry calls for a strong strategic orientation to mentor the change. The

biggest strategic issue concerning the Digital Convergence

industry is the challenge to capitalise on the newly-emerging

distribution mechanisms of information flow. This dissertation

analyses the strategies to encash the potential benefits of

distributing content across the multiple-platforms that has been

created by the digital confluence of the four industries. The key

strategies responsible for bringing around the Digital Convergence

transformation are Strategic Alliance, Bundling and Integration and have

been explored in this dissertation. Based on a qualitative research

methodology, views from a carefully selected sample of 20 highly-

influential professionals (media & communications industry) have been

compiled over in-depth interviews and data has been analysed using

thematic analysis. The dissertation observes that a creative combination

of the three strategies has a tremendous potential to lead the digital

convergence industry towards creating converged communication

applications that can transform human lives. Though in the current

circumstances, issues over digital rights, existence of a standard metric

for performance evaluation, skilled talent to meet the burgeoning demand

and user-privacy concerns still remain unanswered. But, once these

barriers are crossed, digital convergence can have a powerful impact on

the way the world communicates and interacts. To a consumer, digital

convergence would mean an enhanced digital experience, easier


applications and convenient multiple-access to information. Convergence

transcends the geographical and physical barriers of providing information

to innovate services and applications to a point where almost

everything - and everyone - is connected.Such is the impact of

digital convergence that its omnipresence reaches the user at

their point of location.

CHAPTER 1


INTRODUCTION

1.1 Scene Setting: The making of Digital Avatar

Coming together of media & entertainment, telecommunications and

information technology (abbreviated as IT hereafter) and the online industries

are transforming the communications landscape by offering digitally

converged solutions. Rapid technological advancement combined with

massive investments flows buoyed under deregulation and globalisation

ushered a revolution in the digital communications space. This strategic

transformation called - Digital Convergence implies the blurring of

boundaries between the four industries. It offers easy-to-use, value-

added digital solutions at cost-effective rates and faster pace, marking a

paradigm shift towards a globallyintegrated digital omnipresence.



This strategic transformation is addressed in the title of the MBA

dissertation as ‘Digital Avatar-The Strategies for Digital

Convergence’…..a transformation unfolding. ‘Avatar’ meaning

‗metamorphose: transformation‘ (Collins English Gem Dictionary,

1966:325). 'Avatar' implies ‗transformation of a single soul‘, is originally a

word from Sanskrit language and hails its origin to Hindu mythology. But

now, the word ‘avatar’ has gained wide acceptance in English language.

Evidence of a global familiarity to the word ‘avatar’ is well documented in

a recent Hollywood movie (James Cameron's science-fiction epic, 2010) by

the name ‘Avatar’ (2010). The Title of this dissertation hence implies

‘avatar’ as transformation of traditional communication practices to its

present form of converged digital version. Hence ‘Digital Avatar’ is the

dissertation analysing the strategies for bringing about a

successful and sustainable Digital Convergence.

1.2 Changing Market Place

The stages that have led to the transformation of digital convergence

have left an impact with the passing of each era of the time-line. The

first phase (1970s-1990s) of the current millennium affected traditional

print business with the substantial growth of online applications, with

advertising revenues diverting to the emerging online players. Even the



wave of electronic commerce (e-commerce) applications hit the retail-sales in

the high-street stores. Traditional players like newspapers and magazines

struggled to survive on subscription revenues amidst decreasing

newsprint demand. Among them, the only survivors were the specialist

segments- like financial news content, lifestyle magazines (example: fine

wine, fashion, travel et cetera). The second phase (mid-1990s) witnessed an

explosion of mobile communication. The online media continued to grow

in this time-period and did not much affect the television players.

Currently, the third phase (year-2000 onwards) is transforming itself

boosted by high-speed net connected TV. It means a bright side for

internet and media content producers but pose a tough challenge to the

current distribution channels, namely telecom, satellite and cable carriers

and the broadcasters.

But interestingly, amidst this transformation, increased customer focus

and value-addition remain the driving factors in the heart of digital

convergence. Applications like smartphones, on-the-move communication

devices have become digital life-lines (those which can be used without fixed-

lines example: Apple iPad). Traditional newspapers and magazines continue to

see a dwindling growth unless they form strong strategic alliances with

online business models or are recognised as strong brands names like

Forbes, Time etc. The transformation will mark some players emerging as

movers and shakers of the changing landscape, giving nervous times to



the traditionally dominant players. The new dawn will see niche players

(like Google and Facebook) who would completely change the rule of the

game-posing a stiff competition to the existing business models. There is

a shift in the level playing field. Digital Convergence is paving way to

interesting business solutions to converge, compete and change the

digital eco-system. This calls for a strategic perspective to manage and

monetise the convergence. Hence, this dissertation critically analyses the

three key strategies- namely- strategic alliance, bundling and integration

that are closely responsible in bringing about this digital transformation.

Digital convergence will come with a lot of

pride, discontent, politics, human emotions and a clash. A clash of

titans of the four competing industries-

media, internet, telecommunications (mobile) and technology (IT)-

will be like strong tectonic plates colliding. Highly competitive digital

world will give way to smart business solutions, innovative

integration amidst the power struggle of colliding business interests

over content and revenues. During this evolutionary phase, there is a

constant battling on the level playing field with new entrants threatening

existence of traditional old players or at times, the old playing joining hands

with new-age business to promote mutual gains.



Digital Hot Spots of the World

Source: 2009 World Factbook cited in World Digital Media Report (Deloitte and Touche, 2009)

Description: This picture reflects the level of global participation over digital

access. Countries like USA, UK, Canada and most parts of Europe are found to

be most active participants. While, parts of Africa, Latin America, Vietnam et

cetra are found to still catch up the connectivity to log on to the world of

digital experience.



1.3 Objective of the Research

This dissertation will critically analyse the strategies to build creative

combinations of competing digital technologies. Success in mastering

digital convergence can be gained by balancing the right strategies,

maintaining high-standards of quality and using an effective pricing

strategy. The channels of distribution like- internet, mobile and mobile

applications, television, cable distributors have become significant players

in this emerging eco-system. But the most challenging strategic issue in

the evolving business model is the question of monetization of profits

over newly emerging distribution mechanisms.The transforming digital

eco-system is caught between questions over form of effective business

model, nature of agreement within business models, pricing strategy and

evaluates the techniques for seeking cross-functional participation. This

dissertation conducts a detailed evaluation of the strategies that can be



used by digital convergence industry to unleash an unprecedented

consumer experience and monetise emerging business opportunities.

CHAPTER 2

2. LITERATURE REVIEW

This part of the dissertation explores and empirical evidence based on

past literature to evaluate the applicability of the three key strategies –

Strategic Alliance, Bundling and Integration, considered in this

research.



Organisation of Literature Review

The literature review for this dissertation is discussed under the following categories:

2.2.1. Digital Convergence giving a Strategy Perspective and discussing Moore‘s Law

2.2.2. Strategic Alliance

2.2.3. Bundling Strategy

2.2.4. Integration Strategy

2.2.1 Literature Review on Digital Convergence

The convergence phenomenon is unification or coming together of

previously distinct products that employ digital technologies (Yoffie,

1997:2). Digital Convergence is essentially a fusion of technologies such

as voice (and telephony features), data (and applications) video and

online that now share resources and interact with each other to create

new efficiencies. It is a process by which separate media become

digitalized to be delivered via the global networks (European Commission,

Green Paper, 1997). Popularly known as the ‗media convergence man‘,

Henry Jenkins describes the present moment of digital convergence, as a

Renaissance culture- one being transformed - for both better and

worse - as the social, cultural, political, and legal institutions respond to

the media change (Jenkins, 2007). The process of digital convergence

involves flow of content across multiple media platforms, mainly due to



cooperation between multiple media industries targeting the media

audiences searching for varied entertainment experiences (Jenkins,

2007:3). The information-age means blurring and redefinition of industry

boundaries of the ‗new competitive landscape‘ (Bettis & Hitt, 1995;

Porter, 2001; Sampler, 1998). Industry convergence ‗the converging of

two or several hitherto separate industries‘ has tended to focus on

developments within the information technology, communications &

media industries with further intensification of competition. Revolutionary

changes are taking shape and industry convergence owing to ‗digital‘

convergence (Grant, 2008:209), (Yoffie, 1997; Lei, 2000; Stieglitz, 2003)

cited in (Weaver, 2007:3). A strong driver for convergence is an

‗electronic super-highway‘ that is beginning to bind together the globe as

voice, video and data converge, defining a new basket of digital,

multimedia and interactive communication technologies (Negroponte,

1995). The root causes for convergence are ‗innovation and competition‘

brought about by digitization (Bernabo et al., 2009:3).

Digitization compresses the information of bits and bytes (0s and 1s)

that the computer can understand. Digital material can be reproduced at

any resolution to offer unlimited bandwidth and storage.

Digitization changes the distribution of intelligence and the transposition

of one medium to another so that information can be consumed



differently by different people at different times thus, empowering users

(Negroponte, 1995:231-2). Digitization will increase dramatically with

each generation becoming more advanced [digitally] than the preceding

one. Being digital is not about the future: "We are not waiting for any

invention. It is here. It is now" summarises (Negroponte, 1995:231).

Information and digital content being self-multiplicative avoid

redistribution losses (Rowley, 2008). Operation within the existing

capacity can give rise to economies of scale in production in advertising

and distribution of information (James & Trautman, 1990:13).

Digital Convergence is an outcome of a technological revolution, but its

impact is both economical and social. The economics of Digital

Convergence is justified by the empirical observation under

Moore’s Law. Moore's Law says that component density and

performance of integrated circuits doubles every year. Under Moore's

Law, prices of technology-based products fall by 30% every year and

about 50% in every two years (Moore, 1965).

"Reduced cost is one of the big attractions of integrated

electronics and the cost advantage continues to increase as

the technology evolves toward the production of larger and

larger circuit functions on a single semiconductor substance"

(Moore, 1965:115).

Depiction:Gordon Moore at Intel's headquarters at Santa Clara, California

Image Source: Associated Press (AP)



This implies smart optimization, timely introduction of new processing

techniques, device structures and materials. Cost-benefits and quality

improvements make digital convergence a strategically viable

phenomenon (Sorensen et al., 2010:1). Moore‘s law has continued

unabated for 40 years (Thompson & Parthasarathy, 2006:21;

Lundstrome, 2003). It is predicted that by year-2053, Moore’s Law will

reach stunning new levels awakened by the progress on the

Digital Convergence (Futuretimeline.net, 2010). However, Moore

(2000) has pointed out that the rapid decrease in semiconductor and

computer prices may reflect a decreasing marginal utility as technology

reaches redundancy very soon as higher versions of technological

products soon replace the previous counterparts.



2.2.2 Literature Review on Strategy Perspective

Strategy is the art of creating value. Successful company‘s strategic

analysis is a value-creating system within which different economic

actors-suppliers, business partners, allies, and customers-work together

to co-produce value (Norman and Ramirez, 1993:65). Analysing the

changing digital space, Porter says, ‗Internet should be viewed as a

complement to, not a cannibal of, traditional ways of competing‘ (Porter

2001,2). (Fransman, 2000), (Nyström & Hacklin, 2005) suggest that

convergence will create new opportunities for both incumbents and new

entrants in the firm of new technical possibilities and new market

opportunities. As indicated by (Grant, 2008) that ‗the greater the change

in external environment, the more likely it is for the firm will depend on

its internal resources and capabilities to create a secure foundation for

long term strategy‘. The unexplored potential in the complementary

firms has been identified by (Brandenberger and Nalebuff, 1996:117),



defining the room for profitable cooperation. It is not the size of the

firm‘s resource base but much depends on the firm‘s ability to leverage

its resources effectively by the means of converging, balancing and co-

opting (Prahalad & Hammel, 1990). Hence, in strategic decision-making,

cohesive and integrated role of the firm make it better enabled to

compete (Kay, 1999).

2.2.3 Literature Review on Strategic Alliances

A strategic alliance is a business relationship in which two or more

companies, work to achieve a collective advantage, attempt to integrate

operational functions, share risks, and align their corporate cultures



(Chan-Olmsted & Kang, 1998:34-5). Alliance may be in form of a simple

licensing agreement to a joint-marketing effort or joint-ventures.

Companies are found to be interested in alliances to capitalize on different

expertise, speed up a venture with combined resources and develop

economies of scope (Chan-Olmsted, 1998:35). Benefits of strategic

alliances include conserving resources, sharing risk, reducing costs and

improving technological capabilities. Hence the rate of strategic alliance

formation has increased radically (Dyer et al., 2001) cited in (Lee and

Ding, 2010:707).

Networks formed by inter-firm alliances have received considerable

attention from strategy and organization scholars. To better understand

alliances, they are made to work in partnerships (Bleeke and Ernst,

1992). Research on alliance outcomes has shown that preferred positions

in inter-organizational networks confer on firms such advantages as

higher innovation rates (Powell et al., 2005), lower financing costs (Uzzi &

Gillespie, 2002), and higher performance (Baum et al.,2000; Burt, 1992).

The relationship between network structure and advantage has prompted

a large body of research on the patterns of alliance partner selection that

propel network emergence (Gulati, 1995; Gulati & Garguilo, 1999) cited

in (Baum et al., 2005). Much is now known about partner selection



criteria and collaboration build-up (Larson, 1992; Li & Rowley, 2002;

Oxley, 1997; Simonin, 1997).

Strategic Alliances for Partnerships

For digital convergence to work effectively it has to transcend a wide

range of networks, devices, applications and content to offer high-speed

connectivity whenever and wherever (Miner, Google: 2008) cited in

(Deloitte Report, 2008:133). Albarran and Dimmick (1996) identified the

recent trends of conglomeration and consolidation in the media industries

as seen in multinational media conglomerates like News Corporation,

Time Warner and Viacom expanding horizontally, vertically and globally to

maximize their growth potentials. Rise of communication empires reflect

high level of interest for strategic alliance (Picard, 1996). Such

organisations form strategic alliance under strong leadership, visionary

mentorship and high visibility under high uncertainty. Alliance results in

greater stability and risk-reduction. This phenomenon has been witnessed

in growth of the broadcaster CNN (Chan-Olmsted, 1998:35). Presenting a

skill-based view of the firm, Prahalad and Hamel, (1990) assert that it is

possible to conceive of a firm as a portfolio of core competencies.



For instance, Finnish handset leader Nokia employs strategic actions to

build [collaborate on] a sustainable competitive advantage in an emerging

market by taking advantage of the opportunities arising from the

convergence of digital home technologies cited in (Bunduchi &

Berar, 2007:102).

One important way of navigating the value-chain is

throughpartnerships. Companies specializing in one phase of the value

chain partner with companies who are able to manage other parts of the

value-chain. The operators create value in the convergence process by

seeking the most profitable partners for developing products and services

(Nyström and Hacklin, 2005). Porter (1980, 1985) describes the needs for

corporations to identify and exploit inter-relationships among related

businesses to reduce costs or enhance differentiation. Pitofsky (1992,

1996) stressed the importance of alliances in the new global technological

innovation market. The development of ownership integration across

media industry boundaries is well documented in recent years (Chan-

Olmsted, 1998:35).

Strategic Alliance for Core-competence:

Global competition highlights asymmetries in the skill endowments of

firms. Collaboration may provide an opportunity for one partner to



internalize the skills of the other and thus improve its position both within

and without the alliance (Hamel, 1991:83). Hamel, points out that core

competencies and value-creating disciplines are not distributed equally

among firms. Core-competencies are built through a process of

continuous improvement and enhancement. A company that failed to

invest in core competence building will find it very difficult to enter in

emerging markets (Prahalad and Hamel, 1990:15), (Prahalad, 2006).

Competition is not only contributing to digital convergence but is also

paving way for formation of strategic alliances. Such affiliations enable

firms to exploit core competencies while taking advantage of

synergies with other companies (Bernabo et al., 2009). Companies are

under the pressure of responding to increasingly technical demands,

network relationship management, that are virtually impossible to

accomplish as a single entity. Hence, engaging in an alliance, they give a

chance for another party to help shoulder the burden (financially and/or

technologically) and allow a company to remain competitive (Bernabo et

al., 2009). (Mello, 2003:3) says if the biggest pitfall to growth is

the failure to define a core business, the next biggest is the

premature abandonment of a core business. Hamel supports the

emphasis on core competencies and suggests that inter-firm

competition, as opposed to inter-product competition, is essentially

concerned with the acquisition of skills (Hamel, 1991:84). However,



alliances must be carefully struck as there is uncertainty over future

knowledge requirements and where new products offer early-mover

advantages (Grant & Baden-Fuller, 2004:65). A change in strategic

priorities may suddenly make a partnership much more or much less vital

for one of the partners (Franko, 1971), (Harrigan, 1985).

Strategic Alliance for cost-optimization:

Alliances can avoid many of the costs associated with knowledge

transactions across markets. However, it is observed that alliances limit

opportunism by converting single period into multi-period games and

fostering investments in trust (Gulati, 1995; Ring and Van de Ven, 1992;

Simonin, 1997; Teece, 1992) cited in (Grant & Baden-Fuller, 2004:65).

Effective strategic alliances overcome the problems of under-utilized

knowledge arising from incongruent product and knowledge domains.

Strategic Alliances and ownership concern

Strategic alliances are more efficient than internalization within a single firm

in integrating and utilizing knowledge. The advantages of alliances are

especially apparent under conditions of uncertainty and early mover

advantages cited in (Grant and Baden-Fuller, 2004:65).



After Telecommunications Act (1996), many media and

telecommunications companies have formed strategic partners in

preparation for the showdown in an integrated global information

marketplace (Chan-Olmsted, 1998:34). Globalization has been widely

credited for provoking a shift to collaborative strategies (Ghemawat,

Porter and Rawlinson, 1986; Hergert and Morris, 1988; Ohmae, 1989;

Perlmutter and Heenan, 1986). Bargaining power at any point in time

within an alliance is, ceteris paribus, a function of who needs whom the

most. This, in turn, is a function of the perceived strategic importance of

the alliance to each partner and the attractiveness to each partner of

alternatives to collaboration (Hamel, 1991:86).

Although alliance break-ups and member withdrawal are also common,

running as high as 50 percent in some industries (Broschak, 2004:608;

Burt, 2000; Podolny & Page, 1998) but an understanding of them is basic

to the development of realistic and informative models of alliance

behaviour and network dynamics (Kogut, 1989) cited in (Greve et.al,

2010:302-5). An ‘embeddedness’ perspective (Granovetter, 1985), in

which alliances are viewed as economic transactions that occur in a social

context, is also common. Previous studies have suggested that partner

selection favours formation of alliances with firms that are relationally

‗embedded‘ through prior direct ties and structurally ‗embedded‘ though

network connections to common third partners (Gulati & Gargiulo, 1999;



Podolny, 1994) cited in (Greve et al., 2010). This is not surprising, given

the role of social interaction among partner firms in alliances in the

development of the trust and cohesion are necessary for mutually

beneficial inter-firm relationships (Larson, 1992; Li & Rowley, 1999;

Mohr & Spekman, 1994; Ring & Van de Ven, 1992; Seabright, et al.,

1992) cited in (Greve et al., 2010:302-5). Strategic alliance is better than

merger and acquisitions as the industry prefers to have flexible and agile

alliances (Kasama, NIFTY Corp., 2008) cited in (Deloitte Report,

2008:106) & (Alaxender, 2001:482).

But, it's hard to escape the conclusion that the companies that are

making most money are those that maintain a close guard. Cueing from

examples from Apple Inc. and its applications, it is probably a good

strategy to choose selective openness. As, Economist (May, 2010)

looks at Microsoft, Apple and Google about the future of cloud computing

where the three companies compete and collaborate when it suits their

business objectives. The companies that will strive and in the future those

that are most open to collaboration, and collaborative innovation

(Tapscott, 2010). Openness through innovation across corporate

boundaries is a result yielding strategy (Friedman, 2007), (Tapscott,

2007).



2.2.4 Literature Review on Bundling Strategy

Bundling can be defined as a typical pricing strategy to offer two or more

products (goods or services) that are available for purchase as one single

product (Guiltinan, 1987; Gaeth et al., 1990 and Semonin, 1995). Product

bundling has attracted increasing interest from researchers mainly within

the fields of economics and marketing. Bundling is seen as a device

for leveraging market power from one good to another (Whinston,

1990) cited in (Saligner, 1995:85). It helps in reducing competition

through differentiation (Carbajo et al., 1990; Chen, 1997).

