Annet Aris - New rules of game in the digital world
40
1 Annet Aris Brussels, May 22, 2014 Copyright 2014 Annet Aris. No part of it may be circulated, quoted, or reproduced for distribution without prior written approval from Annet Aris. This material was used by Annet Aris during an oral presentation; it is not a complete record of the discussion. New rules of game in the digital world: from strategic planning to strategic learning Sanoma Media Parade
-
Upload
sanoma-belgium -
Category
Business
-
view
161 -
download
0
description
Transcript of Annet Aris - New rules of game in the digital world
1
Annet Aris
Brussels, May 22, 2014
Copyright 2014 Annet Aris. No part of it may be circulated, quoted, or reproduced for distribution without prior written approval from Annet Aris. This material was used by Annet Aris during an oral presentation; it is not a complete record of the discussion.
New rules of game in the digital world: from strategic
planning to strategic learning
Sanoma Media Parade
2
My perspective on the media and internet value chain
Content CreatorContent packager Network operator
Content bundlerHard-/ Software
provider
© Annet Aris
*
* Until 2011
3
Impact of digitization
Technological game
changers
Tipping point behavior
Value capture by new entrants
New rules of game for
incumbents
© Annet Aris
The adoption cycle of digital technology
What are Technological Game Changers?
© Annet Aris
Definition Game Changer:
1. Offers true new benefits
2. Easy to use
3. Affordable
4. Ecosystem in place
© Annet Aris
Recent technological game changers
Mobile telephony
World wide web
Search
1980s
2010s
1990s
2000s
© Annet Aris
PC
Recent technological game changers
Mobile telephony
Broadband
World wide web
Search
1980s
2010s
1990s
2000s
© Annet Aris
PC
Recent technological game changers
Mobile telephony
Broadband
World wide web
Search
1980s
2010s
1990s
2000s
© Annet Aris
PC
Web 2.0, social
Recent technological game changers
Mobile telephony
Smart phones, tablets, apps
Web 2.0, social
Broadband
World wide web