Cost-saving aspect under bundling makes it a profitable strategy well

applicable to most telecommunications companies product/service offers

cutting across voice, video or internet access. Product bundling strategy

involves retailing several identical products in a single package at a

reduced unit price (Adams & Yellen, 1976). Bundling can also be

categorized as pure or mixed, with pure bundling referring to bundles



where the individual products cannot be purchased individually and mixed

bundling referring to bundles where the individual products can be

purchased both as single products and also as part of the product bundle

(Adams and Yellen, 1976).

Adams and Yellen (1976) argue that mixed bundling at least weakly

dominates pure bundling. (McAfee et al., 1989) suggest that while mixed

bundling virtually always strictly dominates pure bundling, the optimal

bundle price is sometimes greater than the sum of the prices of the

individual goods cited in (Saligner, 1995:86). Schmalensee (1984) was

one of the first authors who discussed bundling in a context that

fits the characteristics of e-commerce, described the phenomenon

of heterogeneous buyers’ taste in a monopolistic market. He

assumes the marginal-utility for the second (reproduced) good to be zero

for all buyers. Study by Bakos & Brynjolfsson (1996, 1997, and 2000)

analyzed why information goods can be sold with higher profits as

bundles. Companies build customer-experience around the product

by bundling-strategy as a means of selling potentially separable

components to customers, as integrated system or ‘bundle’,

usually by collaborating with their B2B partners (Porter,

1985:425). Core-product and services are sold as a bundle (example:

Software-hardware maintenance package). This implies, marketers should

combine sales-leadership and deliver specialized-service.



For example: Ericsson collaborated with Vodafone to create highly

customized solutions for commercializing the new generation 3-G mobile

system technologies offering convergence-benefits to consumers (Davis

et al., 2007:186).

Bundling as a profit Strategy:

Paid content on the web advanced only from the

year-2000 but compelled the academic thinking to

analyze the effect of competition on bundling

strategies of firms that sell information goods.

Bundling entails cost savings, product complementariness, enlarged scope

of profitability, high costs and positive correlation of valuations (Salinger,

1995) and creates entry-deterrence (Nalebuff, 1999). Complementors

(example: Microsoft and Intel) increase the value of each other's offerings and

the size of the total market. However, discord can develop in many areas,

such as pricing, technology, standards, and control of the market, both in

terms of which company has the most influence over customers and

which one gets the biggest slice of the pie. The issue of pricing

perfectly captures this tension in a bundled offer. Ideally, the

pricing will be pegged higher than complementor’s price. The first

step in managing relationships with complementor‘s is ‗to develop a deep



understanding of their economics, strategies and goals, their existing

capabilities, their incentives for cooperation, and any potential areas of

conflict, then, to gain an upper-hand‘ (Yoffie & Kwak, 2006:88-98).

Now-a-days, unbundling strategies are moving towards quadruple

play by incorporating mobile on top of home wire-line products. For

example: NTL-Telewest in the UK bought Virgin to develop a new

quadruple play company called Virgin Media. The advantage of

‘unbundled’ sales is the vendor’s ability to obtain the highest

price for each component product from individual buyers,

whereas bundling can increase seller's profit by extracting more

consumer surplus by reducing the heterogeneity in buyers’

reservation prices (Adams and Yellen 1976; Schmalensee, 1984) cited

in (Häubl, 2010:110-115).

On contrary, (Ware & Dippon, 2010:54-64) analyse that communications

network are subject to unbundling at different levels for different services.

Assessing the cost-benefit of unbundling is complicated because of

convergence and competition among the video, wireless and telephone

providers. While, bundled products/services marketers aim for cost-

effectiveness and strive for better control over their promotional toolset

(Silva-Risso et al., 1999) cited in (Foubert et al., 2010:880),(Stremersch

and Tellis, 2002; Hanson and Martin, 1990). Unbundling of networks can

add disincentive to investment in new infrastructures when it may be


cheaper to make use of regulated access to the existing national telecoms

network (European Union, Green Paper, 2007).

Another stream of analyses has focused on how bundling affects

competition. Economists such as Schmalensee (1984), McAfee et al.

(1989), Saligner (1995) and Armstrong (1996) demonstrate that bundling

may lead to effective price differentiation. Bundling can also act as a

mechanism of market foreclosure, creating concern of anti-competitive

behaviours cited in (Foubert et.al, 2010:880).

Information goods are presumed to have very low marginal costs. Chae

(1992) has analyzed a subscription TV market where bundle is used due

to economies of scope in distribution technology, pricing and production

decisions of a supplier. Bakos and Brynjolfsson (1999) have discussed the

pricing and profits when marginal costs are negligible and customers have

identically distributed valuations. They have shown that pure bundling of

large numbers of goods is optimal. Chung and Sirbu (1999) established

that mixed bundling is the dominant strategy. Wu et al. (2008) solved the

customized bundle pricing problem in which consumers are allowed to

choose up to N goods from a larger pool of J goods by considering the

trade-off between offering more choices and incurring greater menu cost.

Fana et al. (2009) analyzed the bundling of a software product with a

delivery and maintenance service cited in (Yang, 2010:473).



Lack of Standard Metric

Another important yet unexplored area of pricing for digital content is the

lack of standard metric to evaluate financial performance of digital

content. Distorted revenues, costs and share prices have been matched

by the unreliability of the financial metrics that companies have adopted.

The executives of companies conducting business over the Internet have,

conveniently, downplayed traditional measures of profitability and

economic value.

Instead, they [executives of internet companies] have emphasized expansive

definitions of revenue, numbers of customers that might someday

correlate with revenue [such as numbers of unique users (reach), numbers of site

visitors, or click-through rates]. Creative accounting approaches have also

multiplied. Indeed, the internet has given rise to an array of new

performance metrics that have only a loose relationship to economic

value, such as pro forma measures of income that remove ‗non-recurring‘

costs like acquisitions (Porter, 2003:4).

‘The dubious connection between reported metrics and actual profitability

has only served the confusing signals about what has been working in the

marketplace. The fact that those metrics have been taken seriously by the

stock market has muddied the waters even further. For all these reasons,

the true financial performance of many internet-related


businesses is even worse than has been stated’ (Porter, 2001:5).

However, (Bennison, 2009) points out that Google Analytics is a software

tool to measure the success of your digital marketing has been available

for a few years since the advent of Google Analytics is free to set up.

[Analytics software measures the website‘s performance]. But this may

not be successful in evaluating true-economic value of digital content

(Bennison, 2009).

Freemium Model

The internet customer is accustomed to free information.

(Swatman et al., 2006:64)

Some of the new-age thinkers researched the significance of Freemium

strategy to target the paid user of content. In a ‗Freemium‘

(free+premium) model, products/services are offered in free basic and

paid premium versions (Andersen, 2009b).

The word freemium is created by combining the two aspects of the

business model: free and premium (Heires, 2006:36). Freemium model

works by offering basic web services like basic digital content in a

downloadable format for free while charging a premium for advanced or

special features.



The business model has gained popularity with Web 2.0 companies and is

popular for making advertising revenues by targeting the potential paid

customer (Heires, 2006:36). The freemium model is especially relevant in

the case of digital media (internet) companies, where the creation of

revenue streams is often most perplexing because of customer

expectations that basic services should be free.

Digital content measures include straight usage statistics, the Impact

Factor, the Eigen factor and newer metrics that begin to take into account

the linkages and interdependencies that characterize modern,

interdisciplinary research. Though in the 1980s, Ives et al., (1983), Davis

(1989), Baroudi and Orlikowski (1988) and Doll & Torkzadeh (1988)

developed a number of general-purpose measures of success of

information systems. However, these measures are too general purpose

for benchmarking. In addition, ‗they all focus on benefits from the point

of view of individual users as stakeholders, not management‘ cited in

(Shang, 2000:1).

Bundling occurs often where there is a strong and large-scale change

agenda, through peer pressure scope for providing cheaper alternatives

with limited resources (Willcocks & Oshri, 2009). Bundling strategy being

a pricing strategy usually comes under the regulation scanner. The most

notable contributions to the literature exploring the regulation of a

monopolist that screens its consumers include Sherman & Visscher (1982)


and Srinagesh (1986) who examine the effects of rate-of-return

regulation on two-part tariffs and Besanko et al. (1987, 1988), who study

the regulation of a quality- differentiated monopolist. However, Bakos and

Brynjolfsson (2000) showed a non-monopolistic environment of

competition for information goods.



2.2.5 Literature Review on Integration Strategy

Vertical integration refers to a firm‘s ownership of vertically related

activities (Grant, 2008:350). The assumption behind theory of vertical

integration is reduction in transaction cost and attainment of market

share by taking over the competitors (Ahn & Litman, 1997:13). It is

useful to concentrate on the core-competencies to help the firm assemble

its news production and broadcast capabilities to experience a better

vertical integration of its resources. This move will also create barriers to

entry for the firm (Prahalad & Hamel, 1990).

Benefit of Integration:

Empirical evidence on market dominance has been established by

integrating advantages and challengesof one player that are bred

into that of the other to create increasing market integration as studied



by (Veugelers et. al, 2001; Rondi et al.,2003; Rondi and Vannoni, 2005,

DeVoldere et al., 2004) cited in (Belderbos et al.,2009). Past studies

suggest that vertical integration is a way of increasing a firm's value-

added margins for a particular chain of processing from ultra raw

materials to ultimate consumers. Research by (Arrow, 1975; Coase,

1937; Williamson (1969, 1971, & 1975) noted integration economies

gained from shared facilities, information, or other resources cited in

(Harrigan, 1985). Adelman (1949), Bork (1954), and Kaserman (1978)

recognized the market power conveyed by this strategy, but the analyses

they employed in studying it were static (Harrigan, 1985:398). The aim of

an integration strategy is to accomplish a commanding position within

all stages of the value-chain to secure the largest possible market

domination for the players involved. Porter suggests the other way to

achieve advantage is strategic positioning—doing things differently from

competitors, in a way that delivers a unique type of value to customers.

This can mean offering a different set of features, a different array of

services, or different logistical arrangements. It creates operational

efficiency advantages. Operational effectiveness can take myriad forms,

including better technologies, superior inputs, better-trained people, or a

more effective management structure (Porter, 2001:10).

Every economic revolution redefines the roles and relationships on which

offerings are based. This was true during the industrial revolution when



technological breakthroughs in the application of energy to useful work

made possible the factory system with its highly specialised division of

labour (Norman & Ramírez, 1993:2). As an outcome, integration results

in creating more value per person (customer, supplier and employee) and

in securing greater total profit from and for its financial and human

resources than all but a handful of other companies in any consumer

industry (Norman & Ramírez, 1993:4). The result is an integrated

business system that invents value by matching the various capabilities of

participants more efficiently than was ever the case in the past (Norman

and Ramírez, 1993:4). The availability of digital information highways, in

commerce will give consumers fast and increased access to a vast

selection of goods and will also cause an evolution from retail channels to

electronic markets. The virtual products offered will be ordered on-screen

and delivered direct to the home (Magretta, 1998; Ghosh, 1998) cited in

(Wirtzab, 1999:19).

The change from an industrial to an information society connected there

with will above all else be affected by the dynamics of technological

developments (Wirtzab, 1999). This change has been bolstered by birth of

internet. The internet came as a strong force. This disruptive force broke

down the concentration of power from the hands of a few, to the hands of

many. Andersen (2009a:3) asserts, ‗there have never been a more

competitive market than the Internet, and every day the marginal cost of



digital information is drastically reducing‘. In most upstream

telecommunications markets, incumbents are subject to a number of

obligations, including a requirement not to engage in ‗undue‘ price and

non-price discrimination. However, enforcement of non-price

discrimination is inherently difficult. In light of this, considerable academic

literature has focused on the ability and incentives of a vertically

integrated operator to engage in non-price discrimination. By putting

downstream rivals at a disadvantage, a vertically integrated operator is

able to capture a higher share of the downstream profits (Crocioni, 2007:

464). Further, (Yoffie, 1997) predicts that consumer multi-media industry

will change from three vertical businesses to five horizontal segments and

suggests that content providers are in the strongest position to prosper,

while hardware companies face limited prospects. New information

technologies are divisive in allowing such a flexible, adaptive model to

actually work (Castell, 2000:177). Digital technology allowed the

packaging of all kinds of messages including sound, images & data- a

network was formed that was able to communicate its nodes without

using control centres (Castell, 2000:45).

Lack of vertical integration may lead to a reduction in quality

(Economides, 1996:22). By 2011, the world will witness truly interactive

television that will interface consumers, communications, content and

commerce into a seamlessly flow to and from other devices (Friedman,



2010). With vertical integration one can be an efficient producer. But

virtual integration makes one efficient and responsive to change at the

same time (Dell, 1998) cited in (Magretta, 1998:7). More opportunities

also mean more uncertainty and greater risk. Forecasts based on

projections from the past become unreliable. Factors that have always

seemed peripheral turn out to be key drivers of change in a company's

key markets. Invaders from previously unrelated sectors change the rules

of the game overnight (Normann and Ramírez, 1993:65-8).

Economides & Woroch (1992) find that vertical disintegration is not

desirable for the firm that offers end-to-end service. Once disintegrated,

its constituent parts realize lower total profits (Economides, 1996:22).

The lessons of networks can be applied to industries where vertical

relations play a crucial role; conversely, the economic and legal learning

developed in the analysis of vertically-related industries can be applied to

network industries (Economides, 1996:4). In so in a competitive

environment, strategy is no longer a matter of positioning a fixed set of

activities along a value chain. Increasingly, successful companies do not

just add value, they reinvent it. Their focus of strategic analysis is not the

company or even the industry but the value-creating system itself, within

which different economic actors - suppliers, business partners, allies,

customers work together to co-produce value (Prahalad, 2008) cited in

(Leavy, 2008). Their key strategic task is the reconfiguration of roles and



relationships among this constellation of actors in order to mobilize the

creation of value in new forms and by new players. And their underlying

strategic goal is to create an ever-improving fit between competencies

and customers. To put it another way, successful companies conceive of

strategy as systematic social innovation: the continuous redesign of

complex business systems (Prahalad, 2008).

The literature review has identified some gaps. Despite the

enthusiasm building around digital convergence, significant factors like

regulation, standards, nature of business model, changing customer

requirements and management of dynamism in the industry remain

ignored. Little attention has been paid to the true total costs for

convergence were looming indirect costs may threaten to overpower the

benefits of cost reductions attained under Moore‘s law. It calls for a

standard metric of evaluation of real-growth in the digital convergence

industry. This real-growth parameter would remain unaffected by the un-

real digital exuberance. This dissertation has made an attempt to analyse

these issues in the Data Analysis section.



Strategic
Alliance

Bundling

Integration

2.2.6 Emerging Questions

Based on the critical review of the empirical study of the phenomenon of

digital convergence and strategies to compete in the converging market,

a series of unanswered questions have sparked up. The greatest concern

for the digital convergence industry is the search for a strategic

mentorship to suggest ways to monetise the benefits of the coming

together of multiple-channels of distribution. It calls for a tremendous

change on the strategic canvas by companies seeking competent

alliances, opting for a competitive pricing strategy to value real-growth

and integration of the multiple platforms, currently working in silos.

Hence, the major questions that structure the article and the theory

making process are:



Main questions for research

Strategic Alliance: In the face of digitally changing ecosystem, does the

strategic alliance help the companies to evolve more competent in the

digital interface?

Bundling: Does the pricing strategy of bundling emerge out successful to

the players of the digital era? How do you see the relevance of unbundled

content being priced?

Integration: How can companies efficiently integrate heterogeneous

applications with so many businesses so as to be mutually benefiting all

business capacities? What are the strategic implications of such a business

process for today‘s managers who are setting the scene for digital

convergence to unleash its potential?



CHAPTER 3

3.0 RESEARCH METHODOLOGY

This part of the dissertation emphasises on the research methodology

employed for this dissertation. The dissertation is based on a qualitative

research methodology followed by a thematic analysis of the data

collected. Qualitative approaches are incredibly diverse, complex and

nuanced (Holloway and Todres, 2003), (Argyris et al., 1985) cited in

Bryman and Bell (2007:428) and thematic analysis is seen as a

foundational method for qualitative analysis (Braun et al., 2006:78).

Thematic analysis is firmly compatible with both essentialist and

constructionist paradigms within psychology (Braun et al., 2006:78).The

interviews conducted are an account of in-depth perspective on the

questions that emanate from the critical review of past studies evaluated

in the literature review. Thematic analysis is a method for identifying,

analysing and reporting patterns (themes). Thematic analysis organizes

and describes the data set in (rich) detail (Braun et al., 2006:79).

The focus of the dissertation is to analyze the real problems within the

digital convergence industry and weigh them against the strategies that

are reflective of the most recent changes in the digital landscape. It aims

at suggesting a practical solution that can prove beneficial to the digitally

converging industry. The dissertation is based on strong theoretical



foundations of strategic management and aims to arrive at findings that

have practical implications Bryman and Bell (2007:428). The objective of

this dissertation is to seek effective digital strategies that can offer a

competitive edge to a company in this industry.

Why qualitative research methodology?This dissertation research has

been conducted using the qualitative research methodology as the

objective of the research is to capture the emerging views from the

carefully selected group of interviewees. The author chose a qualitative

research method as it facilitates theoretical mapping of views and extract

the emerging thinking from the data into meaningful information.

Qualitative research also potentially enhances managerial knowledge by

providing best-practice information as most participants have expressed

their practical experience in the digital interface.

Why Interviews? The ethnographic interview is a commonly used

interviewing process employed by research-clinicians (Kuehl & Newfield,

1991). It gives an opportunity to emerging ideas to be identified in

observable patterns. It is here that role of thematic analysis is brought

into view. Thematic analysis focuses on identifiable themes and patterns

of living and/or behaviour. The interview can be a combination of closed

ended and open-ended questions (Bryman & Bell, 2007:213). Further, it

has been highly advantageous to conduct the interviews from the

carefully selected set of respondents as the interviewees are highly-placed


senior professionals from the media and communications industry. These

respondents represent the decision-makers across the four industries that

reflect the theme of digital convergence across- Media,

Telecommunications, Internet and Information Technology. Further, the

respondents have been interviewed in-detail over a fairly well distributed

time frame over each of the questions asked by the author. It has been a

commendable opportunity for the author to use the seven-years of rich

work-experience as a broadcast media journalist into the art of

interviewing & analysing and interpreting the emerging patterns.

Face-to-face interview gives the freedom to the interviewer to encourage

the interviewee to respond and develop a comfort level with the questions

put up. Further, the author‘s personal experience in interviewing is the

importance of eye-contact in face-to-face interview. Hence, based on the

validity of importance of capturing emerging thinking from the data-set

ad based on strong background of professional experience, this

dissertation has chosen Qualitative Research Methodology: Semi-

structured interviews using a standardized interview protocol for each

interview would be conducted with focus groups. The semi-structured

interviewees, in this dissertation analysis will be the senior/managers in

digital media, communications, and telecommunication, entertainment &

IT industries. The above mentioned industries are rapidly witnessing a



digital transformation and hence are expected to be a part of close review

of this study.

The candidates were first emailed a copy of the dissertation synopses,

complete set of questions and the consent form at least 2-4 weeks ahead

of the interview. They were requested for a convenient time of 45-60

minutes for conducting the in-depth interview. A total of 20 in-depth

interviews (face-to-face and a few over Skype call) were conducted. The

average duration of an interview was 30-50 min to 85-90 minutes. Only 2

interviews are on specific questions and range for 10 minutes. All

interviews have been recorded on a digital voice recorder (Olympus

VN5500PC) and professionally transcribed for the total duration. (All

transcripts are attached in Appendix).

Research Setting:This dissertation is a reflection of the most dominant

factors for changes in digital landscape in advanced, emerging and

developing markets for digital content.

The data is collected from well-established players that represent the

largest companies in the 4-industry confluence. Most of the data is

collected from companies based in London (UK). But there are highly

valuable contributions of views from industry leaders from Cambridge

(MA), Toronto, Germany and Dublin.



Data Collection- The data had been collected from highly-credible

sources by conducting in-depth interviews of 20 of the responsibly placed,

senior professionals (media & communications industry) between June

2010 and July 2010. The objective of the interviews has been to capture

the views on research questions from the sample that reflects the

diversity of experience in witnessing, managing and deciding the future of

digital convergence. Apart from the interviews, a wide range of journals,

publications, reports, trend have been referred. Apart from them, the

author has attended 3 Conferences on digital media (between March-July

2010) at London. This has been useful to gain meaningful insights into

the latest indications in order to throw a deeper analysis over this

dissertation. Selection of the topic of digital convergence also finds a

reflection into the minute observation of changing trends, gained over 7

years of work-experience into the media industry. The areas covered in

the interviews include verbal-discussion on the firm's perspectives on

technology evolution in the digital convergence industry, major drivers

and barriers to the adoption of digital technologies, impact of competition

and detailed focus on the 3 strategies explored in this dissertation

Data Analysis-The data has been analysed using thematic analysis

process where key patterns have been categorised under– strategic

alliance, bundling and integration. The data analysis involves a rich inter-

weaving of emerging perspectives of the interviewees who maintain



influential positions in their organisations and are at the helm of decision-

making and retain powerful positions in their respective organisations.

The emerging thinking is summarised by extracting details of information

that run across the data and not within each participant.

Data Analysis

Data Collection 20 Qualitative In-depth interviews

Data Immersion
Identification of common themes,
Data Reduction patters, emerging thinking from the
interviews

Data Processing
Identification of Strategic
Alliance, Bundling and Integration to be
Analysis
propelling forces to drive the Digital
Ecosystem

Systematic Data Collection Flowchart

(Created by the author)



CHAPTER 4



4.1 Expert’s Views on transformation of Digital Avatar

Digital convergence is what has emerged from the pace of technological

changes in the era of technological dynamism. This convergence is

sustained by the fundamental co-existence of the three strategies- strategic

alliance, bundling and integration (vertical and horizontal), interplaying to make

digital convergence a reality. This part of the dissertation captures the

emerging picture that emanates from the data collected, defining the

prominent trends attained from the set of interviews over the next-

generation strategy canvas.

This part of the dissertation conducts a thematic analysis to capture the

emerging picture that emanates from the data collected from 14 (out of

total of 20) senior media professionals who have been interviewed by the

author during qualitative data-collection stage. The objective of this stage

of the dissertation is to capture the common positions, points of

differences by cross-linking the thoughts of participants. Adoption of

strategic alliance as a strategic management tool has been supported by

14 participants. The seven major themes arising emphasise that strategic

alliance helps in content sharing by developing smart partnership,

achieves core-competence and cost-optimisation and balance of power

relations under strategic alliance that lead into mutually beneficial

relationships. It leads to achieve cross-media integration, pursue social



marketing and such alliances are proving to save the telecommunication

companies to adopt lucrative business models for revenue-growth.

4.1.1 Understanding the nature of strategic alliance:

Why Strategic Alliance? Strategic alliance has been successful in

improving revenue models of cash-starved traditional media &

telecommunications companies and results in funding cross-media

advertising. Companies can focus on core-competence of their specific

areas and merge the specialities together under strategic alliance, to

provide an enhanced consumer experience. Under the current scenario,

the traditional media companies have been losing advertisement revenues

to the digital space and telecommunication companies are hit by revenues

diverting to new-age internet companies. Music industry is dented by free

online music and cross-media advertising has not been well understood

by new-age advertisers.



For example, Endaf Kerfoot, Thinker-in-Chief, Brand New Adventures

UK says, ―Companies like BBC or CNN don‘t have to go back and re-engineer

all content. They find it convenient to apply a protocol to all of that content

which basically automatically optimizes that content on a device like say

iPad. That is again in Apple‘s interest as well because the more content

people can access via the iPad, the more successful the iPad will be‖.
Source: Personal Interview conducted on June 29,2010 (Time:2-3pm) at Earl‘s Court office, London

Apple‘s iPad is a revolutionary device combining the benefits of web,

email, photos and videos that sold about 3 million sets in 80-90 days

since its launch in April 2010. Further media barons CNN or BBC are

increasingly generating content for mobile phones to harness the

convenience of cost-reduction. So, it gives rise to a set of content

producers aligning with high-tech device providers to lead way to a digital

experience for the users. As Endaf Kerfoot points out, strategic

alliance involves ease of sharing content. This implies a commercial

relationship that works on mutual benefits for each of the competing

industries. Co-existing in atmosphere of strategic alliance also helps the

company‘s focus on their core competence areas. For instance, the

content owners (like CNN) can partner with distribution networks (like

Virgin Media) to make the content available to the consumer. Andrew

McGrath, Executive Director (Commercial), Virgin Media supports



the view that with strategic alliances, the companies can focus on their

area of core competence.

Andrew McGrath says, ―What we want to be is really good at what

we‘re good at and because we‘re the best at what we do. We want to

work with really good systems integrators, combine ourselves and we do

that just through commercial arrangement and mutual interest for each

organization‖. Source: Personal Interview conducted on June 22,2010 (Time:4-5pm) at

Virgin Media‘s office, Covent Garden, London

It can be inferred that companies supporting strategic alliances, resist

being system integrators. They find solutions workable with mutually

beneficial commercial agreements rather than complex strategic

agreements and avoid complicated equity-partnerships. Under Strategic

Alliance, the unique selling propositions of both assigned entities are

clearly maintained by pursuing a clear understanding of what the

customers requirement are to identify partners and also the alliance one

wants to work with. This materialises in providing converged solution from

the two or more companies that work for the customer. It is worth

observing the rising votes to strategic alliance due to the inherent critical

element called core-competence. [Sofia’s Diary is an ‗interactive media soap in

which teenagers can make decisions about Sofia‘s life (Cinekid, 2006)].



Director of this popular soap- Sophia‘s Diary, Triona

Campbell, Director, CR Films (London and Dublin) agrees with

Andrew McGrath that strategic alliance strengthens the ability of the

company to focus on core-competence. Triona says, ―we are being more

independent on our core-content by working in partnership with others‖.
Source: (Face to face) Skype Video Call interview from Dublin studio conducted on July 5, 2010

(Time: 1-2 PM)

Focus on core-competence promotes bottom-up efficiency for firms

entering into strategic alliances. It is worth noting the fact that since

2010, cable giant Virgin Media UK is working on offering high-bandwidth

product of 400 Mbps that has been made possible by striking a strategic

alliance by piling in more capabilities around the information technology

partners rather than just the telecommunications allies. Combined

capabilities of two organisations are addressed through working

in commercial relationships with other organizations and

concentrating on core-competence.

An observation of underlying importance is that, while some participants

have expressed strong views on focus on core-competence as a crucial

factor for strategic alliance to exist, there are some thinkers in the

industry who differ in their opinions. Influenced by the dynamic changes

in the digital eco-system, these participants insist that strategic alliance is



an outcome of smart-partnership ties between two companies or

industries.

Harry Strasser, Executive Partner, Digital Convergence and

Innovation, Germany says, ―I strongly believe in smart partnership to

be the right way. It can be in form of strategic alliances. It can be seen

in this era where internet is a strong driver, internet solutions

applications have come about as a stronger driver to fix

telecommunication‖.
Source:Face-to-face Skype Video Call interview from Germany on July 20, 2010 (Time:12-1 pm)

This implies that as the digital convergence is changing the digital eco-

system, there are new forms of alliances teaming up where the

converging industry offers smart solutions to the customer. It is worth

noting that strategic alliances have been existing in the industrial eco-

system, but in the dynamic world, partnership implies smart-customised

and personalised solutions that are far more customer oriented compared

to the contemporary offer a decade ago. It is interesting to observe some

of the participants differ in their positions on smart partnership ties. It

can be inferred from a different position taken up by one of the

participants. Oli Shaw, Director, Oli UK resists the smart partnership

debate by highlighting the imposed form of strategic alliance.



Oli Shaw insists that, at times ―strategic alliances are mere collaborations

to serve a legal mandate amongst viciously competitive companies. So, it is

only in such situations that the competing industries enter into a strategic

collaboration due to serve a legal mandate. For instance, BSkyB legally had

to give up some of its channels to be broadcasted on Virgin

platform…otherwise they would have to make a large amount of fines‖.
Source: Personal Interview conducted on July 2,2010 (Time:2:30-4pm) Old Street Station, London

So, alliance may as well be a form of imposed relationship rather than a

mutual agreement.

Tim Hussain, Head of Mobile & Video Advertising, BSkyB

(London) differs from Oli shaw by saying that a legal mandate is only

a regulatory requirement and can‘t be called a strategically allied

solution. Tim asserts, ―I would not call this a strategic alliance, it is a

mere arrangement to fulfil regulatory implications imposed by industry

regulator, Ofcom‖. [Ofcom is the independent regulator and competition

authority for communications industries in the UK].

Source:Personal Interview conducted on July 28, 2010 (Time:2-3 pm) at Sky‘s Office, Old

Street, London

Interestingly, the following opinion from BBC brings the observation back

to square-one. It has to be noted that strong waves of dynamism have



made BBC change from the earlier concept of partnership to that of

strategic alliances.

John Denton, Managing Editor (TV Platforms), BBC London

believes, ―BBC has been very big in the last two years talking about

partnerships. But there is a reason we‘ve got why the word partnerships

isn‘t used quite a lot, because there is a lot of change, digital is affecting

old business models, no one is entirely sure what is going to come out

later. And with lots of hopes, and lots of plans and projections, but no one

is entirely sure. So in that kind of a framework, where uncertainty

ranges, I think people start to look to share the burden, share the

pain. That's why I feel strategic alliances are really important at the

moment. People can‘t do it all on their own, people are nervous about

investing huge sums of money and going down a path that then maybe

the wrong one. So, I guess strategic alliances does a couple of things, it

helps you get together as a team to do a bigger project, but it also

means if you can convince someone to join that team, then hopefully it‘s a

good idea!‖.

Source: Personal Interview conducted on July 14,2010(Time: 10-11am) at BBC White City,London

Such alliances foster emphasis on research and development, create and

distribute clever interactive applicationsfor the 3-screen approach - TV,

mobile and the internet, (referred to as multi-casting). So, information



becomes quickly available to the mass audience. Strategic alliance is

encouraging the content king, BBC to seek commercial partners who

would invest in software and hardware and share the content. BBC

Canvas is the latest example in this respect. Further, JohnDenton

believes, strategic alliance supports Moore's law which says that

processing power doubles every 18 months over constant costs.

John says, ―we all come to get new partnerships because no one entirely

sure, but there is a lot of hope that we are right‖.
Source:Personal Interview conducted on July 14,2010 (Time:10-11 am) at BBC White City, London

John predicts another round of strategic alliance- would be with the

Government of United Kingdom to partner in investment for BBC. For

pursuing UK government‘s ambitious-project of establishing ‗Digital

Britain‘ by 2012, the public service broadcaster, BBC seeks strategic

alliance with the government for project-funding.

John Denton says, ―if you [UK government] want Digital Britain by

2012, you got to help us [financially]. So that, BBC will roll up public

service money to try and help other companies understand the difficulties

and try and come up with some solutions and so we have to work

together to solve it‖.
Source: Personal Interview conducted on July 14, 2010 (Time: 10-11 am) at BBC White City office, London



An emerging thinking over the forms of strategic alliance emanating in

the digitally converging landscape point to a significant observation that

draws attention towards the balance of power positions maintained by

the (converging and competing) industries. Such a balance of power

position decides the level-playing field for the four converging yet

competing digital convergence industries namely- TV, Web,

mobile and technology.

As Peter Brimacombe, Former VP, Disney World, says, ―It‘s whether

you get those kind of the balance of power in the value chain and you

find the one bigger player can extract value from others that people

start thinking that they will need to integrate in order to protect their

market position‖.
Source: (Face to face) Skype Video Call interview conducted on July 23, 2010 (Time: 10:30-11:30 am) from

Peter‘s office, London

This observation indicates the stiff-competition that can be expected

within the industry players. Supporting Peter‘s notion of balance of power,

Tim Hussain, Head of Mobile and Video Advertising, Sky (London)

expresses alliances coming in way with strong internet companies, like

Google. But expressing fear of losing ownership, Tim asserts that

strategic alliances may have to be carefully plotted.



Tim says, ―..at the same time they[Google] are trying to be a competitor

but they also need our content. But we have to be careful else, we‘ll start

to lose that ownership of relationship. Further... we may not have the

ability to pull back as quick from that relationship. So we have to be very

careful..‖.
Source: Personal Interview conducted on July 28, 2010 (Time: 2-3 pm) at Sky‘s Office, Old Street, London

This view makes a strong suggestion that strategic alliances will have to

be an outcome of well-balanced analysis of relationship outcomes.

Monetary gains must spread equally to both alliances in the long run

otherwise; alliances start to feel the displeasure of relationship. A deeper

thought into the stiff-competition scenario expressed by Peter

Brimacombe, reflects the divergences building up over the converging

and competing scenario. This means the industry players compete to

build up their market shares using innovation and adaptation of dynamic

technologies. There is a room for strategic alliances for traditional print

media players (newspapers and magazines), that are already suffering a

downfall in their market shares due to strong displacement caused by

online media (free news and views available over the internet) . The plight of

traditional media players may continue as the life-cycle of this industry is

under attack by the new-internet stars.



Carolyn Morgan, Director, Penmaen Media predicts the slow death of

traditional companies who fail to catch the verve of the smart, dynamic

and young players (like Apple‘s iPad- launched on April 03, 2010 crossed over

10,000 subscriptions in mere 4 months). Carolyn says, ―I think it‘s still in the

smaller groups that provide more (niche) specialized content that will

survive. …But there is going to be quite a lot of blood in the floor, and

they will have to make their businesses smaller. They [traditional media

players] will have to reduce the number of journalists, reduce their

overheads‖.

Source: Personal Interview conducted on June 21, 2010 (Time: 11am-1pm) at Stamford, England

So, unless the traditional players do not sign strategic alliance

with digital players, they may find survival getting harder. But it is

observed that while companies are trying new alternatives- print media

aligning with online media, these strategies for Digital Convergence are

still not fully marketed to yield revenues.

Eric Elia, Vice-President (TV Solutions), Brightcove Inc

(Cambridge) believes, ―traditional print media companies trying a lot of

different things by creating online versions of the content and using

applications devices to to reach where the consumer is located‖.
Source: Face-to-face Skype Video Call interview from Brightcove Office, Berkley, CA on July 12, 2010 (Time:

9-10 pm GMT)



Views indicate that when it difficult to innovate start-ups, companies

prefers to ally with existing small-scale specialised firms. As the start-up

business models are nimble and agile and can be easily moulded

according to business objectives. Hence, in most cases the purpose of

formation of strategic alliance- that is competence benefits are observed

to accrue to both parties involved.

So, this part of Data Analysis summarises that traditional media

companies can have better revenues and a longer survival if they form

strategic alliances with emerging channels of distribution like the online

players.



4.1.2 Strategic Alliance and cross-media participation

Digital Convergence still lacks the maturity on thinking about cross-media

advertising. Cross-media advertising means advertising the same product

or service in several different types of channels offered by a single-

company so as to target the same audience accessing content from TV

and mobile, or on web and mobile than on TV alone. So, if an advertiser

spend similar amount of money on TV, on mobile and web on the same

audience‘s digital profile, they will be able to monetise better revenues.

Triona Campbell, Director, CR Films (London and Dublin) says, ―with

strategic alliance, you can have advertising that goes in all the platforms-

media, mobile, internet and technology and not in just in two or three

platforms….‖.
Source: (Face-to-face) Skype Video Call interview from Dublin studio conducted on July 5,2010

(Time:1-2 PM)



This process not only adds value to the communication chain but also

transforms a uni-dimensional communication to multi-media

communication. It ultimately cuts down the costs and disseminates

information with a greater impact. The advertising world is still caught in

the traditional one-media thinking rather than cross-media thinking over-

Web, TV and Mobile. So, digital media companies currently are struggling

to convince the advertisers.

Giuliano Stiglitz, CEO Orange Advertising (USA) & Global Sales

Director Orange UK notes that, ―advertisers don‘t see different

technologies as just part of one big information flow that they just see

different technologies in different platforms. So... they employ different

media strategies to target TV watchers from mobile users‖.
Source: Personal Interview conducted on July 1,2010 (Time:12-1 pm) at Orange FT office, Tottenham Court

Road, London

This implies online advertising poses a challenge and needs deep thought

over seeking cross-participation solution. Advertising media bases tend to

be very conservative.



Triona Campbell, Director, CR Films (London & Dublin) says,

―They[advertisers] buy by the number of eye-balls and the number of

page impressions. They don‘t understand how it quantifies the digital

content impact it to the people they‘re answering to‖. Cross-channel

advertising has still a long way to go as Triona adds, ―the current system

lacks a mechanism to quantify the product placement or judicial

integration of content would benefit in terms of the number of

consumers...We need something like Nelson‘s rating system for integration

and product placement‖.
Source: (Face-to-face) Skype Video Call interview from Dublin studio conducted on July 5,2010

(Time:1-2 PM)

This means, quantifying the metric to an advertiser would make sense.

Many other participants have converging views with Triona, expressing

concern over absence of a standard metric to measure Digital

Convergence impact by tracking digital footprints.

Further, Digital convergence is creating platforms for music industry‘s

applications. Application devices are partnering with the music content

developers. For instance, Apple motivates applications developers for the

iPhone by yielding 70 percent of the revenues for them by partnering with

music content provider like Universal Music.



Music content developer Aaron Bogucki, Senior Digital Campaign

Manager, Universal Music, says strategic alliance ―promotes iTunes

application and promotes deliveries to large-scale retails like HMV and

Zavvi and Amazon‖.
Source: Personal Interview conducted on June 25,2010 (Time:11-12noon)at Earls Court, London

Under alliance with dedicated mobile teams, the music industry is

witnessing massive growth opportunities for mobile applications. Taking

cue from the changing consumption pattern of the digital content, Paul

Cowan, Vice-President (New Ventures), Syncapse Ltd. (Toronto)

predicts dramatic changes in the digital space to come about.

Paul says, ―digital will cut into the traditional media space and …I think

you are going to start to see more and more of the digital analytics

and methodologies and pricing models [emphasis added] start to move

their way into their traditional mediums‖.
Source: Face-to-face Skype Video Call interview from Syncapse office, Toronto on June 29, 2010

(Time: 5-6 pm)

But on issues over monetising the benefits of digital convergence,

participants observe the need for data analytics and digital insights.



Adam Field recollects, ―some companies currently use proprietary

analytics tool like (Artemis tool) that measures digital profiles to some

extent and allows identification of different marketing mix... but it is not

an adequate measure...‖.
Source: Personal Interview conducted on June 22, 2010 (Time: 10-11 am) at Covent Garden

London

Google Analytics is the enterprise-class web analytics solution that gives

rich insights into website traffic and improves marketing effectiveness.

The model shows multi-media influence over how users rate it.

Penny Power, Founder, Ecademy says, ―Though it [Google Analytics] is

still a better solution.. it shows detailed user profiles ...anyone can find

anything [details] about the company ...it is good for marketing... but still

not an adequate tool.."
Source: Personal Interview conducted on June 28, 2010 (Time: 12-1 pm) at Reading City office

Hence, a dedicated system of digital data assessment to specifically

measure the cross-media impact can be clearly observed to be the need

of the hour. At the heart of cross-media advertising is the intention of

having a richer dialogue with new customers with use of smart tools and

evaluators.



Paul Armstrong, Director (Digital Strategies), Kindred (London)

says, ―Things really work when you marry that technology with hyper-

targeting to encourage customer interaction. There is a need for right

timing of the market and willingness of the alliances to mutually compete".
Source: Personal Interview conducted on July 2,2010 (Time:5-6 pm) at Kindred Office,Goodge

Street, London

Trends indicate that internet and mobile text services remain the hot

spots for businesses to monetise the digital convergence opportunity.

―Mobile is the hottest area of computer technology… the

smartest developers are now writing applications (apps)

for mobile…‖ (Eric Schmidt, CEO, Google Inc.)
Source: Eric Schmidt Speaking at Key Note address at the Guardian

Activate Summit, July 01, 2010, Kings Palace, London: Guardian.co.uk

So, to bring about strategic alliance in the digital hemisphere, there is a

need for willingness to mutually compete under cross-media participation.

However, this willingness is caught within complicated legal issues over

digital rights management. This imposes an access control restriction over

the movement of content from one channel or device to the other flanked

by regulatory management of digital access and copyright-protection



controls. Digital rights management is globally used by companies such as

Sony, Amazon, Apple Inc., Microsoft, AOL and BBC.

Eric Elia says, ―Digital Rights Management is an industry wide problem

that adds to the inability of moving content from one device to another….‖.
Source: Face-to-face Skype Video Call interview from Brightcove Office, Berkley, CA on July

12, 2010 (Time: 9-10 pm)

This part of the data analysis section concludes that the industry is

increasingly realising the importance of cross-media participation, but the

full effect is restricted due to lack of a standard metric for performance

evaluation.



4.1.3 Emergence of Social Marketing due to Strategic Alliance

Advertisers seek viral marketing

Power of social commerce and emergence of social marketing is becoming

significant. But digital media companies are yet to tap into the possibility

of incentivising people (digital content user) and urge the users to

indirectly add to company‘s cross-channel marketing. For instance, a

Facebook user could be a significant contributor to virally propagating a

company‘s marketing message over the friend‘s list. Any user usually has

a friend‘s list of at least 100 contacts. Every marketer and advertiser is

now enthusiastic about access to the widely networked space created by

emerging monopolies like Facebook and Google.

Paul Cowan, Vice-President (New Ventures), Syncapse Ltd.

(Toronto) says, ―I think the monopoly situation is an interesting one

because we are going to have two monoliths being Google and Facebook

that are going to be filling on absolutely massive amount of customer data‖.
Source: Face-to-face Skype Video Call interview from Syncapse office, Toronto ;June 29, 2010 (Time: 5-6 pm)



In a significant development, this dissertation observes Britain‘s largest

public service broadcaster- BBC seeking strategic alliance with social

networking giant- Facebook to profit from social marketing.BBC is actively

considering strategic partnership with Facebook to harness the wide reach

of the popular social networking site. At the same time, Facebook is keen

about the deal as the networking site values BBC‘s content. New

paradigms of alliances are being developed. John Denton shared his

experience at BBC London where over a corporate presentation, social

networking leader Facebook has been expressing interest to Britain‘s

largest broadcaster BBC for channelling their content via social

networking platforms.


expresses amazement, ―for the first time you can see how the

plates are shifting!!... because previously even BBC would say we‘re a

big broadcaster we‘ve got 97% of the audience watching any of our

channels or listening to us, anyone time, blanket coverage, why would

we need Facebook..?. But suddenly.. it’s a bit like who needs who the

most. Facebook want our content and want to be able to channel our

content. And we are thinking, oh my god! they’ve [Facebook] got 400

million, they’ve got an audience!!"…. .......(continued...)
Source:Personal Interview conducted on July 14, 2010 (Time:10-11 am), BBC White City,London



(cont.).....So it was a little like, how would you position yourself in that

role.. And that is very much what is affecting…as the BBC is going to ask

more about those questions, because it hasn‘t been successful at creating

its own Facebook. We‘ve never really been good at software

innovation, and even iPlayer a forward success is really just about

distribution, cause we are broadcaster we kind of can‘t shake that (the

software expertise)!‖.
Source:Personal Interview conducted on July 14, 2010 (Time:10-11 am) at BBC White City,London

But, it is worth mentioning that some views do not suggest that social

media has helped their objectives. At most situations, demographic

factors need to be kept in mind before rolling out our online campaigns.

Craig Elder, Digital Media Editor, Conservatives (London) says,

―social networking is not going to help us to reach as social networking

takes in a very broad sphere of people but not all users are digital

content consumers. We have observed a lot of conversation about the

election going on, on Twitter and Facebook. But the fact is that… it is still

a very niche audience…‖.
Source: Personal Interview conducted on June 29, 2010 (Time: 2-3 pm) Millbank Office, London



The strength of emerging social networking fabric can‘t be ignored. It is

even more interesting to note that both digital and non-digital companies

are engaging in positioning themselves into the digital space to capture

visibility, customer attention, brand enhancement and ultimately, a

stronger market position but audience preference must be carefully

evaluated under a cost-benefit analysis before hitting on any cross-

platform targeting plan.

4.1.4 Telecom companies seek a solution by Strategic Alliance

Digital convergence has paved way for some new media players but

continues to pose a threat to traditional survivors, like the

telecommunication companies that are struggling for revenue shares. In

the changing digital landscape, the telecommunication companies are

struggling financially as most of the revenues are diverting to the internet

companies. But many telecommunication companies are surviving this



battle through smart, cleverly chosen strategic alliances for content

sharing, voice and data convergence. It is observed that in the era where

internet is a strong driver, internet solutions applications are posing a

tough challenge to the traditional telecommunication operators. But the

telecommunication companies are exploring opportunities on content-

sharing space by the means of striking effective strategic alliances.

Now, to understand the telecom story it is

worth observing here that

telecommunications companies (like

Vodafone, Orange, T-Mobile etc.) have

been beaten up with revenue-flows

diverting to internet companies (Google,

Yahoo, Skype). It is surprising to observe that the application – internet

on mobile handset actually uses the mobile company platform to deliver

internet experience to the user. But unfortunately, no revenue as per

usage flows into mobile company‘s kitty. Instead all the revenue flows to

the internet companies.



Convergence industry‘s leading consultant, Harry Strasser, Executive

Partner, Digital Convergence and Innovation (Germany)

predicts, ―Telecom companies never will be able to come to the position

they were in the past decade. Now it's too late… now the telecom

companies debate about net neutrality that these companies should give a

part of their revenue streams..‖. Hence, strategic alliance still offers a

partial breathing space to the traditional telcos.
Source: Face-to-face Skype Video Call interview from Germany on July 20, 2010 (Time: 12 - 1 pm)

The revenue divergence bleeds the telcos by repeating itself on mobile

internet side. As mobile internet traffic is getting massive and is coming

through internet companies new generation internet players like

Facebook, MySpace etc. and other social networks offer solutions where

users are connecting not only through the fixed PC but through their

mobile phone, to their Facebook account to watch YouTube and other

videos. Again this is financed through online channel with revenue flowing

into the internet companies.



Harry Strasser reiterates, ―telecom carriers have not learned their lessons

and the latest trend as you might know is with applications where many

developers are offering applications for mobile phones, for smart phones.

But, this space is already taken up by companies like Apple‘s App Store and

Google‘s Android App store. Telecommunication App (application) Stores

however are trying now to chunk on this bandwagon example through the

RIM App Store or Nokia Ovi App Store. But again, the revenues which are

running through these App Stores are shared between the App Store owners

and developers. So again, nothing goes to the carriers due to consumer

preference for Apple and Google brands for applications".

It is further realised that telecom companies lose battle on the Voice over

internet protocol (VoIP) front as well. VoIP kick-started on the fixed

telecommunication side and was initiated by Skype offering free VoIP

solution, without paying for normal telecommunication calls. Skype faced

strong opposition from telecom carriers, but was successful in making

money also through advertising. Again, this did not involve the carriers.

Adding to the telcos woes, now VoIP applications are available over

mobile phones, so revenues for internet companies.



Harry predicts, ―the next 2-3 years, will be of mainstream mobile applications

where many users will download the applications in running Voice over IP calls

and again this will impact the revenues of the carriers. If still the mobile voice

calls are impacted by voice-over-IP calls, it will be a true challenge of survival

for the carriers I believe‖. In the digitally converging space, the

telecommunication companies are only left with the option of partnering with

internet companies.

So, it can be noted that telecom operators bear the brunt, but can

save themselves by strategic alliances. The telecom operators

have also been unable to successfully partner the growth of this

digital convergence by creating the right play over the fixed

telecommunication. Fixed telecommunication is witnessing shrinking

market and revenues falling flat over the last couple of years and this are

due to advertising revenue diverting to online advertising. Strategic

Alliance is paving way for compensating the shrinking revenues of the

traditional streams. It is interesting to observe, that global players (like

Vodafone, Deutsche Telecom and the Telephonica group) with strong

brand image and those who develop smart partnering approach,

responsive top-management may be in stronger position to survive the

challenges. It can be noted that such changes call for the top

management to initiate in their company culture, a deeper understanding

of working with the internet companies. Even companies that own their


telecom, web, TV and broadband platforms are actively engaged in

external alliances over content distribution benefiting the cost reduction

advantage.


Director (UK), Orange-FT says ―We are an operator, but are thinking

about media as we have access to huge audience. When consumers are

buying service, we can also give them content on three different

platforms. Through this, we effectively utilise our rights to football

games, rights to movies etc. So this is a kind of a way of digital

convergence and the alliance and saves costs as well…‖. Some companies

still are considering integration for telecom and internet companies. Harry

believes, ―it would have been wiser for a company like Vodafone to buy a

Yahoo and integrate Yahoo in getting two internet competence and

expertise or other internet players. But so far, their management have

been too cautious and not willing‖.
Source: Personal Interview conducted on July 1, 2010 (Time: 12-1 pm) at Orange FT

office, Tottenham Court Road, London

Source: Face-to-face Skype Video Call interview from Germany July 20, 2010 (Time: 12 - 1 pm)

This implies that, telecommunication companies have to learn the lessons

and management teams have to be receptive to changes. So rather in

developing a completing app store, they (telecom companies) could try to



smart partner with app store vendors and get their new approach to the

market. But strategic alliances must be carefully chosen as there have

been unsuccessful alliances in the past.

As Endaf Kerfoot adds, ―for instance, AOL Time Warner is considered

one of the worst deals in the history of corporate America. This digital

space deal destroyed tens of billions of dollars of shareholder value in

Time Warner. Further, eBay buying Skype was another terrible deal. eBay

is now desperate to get rid of Skype, because it just doesn‘t seem to

work with the eBay brand‖.
Source: Personal Interview conducted on June 29, 2010(Time: 2-3pm) at Earl‘s Court office,

London



4.1.5 Conclusion for Data Analysis on Strategic Alliances

Final observations lay out that digital content users needs and demands

are fast rising up creating a pressure on companies to evolve

personalised and customised products and services. So, this is putting a

pressure on specialization of the content. While at the same time, the

industry is experiencing massive convergence with the coming together

of four industries- Media, Telecommunications, Web and Technology.

Digitally converging eco-system is hence, fragmenting as quickly as it's

converging with the two forces playing against each other with equal

consistency. Therefore, it may be concluded that the emanating digital

ecosystem will bring with it the fundamental complexities, however, a

strategic perspective will give rise to benefits of competencies and

collaborations flow out both to consumers and industry players.



4.2 Data Analysis on Bundling Strategy

Bundling strategy qualifies to be one of the micro-foundations of the

"convergence" process in the IT industries and offers complementary

approach to technological and regional economics (Blanc, 2001). Bundling

offers competing solutions in packaged bundles to the users at

differentiated prices. Price as per offer continues to be the dominating

factor to package a bundle. While the bundled offer much depends on the

type of B2B and B2C market, the major practitioners of bundling strategy

are the mobile telecom providers offering attractive internet purchase

options. Bundling strategies involve premium-services for bundles that

offer the basic package for free but lot more services come with marginal

extra payments.

Bundling is one of the most powerful marketing tools that can disguise

product pricing approaches, add value to off-set price and is extensively



useful to differentiate the products or services even in a saturated

market. So, bundling creates a revenue stream by cross-selling the

bundle and creates an opportunity for product-extension. Bundling

strategy can translate short-run benefits into long run benefits. Finally,

strategic bundling and product extension can help the digital media

companies to attain competitive advantage. Another aspect of bundling is

compiling together lots of different types of content. This part of the

dissertation presents the emerging thinking on bundling strategy of 17

(out of a total of 20), highly-paced senior professionals (media &

communications industry) who have been interviewed by the author

during qualitative data-collection stage. Sustainability of a successful

bundling strategy has found support by 13 participants. This section is

highlighted three major emerging views supporting the effectiveness of

bundling strategy. These themes are- increased customer base due to

product extension and possibility of hyper-targeting the customers to

increase business revenues.

4.2.1 Attractiveness of Bundling

Bundling is an attractive strategy from the consumer perspective, creating

a perception that the said offer is a discounted value deal and can be

monitored under a hassle-free single bill transaction. But from a

company‘s perspective, bundled offers may actually be more expensive to

the consumer‘s pockets, yet are marketed as money-saving deals offering


a convenience purchase. For example, Sky TV bundles together 105

channels and offers them as a bouquet to the consumer. So, the

consumer gets diverse package at the same time for one price.

It is observed that bundling strategy is playing an important role

in business sustainability in telecommunications industry by

encouraging product-extensions to the consumer. Solutions are

made available over intelligent devices like smart phones, PC, laptop, and

newer category devices like - Tablet PCs, iPads etc. Bundles are offered in

forms of subscription services, where for a premium service, the full

package is charged to the consumer.

Harry Strasser, Executive Partner, Digital Convergence and

Innovation, Germany weighs bundling as a successful strategy. Harry

believes, ―in principle I think that [bundling] is definitely one option of a

successful strategy. As a result of convergence between fixed and mobile

communication with TV, there are triple-play solutions available‖.
Source: Face-to-face Skype Call interview from Germany on July 20, 2010 (Time:12-1 pm)

It is worth realising that bundling strategy has not only fostered cost-

optimisation, but also initiated joint billing systems over the bundled IP

based infrastructure, hence offering value-added converged solutions to

the users.



For example, Endaf Kerfoot, Thinker-in-Chief, Brand New

Adventures UK says, ―The economics of bundling strategy is great as far

as I am concerned. … most mobile network operators in the UK and

elsewhere are now rethinking and that their content-data offerings‖.
Source: Personal Interview conducted on June 29,2010 (Time:2-3 pm) at Earl‘s Court, London

From the emanating views, it can be recognised that successful bundling

is advantageous to the user offering a single-bill at a competitive price.

From a media standpoint, bundling is the only way that to drive increased

adoption and penetration of their services within the advertising

community and drive long-term viability of their products and services.

Carolyn Morgan, Managing Consultant, Penmaen Media who

conducted her consultancy assignment for ‗the Guardian‘ experienced the

experimentation on revenue model by bundling regular print-subscribers

with the growing magazine subscription packages.

Carolyn says, ―news publishers engaged with alternative digital news

dissemination formats over print and mobile in reader formats to monetize

the online potential. Niche publishers offerd specialized bundled services

to large-media houses. Remember..only clever bundling strategies work".
Source:Personal Interview conducted on June 21, 2010 (Time: 11am-1pm) at Stamford, England



An important observation from the Spectator case study is deciphered

and can be interpreted that bundling with digital content improved a

section of non-digital sales.

Carolyn remarks, ―Spectator newspaper experimented the bundling

strategy of putting a version of that content on to the iPhone..and the

model resulted in success and added a reasonable number of

subscriptions due to the cheaper version of digital content‖.

Surprisingly, it revealed that not only did the digital subscription increase,

but the dying print sale also resumes sales due to Spectator‘s digital

brand publicity.

This dissertation notes that bundling is about engaging clever

tactics to sell across different versions of the content and charges

the customer as per the package offered. Users pay different

amounts of money for different packages of content. So, bundling is

effective in cross-media promotion and allows users to choose what they

are interested in. It also increases the life-cycles of traditional media

companies.



Bundling offers the ease of see, watch, surf the pool of content cutting

across various content packages. At BBC, there is also bundling is seen

over digital, online, TV and broadband space by simple yet smart

packaging of the offer bundle.


adds, ―Bundling is an interesting offer for us because we do it at such

scale and some people saying to us, we can‘t actually technically take all

your content due to cost pressures. So for us, BBC iPlayer has its content

bundled on the number of hours, making it a bundle. This is due to our

public service position where the whole range of content is counted.

bundling for BBC is a bit different‖.
Source: Personal Interview conducted on July 14,2010 (Time:10-11am), BBC White City, London

It can be noted that another form of bundling also exists at BBC. This

comes in form of interactive television popularised by BBC Red Button.

[BBC Red Button is the brand

name for digital interactive

television services provided by

the BBC as depicted in the

picture].

Image Source: www.google.co.uk



Popularly addressed as BBC‘s Red Button man, John adds, ―We have

also have bundled content on travel and children. So, there is a strange

bond being developed with bundles service offer‖.
Source: Personal Interview conducted on July 14,2010 (Time:10-11am), BBC White City, London

It is important to realise an observation that bundling is finding an

important position in the strategy document of the non-commercial public

sector broadcaster- BBC, hence creating a consolidation of the offer. But

again, it is a crucial point to observe that bundling is usually flanked by

competition commission regulations.

Peter Brimacombe, Former VP (Strategy), Disneyworld reminds that,

―BBC‘s initiatives under project Kangaroo were restricted under competition

concerns for trying to put together lots of different TV channels through an

online platform‖.
Source: (Face to face) Skype Video Call interview conducted on July 23, 2010 (Time:10:30 -11:30

am) from Peter‘s office, London

So, revenue generation under the bundling strategy needs a careful

implementation in certain cases. Bundling is a purely a commercial

decision and is swiftly gaining popularity over smart digital devices

engaging the user in a captivating digital experience. For example,

devices like iPad and iPhone foster an easier ‗scroll-‘n-‗tap‘ mechanism


leaving an engrossing visual experience for customers. This is important

for the marketing perspective on bundling.

Adding a marketing perspective, Paul Cowan, Vice-President (New

Ventures), Syncapse Ltd. (Toronto) thinks, ―Digital applications

dictate on experiences and are becoming much more powerful with

that…It's really kind of indicative of how organizations actually market the

bundled applications.. and marketers like it because it generally gives

them packages that have greater discounts, media companies that make

their life easier from developing their overall program. Indeed, bundling is

just a natural way for organizations to sell products in an easier fashion‖.

(Time: 5-6 pm)

It can be concluded that beyond unleashing the digital experience,

companies are designing smart marketing strategies to implement direct

relationships with customers and engage with their customers on a one-

to-one basis.



4.2.2 Bundling Strategy retains customer base

It is interesting to observe a strong contradiction to bundling, expressed

by 5 participants. Oli Shaw acknowledges bundling strategy for customer

retention but maintains that bundling is a necessary evil.

Oli Shaw, Director, Oli UK says, ―bundling at times is more of a

business headache for companies and just a strategy for retaining

customers and locking them in. For example, mobile service

provider, Orange makes much more money from mobile subscriptions

rather than from a broadband subscription, Sky from the TV and Virgin

from TV. So, bundling is not necessarily a positive retention method but

undeniably embraces the customer‖.
Source: Personal Interview conducted on July 2, 2010 (Time: 2:30-4 pm) at Old Street Station

office, London

Bundling does create managerial issues from the company‘s perspective.

To a consumer, bundling creates a perception of a cheaper offer and

leaves the customer with the convenience of a single-bill transaction to

generate brand loyalty for the customer. Bundling gives the experience of

complementariness of the product offer. For example, Orange telecom



offers broadband and the mobile services; Sky offers the telephone,

broadband and TV experience. Hence, from this observation, it can be

inferred that bundling may be a necessary evil, but stands crucial

for customer retention. It is an essential observation that a few

participants maintain a different position on bundling and surprisingly

consider that unbundling is actually a way to reach out to more

customers.

Peter Brimacome observes unbundling activities gaining influence and

comments, ―the internet and open mobile platforms are developing as a real

distribution channel for media owners and they are completely open and

unbundled. I think that consumers want them to remain and will resist

bundling in that space. I think that there are more direct ways of getting

content in front of viewers through the internet and through iPlayer and

through the on-demand services. So you‘ll continue to see a bit of

unbundling that goes on there, rather than having to go to your

SKYs, getting your TV, you can now -- the iPlayer offers a more compelling

experience!‖.
Source: (Face to face) Skype Video Call interview conducted on July 23, 2010 (Time: 10:30 -11:30

am) from Peter‘s office , London

Here is an important observation that if an audience has missed watching

a show on the BBC, they can still go back to BBC iPlayer and tune in. So,

that‘s a kind of (un)bundling service, which is acting on fragmenting the


industry a bit as well, because content is diversified in more and more

places. Further, unbundling is expressed to be more convenient from a

licence point of view.

But Tim Hussain, Head of Mobile & Video Advertising, BSkyB

(London) asserts, ―From a licence point of view unbundling is better,

because unbundling allows a separate fee each time, but from a consumer

expectation is that they view would we have this relationship with Sky and

so therefore it should carry through. But we already have a premium pay

pricing model where customers expect more and more applications for

free. So really, it‘s a balancing act for us‖.
Source: Personal Interview conducted on July 28, 2010 (Time: 2-3 pm) at Sky‘s Office, Old Street,

London

It is interesting to note that businesses with subscription model prefer

unbundled pricing but actually are practicing a bundling strategy due to

the competitive pressure to serve customers better. At times, with



bundled sales, issues over real-time billing are observed.

Paul says, ―it's [bundling] convenient, you've got one bill in one place. There

is a benefit of aggregating your services. In one place you can see how much

you are spending, you can manage the services better. But only when the

fundamental problem of real-time billing is sorted out‖.
Source: Face-to-face Skype Video-Call interview from Syncapse office, Toronto on June 29, 2010

(Time: 5-6 pm)

But, to catch the market move, smart players like, Apple Inc apps shops

customise a real-time billing for iTunes. Hence, bundling solves the

fundamental problem of billing aggregation to be rated as an efficient

strategy.

Paul Cowan considers this digital rights managment be a big challenge.

Paul adds, ―Yeah, I think that the biggest challenge that media

organization have been and the way they have been trying to bundle

different services together is simply because of how they have actually

adopt the pricing model from a digital standpoint‖.

It can be observed that digital pricing mechanism lacking a measurable

metric continues to create evaluation problems in the industry. Marketers

have to rely on traditional revenue streams to help drive profitability and



engage with digital interactions. It can be observed that lack of the metric

is probably responsible for digital media companies facing lower digital

revenue streams as the company‘s bottom-lines shrink. It can be

observed that the discontented feeling is due to lack of cross-

media reach. From the mixed bag of views, it can be inferred that for

most participants, bundling is not so candidly preferred, yet most widely

practiced pricing strategy. Many businesses like Sky are compelled to take

up a bundling in order to retain the customer base. But, digital rights,

competitive pricing and real-time issues do hamper the success of

bundling strategy. It can however be inferred that in some of the

converged solutions like iPlayer, on-the-demand content et cetra, there is

a move towards unbundling already happening in the digital eco-system.

Many participants observe that innovation in online advertising is taking

place in the real sense. Content can be effectively marketed by bundling

them. Triona and Eric believe that innovation brings difference and adds

value to bundled options. But Adam Field points out that bundling is only

effective if the customer needs are deeply catered to and well understood.



It is further important to note that to ensure transparency and have a

clear understanding of different mediums to engage in ways of distribute

cross-media content. Tom Weiss, CEO, TV Genius (UK) says, ―I mean

as a whole mix involved isn't bad really. There a whole bunch of things

that has to be in place. In terms of pricing, people are bundling in mobile

or PC based services for free‖.
Source:Skype call interview conducted on June 21,2010 (Time:3-4 pm) TV Genius studio, London

Media-content providers align themselves with handsets & devices

companies to enable users to access their data and their content.

However, the content bundling issue is stuck due to multiple-licence

concerns for each medium responsible for increasing cost-burden.




Director Orange UK says, ―I think obviously now you have to pay a

licence for web, a license for TV, and license for mobile, so, it adds to the

cost…so I‘ll sit across, it would be ideal when the content provider will

recognize, okay, what‘s your audience of 100 million people, I don‘t care

from which platform they come from, here is the content. That‘s not

happening, obviously and its making it a little bit complicated because

then you have to buy an extra license for more than you think‖.


It can be noted that for the audience-driven commercial technology,

decisions are levied upon based on user preferences. Companies often

involve in cleverly playing around with the content to cut across various

new deals. There is a lot of scope for data streaming through the mobile,

web, and internet by way of bundled offer.

So, it is summarised that bundling is still being used as a pricing

strategy in most cases. On the content side, bundling is

reasonably a good strategy to enjoy cross-media participation,

attain viewership, add brand recognition and improve visibility in

consumer’s minds. The only problem is the cost burden due to

multiple-licence issue.



4.2.3 Bundling eases audience hyper-targeting

It can be observed that bundling promotes hyper-targeting and social

media has played an incremental role in hyper-targeting customers by

using bundled solutions. Bundling has a big impact on streamlining

advertising revenues. Thus, user involvement with the digital content may

be a crucial factor before hyper-targeting may be completely relied on

over a digital platform. Some of the participants resonate that many

marketing solutions are still being achieved by bundling services and it is

adopted for affiliate marketing solutions.

Edmund Chambers, Key Accounts Manager, Affiliate Window UK

says, ―bundling works especially well for affiliate marketing solutions as

online selling pays different (bundles) commissions to people sending the

products according to what they sell. For example, Sky is advertising on

our network and then sales staff will get commission for the basic

package, but I think you get more commission for the different packages

that you get from Sky as well".
Source: Personal Interview conducted on July 1, 2010 (Time: 3-4 pm) at Olympia Conference

Hall, London

A good example of bundling is the traditional media bundling online

service offer as a strategy to increase subscriptions. Rupert Murdoch‘s

bundling subscription strategy involved readers to subscribe to the



physical newspaper. Once, they subscribe the physical newspaper, they

get free online access.

Andrew McGrath, Executive Director (Commercial), Virgin Media

adds, ―the one that has made the boldest move on this has been

Murdoch with the times and Sunday times... and FT and moving to it

paid model for accessing that online content... but there aren‘t many

people who have that sort of capability to own the content".
Source: Personal Interview conducted on June 22, 2010(Time: 4-5 pm) at Virgin Media‘s

office, Covent Garden, London

Bundling of converging technology is going through a transition. Bundling

is seen in voice and data convergence, VoIP solutions, desktop video

conferencing and all that type of applications, they are still multiple

competing technologies. Bundling applications may witness

standardization of core applications and emphasis on ease of use.



Andrew summarises, ―If you have got to get beyond, the big change if the

next five years is making it all much easier to use‖. So, as Virgin Media

focuses on providing the best enabling technology with standardised core

applications so as to provide the consumers, the ease of use and power of

choice amongst the offered bundles.


In the telecommunications case, bundling strategy may offer an unlimited

data access but at a slightly higher, standard price. However, 1-5 percent

of users are using the complete set of bundled solution. This merely

utilizes 50% of the bandwidth of mobile based networks and is being

consumed by less than 5 percent of users in total. For instance, O2 being

the first network companies in the UK to restrict subscription and offer

unbundled solutions. This is an example of an unsatisfactory

(un)bundled offer. But bundling has been successful in cinema ticketing

price strategy. For example, Cinema chain, Cineworld‘s Unlimited Card is

a good example of bundling service. The offer allows the user to go to any

Cineworld cinema house out of central London for mere for 13 pounds

every month. The user can enjoy the cinema experience for even four

times in a day at zero incremental cost, while, an unbundled offer would

cost the user about 9 pounds just over a Friday evening. So, if worked

out well, the economics of bundling is highly cost effective.



4.2.4 Conclusion

The road to content-distribution is witnessing more and more options

available. It can be observed that bundling is one of the ways of getting

the content to the user. But much of profitability from bundling depends

on the nature of business models adopted. So, digital media

companies have the power to exercise a balance between the

economic-trade off from bundling and unbundling. Companies

have the choice to select the route that best fits the regulatory

requirements. Further, the companies need to adapt bundling as a

sensible-pricing strategy and not a mere price-strategy as today‘s

empowered consumer is highly price-conscious. Further, there is no

dearth of differentiated products in the digital market place and



consumers may change their choices over price-sensitive behaviour

unless the brand value is the sole reason for their choice. So, effective

bundling of emerging new technology with apt strategy is expected to

offer a better consumer experience.



4.3 DATA ANALYSIS –Digital Integration

4. Integration Strategy

Digital convergence is changing the world of the media industry with

advertising revenues streaming into print media and TV, radio and the

internet. Growth of internet has boosted digital convergence by creating

integrated platforms. Integration strategy is particularly useful for those

players who build up this competence either in-house, organically or by

gaining competence through joint-ventures or acquiring companies.

However, there remains a problem of managing the diversity of


applications. With infrastructure capacities building up, integration

between telecom competence and IT competence is growing. Hence,

companies are trying to use integration strategies by knowing their

customers and understanding the allied business partners. This part of

the dissertation presents the emerging thinking of 13 (out of total of 20),

senior media professionals who have been interviewed by the author

during qualitative data-collection stage. The three major themes identified

in this section are employment of integration strategy to create inter-

platform synergies, develop skill sets and achievement of integrated-

marketing communications. These outcomes help in positioning in the

mind of the consumer and also harness better revenues for the company.

4.3.1 Integrate to create synergies

Digitally integrated marketing has resulted in sustained growth of 13%

year-on-year growth in 2008-2009 which has shrunk only to 11% in

recession, reflecting an evidence of the importance of digital marketing

(PricewaterhouseCoopers Report, 2009). Integrated use of multi-media

applications enable strong foundations for converging markets where

digital media companies transform the way the world communicates. An

effective integrated strategy is a sound tool to transform the business

operations, gain competitive advantage and create future market

scenarios.



To validate this point, Giuliano Stiglitz, CEO Orange Advertising

(USA) & Global Sales Director, Orange-FT (UK) says, ―Well

that‘s[integration] creating synergies and cost optimization because you

don‘t have to rethink on entire content strategy for each platform. The

main advantage of one content across three platforms are synergies and

cost optimization. In demonstrating that, we can take you[the

consumer] through different platforms with the same content and offer

them a different experience each time. At the moment we are not trying

to achieve consumer retention by this method, but are successfully

achieving the objective of same content across the platforms‖.


It can be observed that companies try to optimize their platforms and

integrate it across the value-chain. In most cases, this not only improves

company insight, but also provides more knowledge to the consumer to

make an informed decision after learning the necessary facts. It reduces

switching-costs to the consumer. Experts have been found to resonate

with the idea of value-addition.



Harry Strasser, Executive Partner - Digital Convergence and

Innovation, Germany says, ―If we go to the media side, companies are

still building up competence along the value chain in a vertical model and

also acquiring some companies‖.
Source:Face-to-face Skype Video Call interview from Germany on July 20, 2010 (Time:12-1 pm)

For instance, large media players like News Corp have been acquiring

companies along the value chain and expand their business model by

integrating partly start-up companies. So, integration is not only a crucial

factor for expansion, but much of it depends on company culture

supporting different kind of players in a vertically integrated growth. It

can be noticed that with growing advertising market, integration gives a

larger scope for TV, radio and print advertising streams to converge with

internet industries. Traditionally strong, print-media is found to be

organically integrating with the new internet portals to benefit from the

opportunity of advertising so as to bolster their overall revenue streams.

This indicates that integration is successful if it creates cross-channel

synergies. Public broadcaster and media giant BBC has been

demonstrated to benefit from integration strategy and is now foraying to

create its own space on cloud computing. The BBC realises the potential

of integrating its content across video, audio or text or pictures, into one

output across different mediums.



John Denton, Managing Director (TV Platforms), BBC London

says, ―At BBC, we observe a confluence of driving the flow of metadata

(loosely defined database). Metadata now allows us to try and track all

content that works well with the large scale of operations we have here‖.

Based on that, BBC is shaping creative content around different user

experiences. John adds, ―we just launched a world cup on internet

connected setup boxes which brings live broadcast. So you can be

watching live broadcast on BBC1, press to get streamed assets and video

that are offered to audience in integrated packages, say of 30 clips‖.

[A metadata is a file name description about a text or image].

Source: Personal Interview conducted on July 14,2010 (Time: 10-11 am), BBC White City, London

For BBC, integration implies getting all back-end systems to be working

together. Now, the BBC is building its own version of its cloud, where all

the technologies sits in this space and all content is available.

John adds, ―We are now trying alternatives to integrate content across

the mobile team and the TV platforms. We are also working at pumping

out video with text and with titles to different TV platforms and recognize

if they are different‖.
Source:Personal Interview conducted on July 14, 2010 (Time:10-11 am), BBC White City, London



John summarises by his idea of next level of integration where hi-tech

devices will rule the living room, where mobile phones would replace the

TV remote controls. Successful integration strategy positions a company

at a commanding position on the value chain and helps to attain market

dominance.

John Denton reflects back and says that he joined BBC due to his passion

for interactive TV. John recollects, ―I came into the BBC specifically looking

at interactive television..and got thrilled to know red-button being introduced

at BBC. The interactive red button provides an extra content on demand….

So, I thought, Oh great, the BBC has got BBC online, has got BBC Mobile,

and now it‘s got BBC Red Button. Earlier, at BBC, we had interactive TV, we

have mobile, we have it online, but they never really talk to each other

despite the fact that it was multi-platform ideas, 360 commissioning or

multi-platform commissioning in place‖.
Source: Personal Interview conducted on July 14, 2010 (Time: 10-11 am) BBC White City, London

This leads to an important finding that companies have a great scope for

attaining a level-playing field if they have the potential for converged

digital content. It can be observed that the concept has now been put

through the strategy document with BBC‘s trust called ‗Putting quality

first‘. Rightly, the satellite cable companies are pressing for integration

with media content.


Tim Hussain, Head of Mobile and TV, Sky (London) observes

integration cutting across media platforms. Tim says, ―The reason why

telcos are trying to move (to media content) is because of the aspiration

to be both. I believe they are trying to move away obviously it can mean

just a pure telco technology company into more of a lifestyle consumer

product. And that moves them out to their traditional competitors there

into a new area. And so they cross over the fence into the media

space...". So, the digital space is looking ahead to integration of

expertise of the two worlds of content and telecommunication

experience.
Source: Personal Interview conducted on July 28, 2010 (Time: 2-3 pm) at Sky‘s Office, Old

Street, London

However, Giuliano Stiglitz, CEO Orange Advertising (USA) & Global

Sales Director (UK), Orange-FT observes the biggest problem with

integration is the existence of a gap across the board and not just

hardware or software.

John adds, ―apart from the fundamental technicalities of

integration, there is a perception and knowledge problem at client level.

To some extent, this problem is even at the industry level. So we see too

many interests and hidden agendas being pushed in different directions‖.
Source: Personal Interview conducted on July 14, 2010 (Time: 10-11 am) at BBC White City

office, London



So, it is worth noticing that it may be more useful to have an

understanding and agreement to venture into digital integration. It can be

observed that digital integration would not be successful if corporations

and people work in isolated silos, rather, integration must start from an

individual level and sync well at the industry level. Online retailers are

engaging in integrating offline and online content to target good coverage

of stores and expanding cross-country going across the country.

Edmund Chambers, Key Accounts Manager, Affiliate Window UK

says, ―The companies advertise online and merge off-line store offers

through something called ‗Reserve and Collect‘ to the website offering.

Here the customer can reserve the product online and collect it when they

pass by the store. This integration strategy advertises the product and

also earns commission from getting people to go to the store to take their

product as well‖.
Source: Personal Interview conducted on July 1, 2010 (Time: 2-3 pm) at Olympia Conference Hall

Further, from a business perspective, integration caters to augmented

marketing. Digital integration makes augmented media a reality through

the technology.



Jack Willis, Accounts Manager, Marketing Grin (UK) says, ―for

example, you can download an app for your iPhone but you can set, as you

do on Facebook, you set the profile settings. Now if you go to a meeting you

can have a look at your phone or any augmented media and has a little

camera and I‘ll flag up. So, The person you are having a meeting with and

you will get little sort of thought levels above and which is a profile and you

can click on it and read your CV perhaps or whatever he said and all this is

coming into life‖.
Source: Personal Interview conducted on July 1, 2010 (Time: 3-4 pm) at Olympia Conference Hall

Such a closely monitored profiling will add to industry attractiveness, a

gift of digital integration. Further, Traditional media players like print

media and publishers are observed to be actively integrating the print

versions with digital formats and they tend to put it online for free, hoping

for advertisement revenues. Further, this is propelled by devices like iPad

and iPhone readers that are offering converged solutions over mobile

apps. Media companies are building businesses around free content.



Carolyn Morgan, Managing Consultant, Penmaen Media (UK) says,

―specialised content providers like niche magazines and finance

newspapers still have an opportunity to digitalise and earn revenue from

online subscriptions and advertisements‖.

But it can be seen that, much of integration depends on the discipline or

genre of the business.

Paul Armstrong, Director (Digital Strategy), Kindred believes, ―It‘s

less about verticalization and more about using the right tool for the

right job at the right time. I think that‘s the massive opportunity with it‖.
Source: Personal Interview conducted on July 2, 2010 (Time: 5-6 pm) at Kindred

Office, Goodge Street, London

It can be realised that integration is indeed a much smarter way of

working. So these digital engagements work across numerous touch

points. For instance, active engagement with social networking is

integrating business objectives with wide reached internet company such

as Facebook.



Paul Armstrong adds, ―if you are very clear on the insights over

business objectives you will have real good strategy‖. It can be worth

noting that much of integration also depends on human centric experience

and complementariness of product. A good example to this is Apple, which

is very human centric in terms of the experience and its offers

complementariness of products. For example, the creative combination of

iPod, a music player with iTunes, and a music organizer is a perfect

complementary product offer...a well integrated package.
Source: Personal Interview conducted on July 2, 2010 (Time: 5-6 pm) at Kindred Office, Goodge

Street, London



4.3.2 Organisational challenges with Integration Strategy:

Multi-tasking skill-sets

Digital Integration comes it at own costs and poses managerial challenges

of multi-tasking the skill-sets.

From the media content perspective, Carolyn Morgan believes, ―the editorial

teams need to learn how to create content to pull up to different formats. So

there‘s hardly writing for sort of to shorter formats and in creating

audio, creating video if you are normally a print-journalists, just creating

content that can be repackaged for lots of different, lots of different

platforms. Something as a whole, as you should have skills for kind of, the

journalists which means if in a media business point of view, they‘ve got to

invest more money in training. Media professionals and journalists have got

to be more flexible and multi-task themselves‖.
Source:Personal Interview conducted on June 21,2010 (Time 11am-1pm) at Stamford, England

Most media companies are integrating in-house development teams or a

relationship with competent technology companies. So, it can be realised

that under integration strategy, the challenge is to blend the specialized

and integrated skill sets in order to create a package that actually solves

the client‘s problem and profit form innovation. It makes an important

observation that multi-tasking would have to come about by motivating

the employees, integrating the editorial and marketing teams to cater to



the market needs. Further, companies integrate the marketing databases

using digital profiles to cross-sell across different channels. This challenge

continues with online integrated advertising as well. Media companies

seek an intelligently designed integrated advertising campaign that can

communicate across cross-media audience. So, from the point of view of

selling to advertisers, this is a struggle for lot of media businesses is

where their sales teams have got a background in traditional print media

unless the company masters the strategy of integration. Digital

convergence industry realises that people need to think cross platform.

Giuliano Stigtliz adds, ―The problem is that, the majority of the people

in the industry don‘t think cross platforms…‖. So, think cross-platform to

serve cross-platforms. Further, Carolyn Morgan adds, ―A bit of this

initiation should come from company leadership and getting people to

think differently‖.


Source:Personal Interview conducted on June 21, 2010 (Time:11am-1pm) at Stamford, England

During the transition in converging platforms the organisational

challenges are huge. Particularly, in the advertising and publishing,

traditional media like print, the people have been associated with

specialised and disintegrated tasks like script writing or content display



etc. So, convergence poses a brain challenge to impart training to staff to

integrate the specialised skill-sets across the digital space.

4.3.3 [Integrated] Marketing Communication currently is

disintegrated

Despite digital convergence being highly emphasised in corporate

boardrooms, the industry realises that it‘s still a long way to go to

monetise the benefits of true convergence. Industry leaders raise concern

about failing to realise the commercial benefits of synergies between

different tools in the digital space.

Giuliano Stigtliz worries, ―We are seeing the commercial benefits of

selling web advertising, mobile advertising and IPTV advertising. But all are

separate and not integrate‖. The telecommunications industry is struggling

to approach it all together. Giuliano adds, ―We understand the customer

already and have potentials to track the audience. But, what we cannot do

is monetize this knowledge yet. But there is scope to converge it all by the

digital integration strategy as we are occupying quite a unique space being

an operator or being a big web publisher and being a TV‖.
Source: Personal Interview conducted on July 1, 2010 (Time: 12-1 pm) at Orange FT office,

Tottenham Court Road, London



It brings the existing gap in the digitally converging space that solutions

integration has still not been achieved. But there is a good scope to

bridge the gap across the board in technology and this urges the need to

well integrate the hardware and software competence for targeting

solutions across different platforms. Integration across 360-degrees may

be catching the trend, but such integration still has a wide scope to take

off. This strategy helps to monetize the revenue shares across same

audience. Further, Carolyn Morgan observes the complications in the

360 degree platform.

Carolyn says, ―just see how complicated it is if somebody has

subscribed to a mobile app, wants to change their want subscription. As

an organisation, it may be difficult to be able to track all that‖.
Source:Personal Interview conducted on June 21, 2010 (Time: 11am-1pm)at Stamford, England

So, integration will initiate managing the data flow for marketing purposes

and managing long run relationships with customers in a consistent way.

Trends indicate that now at agencies, companies integrate with what they

are doing.



Adam Field, Head of Social Media, Media Contacts UK points, ―it is

really important as an agency we start to think seriously about

integration. For sustainability of the need for traditional

media, radio, TV, newspapers and billboards, and there is a need to

integrate them in an online environment‖. Companies are making that

direct integrated link between something that's involving in a new digital

road, something that's quite traditional in the media sense. Adam

adds, ―In the online media, create dynamic micro-messaging and micro-

targeting campaigns are making integration with that is quite interesting‖.
Source: Personal Interview conducted on June 22, 2010 (Time: 10-11 am) at Covent Garden

office, London

‘Spotify’ is a good example of integration of a music platform within a

social context. Some of the industry leaders still believe in maintaining

core-competence of providing the best enabling technology and call

content producers to integrate with them for extending mutual benefits.



Andrew McGrath, Executive Director (Commercial), Virgin Media

says, ―At Virgin Media, we try to integrate the content and distribute it

across our platforms. Our approach is a bit different if you see it, we are

going to provide the very best enabling technology‖.


Andrew McGrath identifies fixed and mobile convergence as another

area for integration. As globally, mobile operators are facing an incredible

challenge due to things like the iPhone and the iPlayer that will drive a

massive increase in the bandwidth on the mobile networks against the

current arrangement of limited bandwidth capacity by utilising

technological synergies. The industry remains wary of poorly conceived

models of digital convergence result in unsuccessful businesses.



Eric Elia, Vice-President (TV Solutions), Brightcove Inc

(Cambridge) says, ―We are seeing these integrations not turn out to be

successful for the most part, and companies breaking up or spinning

certain units out...there is definitely more revolution happening‖. Social

commerce is incorporating many of the strategies screening the social

marketing platforms. Eric adds, ―Many marketing companies are trying to

gain from social presence of Facebook or Twitter. So, what we do is create

platforms that will fit at global and seasonal levels‖.
Source: Face-to-face Skype Video Call interview from Brightcove Office, Berkley, CA on July 12,

2010 (Time: 9-10 pm)

Integration of social media is becoming more and more dominant in

digital media. Marketers create tools in technology to better play their

marketing programs at a - from a top level down approach. But on the

other hand, it can be observed that instance of clever integration strategy

is adopted by BBC in taking over Lonely Planet, a book publisher, which

has a website. Lonely Planet has iPhone apps and offers downloading of

book chapters. This is an example of integration of core content with

certain audience but it is producing content-output in lots of different

ways.



4.3.4 Conclusion

Integration strategy pays digital media companies to retaining clients, win

new business and add value to the business proposition. Recent trends

indicate involvement of social media in proving to be a successful

integrating factor. Integration of dying traditional media with digital

applications creating online versions has come about as a survival factor

as well. Digital Integration compels synergies of separate media platforms

to promote converged business interests positively impacting the revenue

streams. However, challenges remain with integrating different skill-sets

to have in-house quality employees well versed with both technology and

creativity to serve well the three screens- mobile, television and internet.



CHAPTER 5

5. DISCUSSION

5.1 Analysing the transformation of Digital Avatar

This part of the dissertation discusses the emerging thinking from the

qualitative data collected in light of the empirical evidence in the Literature

Review. The emanating views are discussed in the context of phenomenon of

Digital Convergence lead by the strategy perspective of the digital

renaissance and Moore‘s Law. The discussion focuses on the three main

research parameters - strategic alliance, bundling and integration. It is

observed that due to the digital convergence, there is a massive change

happening in the global media, communications and entertainment industry.



This change is celebrated by advantages of cohesive existence of four key

industries- web, TV, media and information technology. But at the same

time, the landscape of business faces critical conditions due to clash of

multiple-objectives of the four industries.

The discussion section is organised as per the following:

5.2 Discussion over critical review of Digital Convergence

5.3 Discussion over Bundling Strategy

5.4 Discussion over Strategic Alliance

5.5 Discussion over Integration Strategy

5.2 Discussion over critical review of Digital Convergence

Digital Convergence is the potential field for effective interplay of the

three strategies explored in this dissertation. The phenomenon of Digital

Convergence is driven by Moore's law that acts as a roadmap for the

competitiveness of the industry. Moore‘s law provides the guideline to the

industry to create a faster stream of faster, better, and cheaper high-

technology products. The literature review acknowledges the influence of

Moore‘s Law of the current state of the industry. Empirical studies support

Moore‘s Law that technological performance will double every two years.

During data analysis, the views by participants evaluate their practical



experience in the industry to confirming the existence of the impact of

Moore‘s Law. Hence, as observed in the Data Analysis, views of

some of the industry leaders reflect an agreement with the

literature on empirical evidence of Moore’s law. The empirical study

suggests that moore‘s law will define the pace of changes in the digital

interface. So, this discussion considers that empirical study is in line with

research observation. The theory stands true to the actual phenomenon

of digital convergence witnessed in the real world.

5.3 Discussion over Bundling Strategy

One of the biggest issues that have been observed in the data

analysis is the co-existence of strict divergence and strong

preference for bundling as a successful strategy in the world of

digital convergence.

While some of the participants admit that they have to resort to bundling-

strategy under competitive pressures, some call it a necessary evil.

However, it is observed that most businesses are following a bundling

strategy both for bundled-pricing and bundled-content. But a resistant

view by some participants has brought to sharp notice that with digital

convergence space evolving and may lead to unbundling for some

sections. Further, it has been identified that there is a need for a better



pricing mechanism to manage digital content still needs clearer strategy

from price-implementation. Both Paul Cowan and John Denton have

emphasised on the need for a pricing model from a digital standpoint to

match the need and growing scale of operations. This observation is

analysed against the literature review on bundling. The literature review

emphasises that bundling strategy for price, tends to extract more money

from consumers. Whereas, unbundling strategy is employed to obtain the

highest price for each component product from individual buyer. However,

research scholars warn the businesses of the difficulty in evaluating

pricing of unbundled converged digital products. Sale of operations and

innovation can make bundling a responsive strategy.

It can be inferred that as the empirical evidence offers a loose correlation

between unbundling strategy and its success in most cases. However, some

business-models that cater to the specialized segments (like iplayers, on-

demand TV etc.) are likely to adopt an unbundled pricing strategy. But most

business that cater to digital experience for mass-consumers may continue

with bundling strategy due to pressure of competition. Moreover, the

economics of bundling drives the companies to offer bundled solutions and

this trend is likely to continue.



However, this discussion would suggest that it may be advisable for the

company to conduct cost-benefit analysis before adapting a bundled or an

unbundled pricing strategy. This means, the company needs to well

understand the economics, goals, existing capacities and offer prices

before deciding the convergence partner. Though, bundling does promote

cost-effectiveness. Literature suggests that bundling reduces service

provider‘s costs through simplified management and scale economies. So,

with a combination of better pricing model with right bundling,

organisations can achieve ambitious targets through risk-mitigation.

Further literature suggests that as bundling where there is a strong and

large-scale organisation. So, bundling will further create competition

through peer-pressure, resulting in cheaper alternatives with limited

resources. However, bundling is flanked by regulatory regulations as

inferred from the views expressed Example: BBC‘s Kangroo bundled offer

was flanked by competition commission‘s regulatory guidelines.

It can be summarised that for digital convergence, neither mandatory

bundling nor mandatory unbundling would be successful, but rather the

decision would emerge from the factors like- price offer, costs, benefits,

sustainability, business objectives. So, both bundling and unbundling

as a strategy can be interpreted to co-exist in the digital

convergence space- giving space to mixed-bundling offers. Mixed-



bundling allows the consumers to purchase individual products as well as

bundled products.

Secondly, a gap has been identified between the current

performance evaluator and desirable metric to measure digital

convergence. The need for and ideal performance measure arises from

the observation that the metric should have high correlation real economic

growth, Views expressed by many participants have expressed a

consistency f concern that the digital convergence industry is facing the

problem of lack of a statistical tool to measure content.

Empirical study by (Porter, 2001) says that the current metric for

evaluation of digital performance has a lower correlation to real-growth.

Hence, in a significant observation, this dissertation recognises a strong

dichotomy between the existing evaluation and the real-growth indicator

that should be in practice. This presents a wide disparity of thoughts

between the literature and actual experience of industry leaders. The

views of the candidates reflect a tone of complain over absence of a

standard metric to evaluate financial performance of the digital content.

(Porter, 2001:4) lambasts the current practices of internet-based

companies discouraging them from continuing with the performance

indicators that is loosely correlated to the economic-value. This

observation reminds of the exuberant show of the dot-com companies in



year-2000, soon after which what came blatantly was the dot-com burst.

This discussion observes that there may be a serious need to develop

more reliable and economic-value indicating performance measures for

the digital value evaluation.

So, the author observes an immediate need of having in place a real-

indicator for digital content and evaluates the true-performance. This

could go a long way in saving the digital convergence industry from any

unfortunate denting due to improper evaluators. The growth in the in

industry will be large. So the more realistic it remains, the better will be

its repercussions the multiple-stakeholder-consumers, investors,

companies, suppliers, vendors, software providers, hardware providers et

cetra of the four competing industries-Media, Telecommunications,

Internet and the Information Technology.

It further can be interpreted that absence of a real-indicator is the reason

for failure of cross-media targeting mainly from advertising point of view.

As the advertisers are wary of value of digital content potential and so

fear investing their capital and trust, over a cross-media platform. This

could be the reason why integrated marketing communication has yet to

take off in the digitally converging eco-system. So, there is a need for a

statistical measure in the first place so as to set the stage for



effective hyper-targeting.It may be noted that better measurement

tools to evaluate website‘s performance (number of visitors, traffic

sources, pages visited etc.) may be important for companies to find their

customers. It would also help to measure the marketing attempt to

respond to cross-media advertising rather than traditional advertising

over television, press and radio advertising. Further, literature can be

explored considering the impact on non-measurable scale on marketing

profitability. Some of this observation has been carried on by the author

over the ‗Recommendations‘ section of this Dissertation on Page Number

149.

Thirdly, based on the diversity of views expressed in the data, it has

been observed that some participants (Endaf, Harry Strasser, John

Denton) suggest that bundling is in principle a smart strategy and

amidst challenges, bundling works in favor of customer retention

and can work well with a freemium offer.

Empirical evidence suggests that a seller‘s profit perspective is sometimes

ignored in a bundled offer. Studies by (Adams and Yellen, McAfee,

McMillan) have shown that, optimal bundle price is sometimes greater

than the sum of the prices of the individual goods. So, profit of the seller

is reserved in a bundled offer. Hence, it can be interpreted that bundling

keeps in mind the profit perspective for the seller. So, it may be inferred



that the view of the participants interviewed is in line with the empirical

evidence on bundling. It gives a much clearer understanding reasons for

digital media companies to offer bundled packages of goods and services.

Moreover, companies are giving out a free-offer (freemium offer) with

their bundled packages. It is realised that an attractive pricing strategy

impacts marketing, financial and overall organizational strategy and

directly impacts customer retention.

The literature also reveals the existence of bundling strategy in a multi-

product monopolist setting. But it is observed that digital convergence is

changing the face of the industry and so are the power-relations changing

from a monopoly setting on to a competitive setting of many such players

offering widely differentiated bundles.

But, with the coming on internet, concentration of power has distributed

into many hands. There is a call for a level playing field. So, further

research can be carried out to capture the implications of bundling

strategy in a non-monopoly setting. Hence, this dissertation indicates an

area for future research that will give a better understanding about the

limitations of practicing a bundling strategy in a digitally converging eco-

system.



5.4 Discussion over Strategic Alliance

It emanates from the views expressed that with strategic alliances

coming into existence, the companies can focus on core-

competence.

Evidence from the past literature suggests that companies have found to

have successful outcomes upon strategic alliance. Strategic Alliance has

been found to be effective in situations of divestment of ‗non-core‘

activities where benefits of strategic alliances translate into conserving

resources, sharing risk, reducing product development costs and

improving technological capabilities. As expressed by the participants,

Andrew McGrath believes under the strategic alliance, firms can

concentrate on their area of core competence and Triona Campbell found

this has been effective under her experience. So, it can be realised that

past studies have not only respected the success of strategic alliances,

but also support the focus on core competence to get better in most

cases, under strategic alliance. Past research suggests that strategic

alliance adds a balanced scorecard in its approach by creating

organisational learning and generating more awareness to resist market

turbulence or competitive threat. This is because, an alliance relationship

promotes a greater thinking as companies save the time of handling all



processes on their own and hence can dedicate a deeper understanding

about the business.

Secondly, it is observed that strategic alliances lead to smart

partnerships and cost-optimization. Participants have enthusiastically

welcomed the idea of forming strategic alliances as they foster smart

partnerships and thereby share the burden of risks, competitive pressure

and enjoy cost optimization.

Empirical evidence also says that alliances save costs associated with

knowledge transactions across markets. So, the literature review provides

a theoretical consistency over the views expressed. It is realised that

alliances of the form of smart partnerships are beneficial in treading

through uncertainty of the market. Rapid change in technology implies an

uncertain climate for digital convergence. A change in strategic priorities

may suddenly make a partnership much more or much less vital for one

of the partners. Indeed, strategic alliances can help overcome the

problems of under-utilized knowledge arising from incongruent product

and knowledge domains. With better enabled capacities and new learning

strategic alliances can greatly increase the speed with which a company

can access the new combinations of knowledge needed to bring new

products to market.



Finally, it can be observed that under strategic alliances, a

careful balance of power of the converging partners needs to be

maintained.

Interviewed participants have expressed that under strategic alliances,

changes in balance of power have to be rightly maintained else, there

may be situations of losing ownership or alliance. It is asserted that

strategic alliances may have to be carefully plotted. Empirical studies by

(Hamel, 1991:86) suggest that strategic alliance has certain terms of

agreement, but bargaining power changes according to the business

objective.

So, it can be observed that a delicate balance of power rests in a

strategic alliance. For instance, if IT players (IBM or Cisco) enter into

a strategic alliance with the telecommunication industry

(Ericsson, Nokia), it results in a change in the level playing field of all

these players. It may be a good strategy to win new markets and

generate new solutions, but it can pose enormous risks for traditional

players that face the new threat of competition. But strategic alliance is

useful in resolving some of the common problems of the industry-like

licensing or digital rights management issues that are now being sorted

out in a digitally converging marketplace.



5.5 Discussion over Integration Strategy

Digital convergence has opened the opportunity for a collection of

industries to pool in their best known for resources and capabilities. It has

opened the door to much greater cohesion under integration of newer

products and services to evolve across the digital media platforms.

In an important observation attained from the data, it is realized

that integration helps in creating synergies across the media

platforms. Integration impacts the scale of operations and translates

the capabilities across the value-chain into multiple use and benefits.

The experiences industry professional have indicated integration as a

massive capacity.

Strong evidence from the literature on historical experience with

integration strategy is compared to the views expressed and conclusions

are drawn there upon. (Castells, 2000), (Yoffie, 1997) that integration is

an adaptive strategy and allows flexibility and dynamism in the

operations. Literature suggests, as it can be further analysed that

integration is a strategic positioning tool and places the players at

commanding roles, within all stages of the value chain, redefining the

roles and responsibilities. The players can attain market dominance as

integration drastically reduces transaction costs.



Based on the literary evidence of positive effects of integration, it can be

compiled that integration can be the change factor to sustain the

developments in the digital eco-system. It creates seamless interplay of

cross-channel participation, cross-channel advertising as well as

augmented marketing. Synergies can be harnessed to achieve cross-

media participation, 360-degree integration and cross-platform

advertising.

For example, today, smart applications like Interactive Protocol TV

(IPTV), broadband, wireless, WiMax, 3rd Generation (3G) or the latest 4th

Generation Long Term Evolution (3G LTE) application are still working in

silos with no cross-functionality. That could be the reason for them to be

sold over disintegrated triple-play or quad-play packages

So, integration strategy calls them to offer converges solutions.

It is observed that integration can overcome some of the major hurdles

the digital convergence industry is facing. It calls for inter-connected

structures to enable the players to focus on core competence and partner

with successful partners and work in synchronisation to achieve the

desired outcomes. Such synergies push down costs and make the players

strong against competitive threats. As it is being realise that digitally

convergent solutions across the four specific industries- Web, TV, mobile

and technology can‘t come about without integration. It can be


summarised that successful integration strategy positions a players in a

company at a commanding position on the value chain. What may be

achieved at the end is better technology, superior inputs, better-trained

people, or a more effective management structure. So, it can be seen that

integration caters to augmented marketing. Digital integration makes

augmented media a reality through the technology.

Another attention-seeking issue that emerges from the data

analysed is the importance of reorienting task-skills in a digitally

converging world. Apart from specialized job-skills over digital

content, the digital media management would demand the ability

of multi-tasking of such specialized skills. This further needs to

be translated into a change in mind-sets to think beyond a single

platform.

The emerging thinking suggests that in the fast-converging world, there is

a rising need to motivate the in-house employees to be flexible and

skilled in handling the issues and challenges of the digitally converging

world. Participants have called for innovative thinking from the digital

media professionals and top-management teams to think across the

platforms.



The empirical evidence from the literature review suggests, that

operational efficiency under integration would be highly demanded

(Porter, 2001). The redefinition of the digital ecosystem explored by

(Norman and Ramírez, 1993) suggests task-synergies would be offered in

forms of specialised skill sets delivering competing output. It is pointed

out that integration promotes work-sharing, co-productive arrangements-

bringing together multiple-skills to provide unprecedented consumer-

experience. Integration results in creating more value per person

(customer, supplier, and employee) and in securing greater total profit

from and for its financial and human resources than all but a handful of

other companies in any consumer industry.The result is an integrated

business system that creates value by matching the various capabilities of

participants more efficiently and effectively than was ever the case in the

past to such levels of efficiency that can offer virtual products that is

being ordered online to be delivered direct-at-home.

Hence, past literature bears strong correlation to the view expressed by

the industry thinkers. This implies that the changing digital landscape will

impose managerial implications of handling specialized and multi-tasking

skills. For example print-media journalist may be required to be well

versed with TV Presentation and even write interactive online scripts. It

calls for the need of better grooming of multi-platform job skills. It can be

inferred from the views and past literature that in order to move with the



dynamic challenges, the people leading and working in the digital media

space will have to be ready to embrace change and act strategically.

Hence, this discussion implies that integration will impose behavioral

challenges at three levels-within organization, inter-industry and

consumer adaptation to innovation. Traditional structures of media

business will have to align latest digital technologies and highly

competitive skills, within the organization, innovation will be required.

This will involve the managerial challenge of motivating different kind of

employees of a company to participate and innovate their company from

within the company, but costs of clashing views will be required to be

tackled.

5.6 Conclusion of Discussion

What is emerging out of the discussion is that the digitally convergent

company will have the benefits of core-competence through strategic

alliance, have a better price-strategy in place, and imbibe on vertically

integrated technology and skill-set on adequate application of the three

strategies discussed in this dissertation. It can be identified that bundling

makes strategic and operational sense but a trade-off must be exercised

between offering a bundled or an unbundled package depending on the

business circumstances.


Secondly, this dissertation reaches to a conclusion that in the times

ahead, digitalized content will be available in two sets. The traditional

bundled or unbundled models will exist. But in order capture a larger

consumer base, they may align with a freemium offer. That is offering a

free service for the targeted paid user. Digital content or product/service

will exist in both differentiated and undifferentiated formats. The

differentiated content offered by premium products. People will be

prepared to pay for thispremium content over whatever platform it might

be. Secondly, undifferentiated or free content will exist to act as a tool to

gather advertising revenues.

For example, Rupert Murdoch‘s pay wall model charges the reader for

the premium content offered by The Times. Such content would be a

value-added one with focus on high quality offer. It will open scope and

competition battle for premium content producers for whom attaining

the brand position would be a compelling factor. On contrary, Google

news is an undifferentiated content and will be available for free. The

free content model is accessible by innumerable users and will be

passed on to readers for free. Such a model will be heavily dependent

on advertisement revenues and will not build up brand positions among

content distributors.



Smart partnerships in forms of strategic alliances will exist but

they may maintain selective openness based on the business

objective. Strategic alliance will further nurture the companies for

maintaining core competence. However, careful balance of power between

the entities will run across carefully protecting the ownership rights and

intellectual property issues.

Finally, the issue of transiting to the changes in the integrating

marketplace are a bit of challenge for organisations to embed them as a

successful change management. Convergence will call for changes in the

organisational context. It implies changes in the in the traditional pattern

of running company to integrating new solutions and that too at a fast

pace, so as to gain from timing the market appropriately. A lot of

emphasis on participation and innovation will need to be invoked. Each

organisation will have to promote and encourage their own employees to

contribute to innovation and offer solution ideas. Good amount of training

will have to be imparted to encourage right ways of innovation. Large size

companies will have an opportunity to grow bigger. But, digital

convergence gives an opportunity to small or medium sized smart

companies to build up a strong market share and that too in a

comparatively short span of time. So, companies need to have good

competent management team and commit to smart investment

strategies.



CHAPTER 6

6.1 RECOMMENDATIONS

Based on a critical observation, this dissertation suggests some

recommendations that may be observed by the digital convergence

industry and the world of academics.

This dissertation stresses on such a research to be considered so as to

avoid unreal growth of irrational exuberance from misleading the limping

global markets. As predicted, the digital market will grow multi-fold.

So, it is highly essential for the growth to be real and not an outcome

of irrational exuberance. Lessons from past reveal that unfortunate

events such as the dot-com bubble burst (1995-2000s), global financial

meltdown (2008-9) have emanated due to improper evaluations of

growth performance. Such incidents have left behind a trail of painful

spill-over effects on the world.



The dot-com boom of the 1995-2000‘s reminds of the over-dependence on

un-real and speculative-growth indicators that ultimately left distressing

repercussions leading to crash of the building exuberance. Similarly, if

the digital convergence growth is not measured on real-growth

indicators, it may be feared to lead into un-real digital-growth

exuberance. By this, the author implies that if digital convergence

growth is not measured on growth indicators that reflect real-growth, it

may not give the accurate growth position of the industry. If the

fundamentals of this growth-achievement are not sustainable, it

could be feared to lead to a digital-exuberance crash.

This finding can be considered to be of an alarming nature as

management of this digital growth story calls for immediate attention.

This observation gains support from empirical study by (Porter, 2001: 4)

in his Harvard Business Research study which suggests that a the existing

financial performance indicators currently practiced in the industry do not

fully correlate to their economic value. Thus, financial performance of

digital potential needs to be related to its true economic value. At the

same time, this gap could be further investigated by research scholars

emphasising the nature, need, digital profiling of the key indicators. The

author suggests this could be investigated from a quantitative data



analysis point of view as it could be more relevant to establish a

hypothesis based research.

The following are the two Hypothesis suggested by this dissertation:

Hypothesis 1: Is the existing metric a reflection of economic value of

the performance of digital content?

Hypothesis 2: Is the new metric a reflection of true economic value of

digital content?

These are some suggested research questions that may be useful

to future researchers:

1. From the digital profile data (based on number of clicks, user profile,

time-spent etc.), can a good performance indicator stand true to reflect

economic-value of digital content?

2. How trustworthy are the current performance indicators-like- Google

analytics, straight usage statistics, the Impact Factor, the Eigen factor

and newer metrics.

3. What are the latest findings of the researchers towards having a

comprehensive measure of performance indication?

4. Can the new metric (that may be getting developed at the moment)

separate performance exuberance from real economic value?



5. Does the finding differ from academic literature that dismisses the

fact that existing evaluators are anywhere consistent to true value?

6. As digitally converging market is an emerging market, a study can be

done specifically on monitoring performance indicators for emerging

markets.

So, the author observes an immediate need of having in place a

real-indicator for digital content and evaluates the true-

performance. This could go a long way in saving the digital

convergence industry from any unfortunate denting due to

improper evaluators. The growth in the industry will be large. So the

more realistic it remains, the better will be its repercussions the multiple-

stakeholders- consumers, investors, companies, suppliers, vendors,

software providers, hardware providers etc.- of the four competing

industries- Media, Telecommunications, Internet and the Information

Technology.



This realisation is like the tip of the iceberg to foreseeable but real problem

for future. The author urges this observation to be treated with immediate

effect so to have the real-growth picture, before the news stories on ‗digital

convergence bubble burst‘ or ‗good-bye digital exuberance‘ make headlines

on daily newspapers, through TV into our living rooms or click on the

internet. This observation emerges out of a comparison of the empirical

evidence in the literature review with emerging thinking of participants.

Based on this understanding and analysis of outcomes of un-real growth, this

dissertation realises that if powered by unreal growth, digital burst could be a

reality if not handled well.

6.2 Limitations of the research

Digital Convergence is all pervasive. The applications are vast and may

have industry-specific trends. This dissertation has captured some of the

most remarkable trends that capture the convergence effect in 4 key



industries namely- Media, Telecom, Internet and Information Technology.

However, there are specific industries like – online book publishing, small

scale business networks, online charity institutions, online education

industry that may have a different approach towards the markets.

Further, areas of national defence, satellite communication for

surveillance, weather monitoring, data monitoring of the governments,

use of digital content on clinical and health industry may have more

protected and conservative approach. The strategies explored in this

dissertation may not apply to such specific industries. It has been beyond

the scope of this dissertation to address the typical scenarios in typical

cases.

It can be observed that importance of digital convergence and its

applications is growing massively around the world. But it is realised that

there still exists a digital divide based on the net- penetration, impact and

growth of Digital convergence. For example, in UK, USA, China, Korea the

digital convergence is at its full boom, but countries like-Vietnam, parts of

Nigeria may still be affected with lack of digital interface. This dissertation

is however in line with advanced, emerging and developing markets for

digital content. Further, this dissertation is an academic paper and effects

of digital convergence on industries related to gambling, adult content,

black-economy stand beyond the scope of this research document.



6.3 Conclusion of Dissertation: Digital Avatar transformed…

There will be challenges opening up galore as the 4 titans of the industry

that compete to converge. This research has made an attempt to explore

the strategies involved in digital convergence. What may be essential to

note is that organisations will have to be receptive to the changes in the

digital landscape to take the opportunities and challenges thrown open.

The top-management teams in the organisation may need to constantly

revalue the strategic alliances, bundling strategy and integration effects

to maintain the pace of desired changes. Innovation may be encouraged

to emanate from multi-levels in organisation. This means the companies

will have to motivate and encourage their employees to think about

adding value to their tasks. At the same time, the employees will have to

be trained to render cross-media functioning. The next era will be

earmarked with even more competition, further indulgence in price-cuts

and product differentiation. So, to the digital media companies have to be

well prepared and equipped adapting a forward-thinking approach to

position themselves in the minds of the consumer. The age will be of easy



application solutions and greater consumer engagement.As the digital

convergence industry witnesses a new boom, a right balance of the

strategies explored in this dissertation may prove beneficial to witness

multi-platform interaction of the channels of distribution. This could create

further clarification to the current challenge of monetization of profits for

the digital convergence companies. Further, the empirical evidence and

the analysis suggest that the integrated approach, well balanced with

strategic partnership could have a cost-optimizing effect on the industry.

Consciousness in the industry to create a new metric for measuring

performance could provide an opportunity to weigh, balance and improve

the real growth in digital performance. The new digitized world could

witness more of cloud computing, social media applications in business

alliance, growth of mobile application economy. On the applications side,

further efficiency can look upon smart-home applications, security and

improved surveillance equipments, and advanced forms of navigation –

for all forms of transport. Even digital devices would witness a high level

of improved application with touch screen television, high-definition TV,

out of home digital applications; digital billboard advertising could be on a

rise with software being used as a service application.

However, in this transforming landscape, inter-industry clash will grow

denser with integration amidst fundamental changes brought by strategic

changes. The digital convergence space will promote open innovation as



there could be more integration happening between web (internet) and

TV. Mobile and Internet at the moment are fighting a bitter battle as

revenue streams are diverting to internet companies. Internet connected

TV will pose fresh challenges to the existing players in the current decade.

Internet companies like Google will get Android applications on the TV by

forming strategic alliance with technology providers like Intel and Sony.

As the digital story unfolds to a new dawn, it will engross the curious

users with a captivating digitalized experience that will ensemble

everyone to watch the new ‘Digital Avatar- The Strategies for

Digital Convergence’.....a transformation realised.



CHAPTER 7

7.1 Bibliography

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Ahn, H. & Litman, B. R. (1997) ‗Vertical Integration and Consumer

Welfare in the Cable Industry‘ Journal of Broadcasting & Electronic

Media41(4):453–477

Aigrain, P., Chan, L., Guédon, J. and Willinsky, J. discussed by Benkler, Y.

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www.sims.berkeley.edu/~hal/Papers/mattioli/mattioli.pdf (accessed

21.07.10)

Wäppling, A., Strugnell, C. and Farley, H. (2010) ‗Product bundling

strategies in Swedish markets: links to business orientation and perceived

effects on consumer influence‘ International Journal of Consumer Studies

34(1):19-27

Ware, H. and Dippon, C.M. (2010) Wholesale unbundling and intermodal

competition Telecommunications Policy 34:54–64

Weaver, B. (2007) Research proposal Industry convergence Paper

submitted to the 19th NFF Conference The Institute of Economic

Research, Bergen, 9-11 August



Webster, J. (1986) Audience Behaviour in the New Media Environment

Journal of Communication 36(3):77-91

World Factbook (2009) 'World Digital Media Report' Deloitte and Touche,

2009 Available at

http://www.deloitte.com/view/en_GX/global/industries/technology-media-

telecommunications/df11f15355101210VgnVCM100000ba42f00aRCRD.htm

(accessed 08.08.10)

Wren, M. (2003) Conference Computing - An evaluation of the rise of

interactive sport on Digital TV unpublished School of Electronic and

Computer Science student work, University of Southampton Hampshire

Wolcott, H. F. (1994) Transforming Qualitative Data: Description, Analysis

and Interpretation Sage: Thousand Oaks, CA

Willcocks, L. and Oshri, I. (2009) ‗To bundle or not to bundle? Effective

decision-making for business and IT services‘ The Outsourcing Unit

(2009) Accenture Report (2009)

Wirtzab, B.W. (1999) ‗Convergence processes, value constellations and

integration strategies in the multimedia business‘ International Journal on

Media Management 1(1):14-22

Yoffie, D.B. (1997) Competing in the age of digital convergence

Boston/MA: Harvard Business School Press, pp. 159-200



Yoffie, D.B. and Kwak, M. (2002) ‗Judo Strategy: 10 Techniques for

Beating a Stronger Opponent‘ Business Strategy Review 13(1):20-30

Yoffie, D.B. (1997) ‗CHESS and competing in the age of digital

convergence‘ Boston, MA: Harvard Business School Press

Zook, C. and Allen, J. (2001) Profit from the core: growth strategy in an

era of turbulence Harvard Business School Press pp.195

7.2 Conferences attended in London for Dissertation Research

Social media Forum March (15-16, 2010), Olympia Exhibition centre, London

Internet World 2010 (April 27-28, 2010), Olympia conference centre, London

Digital Marketing Show (June 29, 30, 2010); Grand Hall, Olympia, London



7.3 References of In-depth Interviews

1. Armstrong, P. (2010) ‗Personal Interview conducted on July 2, 2010‘

(Time: 5-6 pm) at Kindred Office, Goodge Street, London

2. Bogucki, A. (2010) ‗Personal Interview conducted on June 25, 2010‘

(Time: 11-12 noon) at Earls Court, London

3. Brimacombe, P. (2010) ‗Face-to-face Skype Video Call interview

conducted on July 23, 2010‘ (Time: 10:30 -11:30 am) from Peter‘s office

4. Campbell, T. (2010) ‗Face- to-face Skype Video Call interview from

Dublin studio conducted on July 5, 2010‘ (Time: 1-2 PM)

5. Chambers, E. (2010) ‗Personal Interview conducted on July 1, 2010‘

(Time: 3-4 pm) at Olympia Conference Hall, London

6. Cowan, P. (2010) ‗Face-to-face Skype Video Call interview from

Syncapse office, Toronto on June 29, 2010‘ (Time: 5-6 pm)

7. Denton, J. (2010) ‗Personal Interview conducted on July 14, 2010‘

(Time: 10-11 am) at BBC White City office, London

8. Elder, C. (2010) ‗Personal Interview conducted on June 29, 2010‘ (Time:

2-3 pm) at Millbank Office, London

9. Elia, E. (2010) Face-to-face Skype Video Call interview from Brightcove

Office, Berkley, CA on July 12, 2010 (Time: 9-10 pm)

10. Field, A. (2010) ‘Personal Interview conducted on June 22, 2010‘

(Time: 10-11 am) at Covent Garden office, London



11. Hussain, T. (2010) ‗Personal Interview conducted on July 28, 2010‘

(Time: 2-3 pm) at Sky‘s Office, Old Street, London12.

12. Kerfoot, E. (2010) ‗Personal Interview conducted on June 29, 2010‘

(Time: 2-3 pm) at Earl‘s Court office, London

13. McGrath, A. (2010) ‘Personal Interview conducted on June 22, 2010‘

(Time: 4-5 pm) at Virgin Media‘s office, Covent Garden, London

14. Morgan, C. (2010) ‗Personal Interview conducted on June 21, 2010‘

(Time: 11am-1pm) at Stamford, England

15. Stiglitz, G. (2010) ‗Personal Interview conducted on July 1, 2010‘ (Time:

12-1 pm) at Orange FT office, Tottenham Court Road, London

16. Power, P. (2010) ‗Personal Interview conducted on June 28, 2010‘ (Time:

12-1 pm) at Reading City office

17.Shaw, O. (2010) ‗Personal Interview conducted on July 2, 2010‘ (Time:

2:30-4 pm) at Old Street Station office, London

18. Strasser, H. (2010) ‗Face-to-face Skype Video Call interview from

Germany on July 20, 2010‘ (Time: 12-1 pm)

19. Weiss, T. (2010) ‗Skype call interview conducted on June 21, 2010‘

(Time: 3-4 pm) from TV Genius studio, London

20. Willis, J. (2010)‘Personal Interview conducted on July 1, 2010‘ (Time: 2-

3 pm) at Olympia Conference Hall, London



7.4 List of Websites Accessed

http://www.emcp.com/intro_pc/reading7.html accessed on July10, 2010

http://www.koreaninsight.com/wp-content/uploads/2010/03/k-55.jpg

accessed on July 10, 2010

http://www.teradata.com/tdmo/v07n04/Features/DigitalConvergence.asp

x accessed on July 10, 2010

Intel's information page on Moore's Law – With link to Moore's original

1965 paper

Intel press kit released for Moore's Law's 40th anniversary, with a

[ftp://download.intel.com/pressroom/images/events/moores_law_40th/M

oores_Law_Original_Graph.jpg 1965 sketch] by Moore

IBM Research Demonstrates Path for Extending Current Chip-Making

Technique – Press release from IBM on new technique for creating line

patterns, 20 February, 2006

Definition of broadband access used here: 150 kbits/s or above offered by

ISP.

http://www.pwc.com/en_GX/gx/technology/pdf/digital-convergence-

ma.pdf PWC Report 2010




ractive_content_ec2006_final_report.pdf (accessed on July 11, 2010)

http://www.futuretimeline.net/21stcentury/2020-2029.htm

Websites visited: For the research purpose, the following websites have

been visited multiple numbers of times between March – August 2010

Wikipedia http://en.wikipedia.org/wiki/Digital_convergence

Linkedin http://www.linkedin.com/nhome/

Virgin Media http://www.virginmedia.com/

BBC http://www.bbc.co.uk/

Syncapse http://www.syncapse.com/

CR Films http://crfilms.net/

Brightcove http://www.brightcove.com/en/

Conservatives http://craigelder.co.uk/

Orange FT http://www.orange.com/en_EN/

Guardian http://www.guardian.co.uk/activate

Social Media Forum http://www.socialmedia-forum.com/



TV Genius http://www.tvgenius.net/

Google Images http://www.google.co.uk/imghp?hl=en&tab=wi

Sellingpix.com http://www.dreamstime.com/sellingpix_info

Gettyimages http://www.gettyimages.co.uk/?language=en-GB&location=GBR

Penmaen Media http://econsultancy.com/directories/members/carolyn-morgan

Media Contacts UK http://www.media-contacts.co.uk/

DigitalConvergence.eu http://www.digitalconvergence.eu/

Disney UK http://home.disney.co.uk/

Ecademy UK http://www.ecademy.com/

Universal Music http://www.universalmusic.com/

Kindred Agency Limited http://www.kindredagency.com/

Marketing Grin, UK http://www.marketinggrin.com/

Affiliate Window UK http://www.affiliatewindow.com/

BBC Press office Website:
www.bbc.co.uk/pressoffice/pressreleases/stories/2004/01_january/07/gra
ndstand_new_look.shtml

BBC Interactive Sport:
www.bbc.co.uk/sport



http://www.futuretimeline.net/21stcentury/2020-2029.htm accessed on
August 11, 2010

BSkyB Corporate Website
www.sky.com

www.skysports.com/skysports/home

www.wotsat.com



CHAPTER 8

APPENDIX

Annexure 1: Contents of DVD

8.1 CONTENTS OF THE DVD

(DVD enclosed in the back pocked of this spiral binding)

Here is a list of the enclosures contained in the compiled DVD:

1. A soft-copy of the full-length Dissertation

2. Audio Files of all the 20-candidates

3. Complete set of questions asked

4. Log-Sheet of the interviews to highlight audio-file number and

interview quotation details

5. Full Length Professional transcription of all the 20 candidates

6. Professional Profiles of the interviewees detailing the Date, Time and

Venue of each of the interviews.

7. Complete Set of the scanned copy of Consent Forms signed by the

interviewees in the order of interviews taken.



Annexure 2

Annexure 2.1 Profile of 20 Senior Professionals interviewed

1.Andrew McGrath, Executive Director (Commercial- Strategy and

Operations), Virgin Media UK

Face to face interview: June 22, 2010; Time: 4-5 pm; Venue: Virgin

Media Office, Covent Garden, London; File name VN550054, Duration

of Interview: 43min: 25sec

Andrew‘s responsible for strategy, marketing, business transformation

and technical/commercial support. He spent 12 years at Cable & Wireless,

latterly as head of their Service Provider Division. At Verizon he was Head

of Marketing and Strategy functions for EMEA, while his early career

includes stints at both Olivetti Systems & Networks and the Oracle

Corporation. In addition to an Engineering degree from Surrey University,

Andrew has an MBA from London Business School.

2. John Denton, Managing Editor, TV Platforms, BBC London

Face–to-face interview: July 14, 10-11 am, Venue: Discussion

Room, BBC White City, London; File Name: VN550079, Duration

of interview 57:14 min

John is sets strategic direction and management of the

BBC's red button services across existing digital TV platforms and



increasingly focussed on new platforms such as Freesat, IPTV and on

demand services. John managed BBC iPlayer on TV (Virgin); Sport Multi-

screen for Beijing Olympics and initial deployment in support of UK's

Digital Switch Over. He looks at IP TV platforms and converging

technologies to find way into the Living room! John is a 2:1 Film and

Theatre Studies/ Computer Studies from The University of Kent

3. Giuliano Stiglitz, CEO Orange Advertising (USA) & Global Sales

Director (UK), Orange-FT

Face–to-face interview: July 1, 12-1 pm, Venue: Orange FT

Office, Tottenham Court Road, London; File Name: VN550068,

Duration of interview 51:12 min

Currently Global Sales Director at Orange Advertising Network (France

Telecom), Giuliano is overseeing international sales, global media

agencies and major clients, as well as working with the sales teams

locally to improve performance focusing on focusing on complex multi-

country deals. He served Metro International as Vice-President Sales for

Metro International the world‘s largest global newspaper, in this position

he managed over €120m of sales. Giuliano worked in strategy at Daimler

Chrysler (now Daimler). He attended Henley Management School in 2008.



5. Tim Hussain, Head of Mobile & Video Advertising, BSkyB

(London)

Face–to-face interview: July 28, 2-3 pm; Venue: BSkyB

studio, Buckingham Palace Road, London; File Name:

VN550089, Duration of interview 39:00 min

Tim is a respected senior professional with over 10

years digital experience across online and mobile, and considerable

success running sales, business development, and product operations

across Global businesses. He heralded European business lead for

acquisition of Third Screen Media (mobile advertising platform and

network), and pan-EU lead for integration of new business unit into AOL

Europe. He established BSkyB‘s mobile advertising department and

successfully launched their first offering to the market in November 2008,

to a very positive response. Honours and Awards: (2006) AOL Nominee

for Media Week‘s 30 under 30 media awards

5.Paul Cowan, VP, New Ventures, Syncapse Ltd.

(Face to face) Skype Video Call interview from

Syncapse office, Toronto, June 29, 5-6 pm; File

Name: VN550062, Duration of interview: 34:45 min

A brand strategist and integrated communications specialist, Paul Cowan

is dedicated to creating innovative and creative marketing programs to



drive business results. Paul is fully immersed in the digital world and has

a keen ability to explain complex ideas in plain English. He has embraced

technologies like social media, mobile, gaming, and alternative

entertainment - and understands the marketing challenges and issues

these tools should be utilized to overcome. Paul accomplished BA Politics

and Philosophy from The University of Western Ontario. Honours and

Awards: Order of Omega (international honorary society)

6.Eric Elia, VP, TV Solutions, Brightcove Inc,

Skype call interview from Berkley, CA, July 12, 9-10

pm; File Name: VN550076, Duration of interview

32:30 min

Eric holds over ten years of experience in multimedia authoring and

interactive video products, tools and services including encoding, search,

custom player development, content distribution networks and

technologies, and asset management. He is a specialist in

conceptualization and realization of easy-to-use interactive media

applications and services for mass market and manages large and diverse

product, software and interactive media development teams.

Brightcove is a Cambridge, MA based company that produces an Online

Video Platform (OVP). In 2009, it received Streaming Media Readers'


Choice Award, CSI Product Award. In 2010, it was named in Lead411's

List of Hottest Boston Companies.

7.Tom Weiss, CEO, TV Genius Ltd

Skype call interview: TV Genius studio, June 21, 3-4 pm; File

Name: VN550050, Duration of interview 25 min

Tom Weiss was Vice President Key Service Introductions at

T-Mobile until August 2005, and was responsible for the launch of T-

Mobile premium services across Europe, including T-Mobile EURO2004

campaign. Prior to T-Mobile, Tom was a key figure in the development of

the Content Management industry and developed online strategies for a

number of UK organisations. He is lives in London with his wife Jane.

‗Mobile Strategies‘ is his first book.

8.Harry Strasser, Executive Partner - Digital Convergence and

Innovation, Germany

(Face to face) Skype Video Call interview from Germany: July

20, 12 noon-1 pm; File Name: VN550082-83, Duration of

interview 1 hr: 33 sec.

Harry Strasser is a proven technology business leader in the TIMES*

industries, and an international expert in digital convergence and

innovation. He has spent 15 years in senior executive positions at major



high-tech companies in telecommunications, IT, consumer electronics,

and gained extensive management and industry expertise in devices,

applications, services, infrastructure and latest Internet Web 2.0

developments. Harry now acts as executive partner and active board

member for trendsetting start-up companies and advises senior

management of the TIMES* industries on value creation and business

transformation through digital convergence and innovation.

He is a multilingual German, based in Munich, holds an MBA from City

University, Washington USA, and attended management courses at

Stanford University USA, Harvard University USA and INSEAD France.

*TIMES: Telecommunication, IT/Internet, Media, Electronics, and Services

9. Peter Brimacombe, Former Vice President- Strategy at Disney

UK now an independent consultant, London

(Face to face) Skype Video Call interview: July 23, 2010; Time: 10:30 -11:30

am; Audio File Name: VN550083, Duration of Interview: 38 min

Peter held the position of Vice President Corporate Strategy and Business

Development EMEA at The Walt Disney Company, now an independent

media consultant in London. At The Walt Disney Company, Peter

managed Business Development and Investor Relations, was Director at



Jetix Europe and headed as Business Development Director at Fox Kids

Europe prior to his position of Senior Strategy Executive at RTL Group.

Peter attended the University of Oxford and is an MBA from INSEAD

(France)

10. Penny Power, Founder, Ecademy UK

Face–to-face interview: July 28, 12-1 pm, Venue: Ecademy,

Reading city, England (UK); File Name: VN550068, Duration

of interview 51:12 min

In 1998, Penny created Ecademy to support Micro Business owners

around the world expanding into over 230 countries and have developed

a community that is the best in the world. She believes in power of Social

networking and considers great opportunity in building brand by creating

collaborative opportunities to compete globally in a low cost, high visibility

world.

11. Aaron Bogucki, Senior Digital Campaign Manager, Universal

Music

Face–to-face interview: June 25, 11-12 noon,

Venue: Universal Music Studio, Earls Court,



London; File Name: VN550056, Duration of interview 27 min

Universal Music Group (UMG) is the largest business group and family of

record labels in the recording industry. It is the largest of the "big four"

record companies by its commanding market share and its multitude of

global operations. Universal Music Group is a wholly owned subsidiary of

international French media conglomerate Vivendi.

12. Adam Field, Head of Social Media, Media Contacts UK

Face-to-face interview: June 22, 10-11 am; Venue: Meeting

Room, Media Contacts office, Covent Garden, London; File

Name: VN550051, Duration of interview 27:13 min

Adam Field is Head of Social Media at Media Contacts He worked as Sales

Planner at Facebook, Account Executive at Neo@Ogilvy and was Account

Exec at Saatchi & Saatchi. Adam attended University of the Arts London,

Queen Elizabeth Boys School and Middlesex University

Media Contacts is the global interactive media network of Havas Digital -

the interactive division of Havas Media. MC provides data driven media

solutions across all interactive channels: digital, direct response,

relationship based media.

13. Carolyn Morgan, ManaginConsultant, Penmaen Media



Face–to-face interview: June 21, 11-1 pm;

Venue: Office of Penmaen Media, Stamford

office, England; File Name: VN550047,

Duration of interview 1:13:45

Carolyn Morgan is a Strategist and New Business Development in print,

events and digital media. She is the Director at Specialist Media Show and

Owner at Penmaen Media. Her Key skills are growing media brands,

launching digital businesses from media brands and making transactions

happen. She has an extremely strong strategic vision, while prepared to

take calculated risks, create new businesses and conclude partnerships

and acquisitions. She is a senior director with a track record of P&L

growth and experience of a broad range of media - online, magazines,

events & TV. She is an experienced business consultant with particular

expertise in media. Carolyn attended University of Oxford for BA Honours,

Mathematics, 1983 — 1986.

14. Oli Shaw, Digital Director, Oli, UK

Face–to-face interview: July 2, 2:30 -4 pm, Venue: Old Street,

London; File Name: VN550070-71, Duration of interview: 42:15 +

11:25 = 53:40 min



Oli Shaw is a purveyor of fine strategy, ideas and direction since 1998. He

has broad creative skills with set expertise in human centred approach

and execution. Oli is a specialist in insights, strategy and ideas - with

experience that traverses marketing, digital brand positioning and the

design of digital products & services. He combines a range of

perspectives; part anthropologist, part strategist and part creative, into

an individual approach to projects. Oli attended Staffordshire University

for 1st Design: Multimedia Graphics (1996 – 2000).

15. Triona Campbell, Company Director of CR Films Entertainment,

Ireland | Media Production

(Face to face) Skype Video Call interview from Dublin

studio, July 5, 1-2 PM; File Name: VN550074, Duration of

Interview: 30 min

Winner of the Kidscreen award for Best Tween/Teen One-Off, Special or

TV Movie 2010; Nominee for best Children‘s / Youth series, Irish Film &

Television Awards 2009 & 2010; CR Entertainment Ltd, 87 Waterloo Road,

Ballsbridge, Dublin 4.

16. Paul Armstrong, Social Media Director, Kindred Agency Limited

Face–to-face interview: July 2, 5-6 pm, Venue:

Meeting Room, Kindred office (Goodge Street,

London); File name: VN550073, Duration of Interview: 24 min



Paul consults with cross-functional teams who are seeking ways to

integrate social media within their programs; provide guidance, expert

advice and a strategy. Augment, broaden and grow Kindred's use of social

media as a communications channel with clients, partners and press.

He empowers Kindred employees to integrate digital strategies into their

marketing plans and objectives with new social media tools, oversees

usage of those tools, and offers expert guidance on best practices and

rules of engagement. His role is to establish a strategy for participation in

various social sites such as Facebook, YouTube, Twitter, and Linkedin. He

has been keen on broadening Kindred's digital footprint on these sites by

bringing new ideas to Kindred's social media program.

17. Craig Elder, Online Communications Editor, Conservatives

Face–to-face interview: June 29, 2-3

pm, Venue: Millbank office, London;

File name: VN550061, Duration of

Interview: 30 min

Craig is the online Communities Editor for the Conservatives. He is

interested in UK politics, social media, open data, Scottish football,

Android apps & Spotify playlists.

18. Endaf Kerfoot, Thinker-in-Chief, Brand New Adventures UK



Face–to-face interview: June 29, 2-3 pm, Venue: Earls Court, London; File

Name: VN550053-54, Duration of Interview: 22:33 + 60 min= 1 hr 22 min

Endaf is a terrific blend between business smarts, customer and industry

empathy and a real understanding for what's fair and reasonable from

personal interactions to board level. He has worked in the events industry

now for over four years with specialisation in Content Management,

Digital Asset Management, Marketing Resource Management, Social

Media, Sales, Marketing Operations, Business Development, Rich Media,

and Digital Marketing. Endaf attended University of Oxford for BA

(Honours) Modern Languages (French & German). Activities and

Societies: Rowing - Gold Medal in UK National Schools Regatta,

Nottingham.

19. Jack Willis, Accounts Manager, Marketing Grin, UK

Face–to-face interview: July 1, 2-3 pm, Venue: Grand Hall,

London Olympia Centre, London; File Name: VN550065,

Duration of Interview: 8 min



Jack Willis is a specialist at Search Engine Optimisation, Pay per Click

management, Online Reputation Management, Email Marketing, Affiliate

marketing and social media and Online PR. He is managing a team of

account executives who manage client‘s digital marketing campaigns.

Jack attended the University of Southampton for BSc-Geology.

20. Edmund Chambers, Key Accounts Manager, Affiliate Window

UK

Face–to-face interview: July1, 3-4 pm; Venue:

Grand Hall, London Olympia Centre, London; File

Name: VN550066, Duration of Interview: 9 min

Affiliate Marketing is a 'merchant' in an online retail space with a

transactional website where you can buy products or services. An

'affiliate' is an online publisher or partner who has access to traffic.

Affiliates are traditionally website owners who can send traffic, via links to

your site. They do this on the basis that any sales generated from this

traffic will earn them an agreed commission. This reward model is

commonly known as Cost Per Action (CPA) and is more transparent and

accountable than the older Cost Per Click (CPC) model.

Annexure 8.2.2 Complete Set of Questions



MBA Dissertation-Qualitative Research Questions

Digital Convergence: Creative combination of Strategies and Marketing

Scene Setting: Introduction about your jobs and responsibilities, years of association

1. I am interested in researching about Digital Convergence.... I understand you/your company has

been involved with digital convergence… Could you tell me about your current role in the

organisation and a little bit about your responsibilities?

2. How many years have you been working on Digital Convergence? Or can you tell me how long

you have been involved with digital convergence issues…

3. Ok... in the past 5 years- what do you think has changed in terms of how digital convergence is

being done?

Role of Strategic Alliances:

4. Thinking about strategic alliances, what do you think is the role of strategic alliance in doing

Digital Convergence? How important are strategic alliances in doing digital convergence?

I was thinking of 2 types of digital convergence:

Of that between different industries- B2B

Of that between different mediums- between different information flows

5. How do you think it works in terms of impact market share? Is it just about market share?

Obstacles to successful strategic alliance

6. Still thinking of strategic alliances...what are the obstacles to successful strategic alliance? I was

thinking of licensing or policy issue…do you think that comes in the way to success?



Implication of Digital Convergence

7. From your perspective, do you think there is too much inter-industry convergence? Or is it too less?

What about the issue of single-point dependence that happens due to digital convergence?

8. What are the initiatives you/your company have taken to overcome the obstacles of convergence?

What do you personally think of bundling strategies, when it comes to digital convergence strategies?

Does Bundling work? Does it work better with integration?

9. Do you think companies can do more when it comes to bundling strategies? In general, is there more

what you could do? What more can be done?

10. One of the obstacles is horizontal and vertical integration around there new kind of technologies.

What are the challenges to horizontal and vertical convergence? How do you manage integration issues

in your organisation?

11. Obviously convergence calls for strategic changes…What do you think are the major changes you

have to go through? Do you think it is same for every player?

12. How do you think about it in context to your organisation?

13. What are the types of strategic changes that you have had to think about in the process? To what

extent other companies have to face similar challenges or are these changes specific to your

organisation?

14. You are a long term player in this field. Now new technology means new entrants. How do you as

an established company respond to threat of competition from new entrants? (Or if you are a new

entrant, how do you sail the existing competition in the market place?)

Major Challenges faced

15. I am interested in your perspective about the current regulatory and policy environment. What do

you see as major challenges you had to respond to in current policy and regulatory environment? What

are the major changes you had to respond to?

16. Technological advancements bring a lot of opportunities, but also introduce challenges. What are

the key issues you see with convergence-based services?

Future Outlook

17. From your perspective what is the future of digital convergence in 5 years time? How can a healthy

balance in digital convergence be achieved?



Creative combination of strategies

18. Some people talk about a combination of strategic alliance, bundling and integration as an

answer to the emerging issues with digital convergence. Do you think that works in the current

perspective?

19. Can there be a war like scene between powerful companies like Google and Apple?

20. What are the surprising trends or findings according to your analysis?

Annexure 8.2.3: Sample of Consent Letter

Dissertation Participation Consent - Information Letter

Dear _____________________

This letter seeks your participation in for my MBA Dissertation coursework which
is a part of my Masters in Business Administration (MBA) course at University of
Leicester. This dissertation will study areas related to strategies and marketing
of Digital Convergence from a business perspective. The discussions will be so
that I can:

-Successfully research on my MBA Dissertation on Digital Convergence
-Gain knowledge of present day convergence strategies
-I also hope to learn more about the topic area and develop my analytical skills.

Participation in this study is entirely voluntary. It will involve an interview of
approximately 30 minutes in length to take place at
_________________________on _____________________as previously
arranged and questions given in advance.


You may decide not to answer any of the interview questions if you wish. You
may also decide to withdraw from this study at any time by advising 099018609.
I may ask for clarification of some points some time after the interview, but as
an academic research, you will not be obliged in any way to clarify or participate
further.

If you request, the information you provide can considered confidential, except
that with your permission anonymised quotes may be used. If you request
confidentiality, beyond anonymised quotes, information you provide will be
treated only as a source of background research, alongside book and web-based
research.

If you request, your name or any other personal identifying information will not
appear in the course project paper resulting from this study; neither will there
be anything to identify your place of work or the business.

Notes collected during this study will be retained for the rest of the 2009-10
academic years in a secure location and then destroyed upon successful
attainment of my degree. The information gained from this interview will only be
used for the above objectives, will not be used for any other purpose and will not
be recorded in excess of what is required.

Even though I may present the study findings to University of Leicester, only the
course supervisor and I will have access to the interview data itself. It is also to
clarify that there are no known or anticipated risks to you as a participant in this
dissertation research participation.

If you have any questions regarding this study or would like additional
information please feel free to ask me before, during, or after the interview.

I can assure you that this dissertation research and questions asked have been
reviewed and approved by my course supervisor. I highly regard your
cooperation. Thank you for your time and assistance in participating in this
dissertation.

Yours Sincerely,

099018609

Annexure 2.4: CONSENT FORM



I have read the information presented in the information letter about the MBA
dissertation study being conducted by 099018609 for Masters in Business
Administration Dissertation coursework at University of Leicester, United
Kingdom.

I have had the opportunity to answer to questions asked by 099018609and have
faced no issues on answering them. I have been able to address the
perspectives that can provide valuable information to the dissertation study.

I am also aware that excerpts from the interview may be included in the course
project paper to come from this research. Quotations will / will not be kept
anonymous. I do/do not give permission for my identity to be revealed in
research reports.

I was also informed that I may withdraw my consent at any time by advising the
student researcher- 099018609.

With full knowledge of all foregoing, I agree to participate in this study.
Participant Name: ___________________________________________
Participant Signature: ___________________________________________
Participant‘s Name of Company: ____________________________________
Participant‘s Designation: _________________________________________

Interviewer Name: _099018609_
Interviewer Signature: ____________________________

Annexure 2.5: Log Sheet

This is the log-sheet for the quotations used in the dissertation. It gives a detailed a account of

time code in/out with respect to the issue addressed by the participant.

Time Code is abbreviated as TC.

1. Endaf Kerfoot, File Name: VN550053

On ―content sharing‖ TC In: 07:00 --- TC Out: 09:30

On ―strategic alliances…and mobile applications‖ TC In: 15:00--- TC Out: 19:00



2. Andrew McGrath File name: VN550052

On ―system integrator‖ TC in 14:30- TC out: 18:00

On ―boldest move‖ TC in- 6:00- TC out- 8:00

3. Triona Campbell File Name: VN5500111

On ―core-competence‖ TC in: 06:00- TC out: 09:00

4. Harry Strasser File Name: VN 550082

on ―changing company culture‖ TC in:08:00- TC out: 11:00

5. Oli Shaw File Name: VN550070

On ―business headache..‖ TC in: 15:00- TC out: 20:00

6. Tim Hussain File Name: VN550089

On ―content bundling‖ TC in: 10:00- TC out: 15:00

7. John Denton File Name: VN550079

On ―strategic alliance, 3 screen and cost optimization‖ TC in: 22:00—TC out: 27:00

8. Peter Brimacombe VN550083

On ―unbundling‖ TC in:14:00- TC out: 18:00

9. John Denton File Name: VN550079

On ―Strategic alliance, and clever interaction, multicasting‖ TC In: 37:00- TC out: 44:00

On ―…transformation and commercialization of interests‖ TC in: 25:00-TC out: 30:00

10. Guiliano Stiglitz File Name:VN550068

On ―strategic alliance‖ TC in: 13:00----TC out: 17:00

On ―bundling and cross-platform integration‖ TC in: 29:00---3300

On ―not being able to monetize knowledge & lack of standard metric: TC in: 36:00- TC out:40:00



11. Eric Elia .. File Name: VN550076

On ―strategic alliances‖ TC in: 16:00- TC out: 22:00

12. Edmund Chambers File Name: VN550066

On ―new applications..‖ TC in: 03:00-TC out: 6:00

13. Jack Willis VN550065

on ―augmented marketing …‖ 04:00-08:00

14. Paul Cowan VN550062

On ―bundling and strategic alliance‖ TC in: 13:00---TC out: 16:00

15. Craig Elder VN550061

On ―impact of social networking not always effective‖ TC in: 05:00 --TC out: 9:00

16. Aaron Bogcuki VN550056 12:00---15:00

On ―strategic alliance‖ TC in: 22:56---TC out: 27:00

17. Carolyn Morgan File Name: VN 550047

On ―clever strategic alliances‖ TC in: 24:00---TC out: 28:00

18. Paul Armstrong File Name: VN550073

On ―integration, working together and strategic alliance‖ TC in: 05:00---TC out: 09:00

19. Tom Weiss File Name: VN50050

On ―Digital Integration and strength of TV technology‖ TC in: 19:00 ---TC out: 22:00

20. Adam Field File Name: VN550051

On ―integration strategy‖ TC in: 11:00---TC out: 15:00

Annexure 2.6: SUPPLEMENTRY CHARTS

a) Thematic Chart for Strategic Alliances

b) Navigation Chart for the 3 Strategies



Giuliano Stiglitz,
Orange FT, “…cross
Research Parameter platform
participation…”
Endaf Kerfoot, Brand
New Adventures
Strategic Alliance
“…ease of content
sharing…”

Paul Cowen, Syncapse
(Toronto) “…lack of
Andrew McGrath, standard metric…”
Virgin Media “…focus Peter Brimacombe,
on core Formerly with Disney
competence…” World “…balance of
power…”

Triona Campbell, CR
Films “…bottom-up
Harry Strasser, Digital
efficiency…content
Convergence
sharing”
Consultant “…smart
John Denton, BBC
partnerships…”
“…share the
burden..share the
pain…”

Navigation Chart of the key strategies- the making of ‘Digital Avatar’



Research Parameter Data Analysis Literature Review Discussion
Strategic Alliance Gomes-Casseres, 1996 confirms overall
(Yoffie, 1997) new competitive
“…core competence…” Andrew McGrath landscape
(Hamel, 1991: 84), needs balancing act
(Mello,2003:3), (Bunduchi & more understanding
Berar, 2007: 102-114), (Park objectives of allies
et al., 2004) et cetra
“
…smart Harry Strasser
partnerships…smart (Chan-Olmsted, 1998: 35), new combinations of
applications…” (Hamel, 1991:86), Grant, knowledge and skills
2008:209), (Norman and overall beneficial,
Peter Brimacombe, Ramirez, 1993:65), (Nyström selective openness
Tim Hussain and Hacklin, 2005).
“…careful balance of change in the level
power…” playing field,
(Hamel,1991:84), (Jenkins, concern over ownership
2007), (Bettis and Hitt, 1995; can jointly solve
Sampler, 1998) common issues like
licensing
overall confirms to be an
effective strategy
Bundling (Kaluza et al., 1999) cited in
(Hacklin and Nyström, 2005); Mixed reactions,
“…bundled or unbundled..” Peter Brimacombe, (Brandenberger & Nalebuff); no common answer
Oli shaw, Tim Hussain (Nalebuff, 1999). usability of pricing
“…freemium pricing…” (Wäppling et.al, 2010:18) specific to business
1996:117); (Porter 2001, 2), cases,
Day & Schoemaker, 2000; can promote cost
“…lack of performance Paul Cowan, John Denton, (Guiltinan, 1987; Gaeth et effectiveness
metric…” Giuliano Stiglitz, al., 1990), (Saligner,1995:85)
Triona Campbell Serious issue
No real growth indicator

This dissertation
identifies need for a
metric to calculate real-
growth
Integration (Negroponte, 1995), (Lee, seamless interface
2003: 24-29). (Porter, 2001: between consumers,
“…creating 10), (Wirtzab, 1999:20), commerce, content
synergies…..think cross- Giuliano Stiglitz (Norman and Ramírez, communications and
platform” 1993:2). Albarran and cross-platform
Dimmick (1996) advertising

…impact the scale… social John Denton (Bernabo et al. 2009). 360 degree approach
media enters… (Prahalad & Hammel, 1990) redefinition of landscape
(Friedman, 2007) ;(Tapscott, integrated marketing
2007). communication,
operational efficiency
Carolyn Morgan cost optimization
“…reorienting task- (Magretta, 1998; Ghosh,
skills…..demand for highly 1998) as cited in (Wirtzab; promotes work-sharing
competitive dynamic 1999:19 demand for highly
skills…” competitive skill-sets

This dissertation
identifies the
behavioural challenges
and need for highly
competitive skills



END


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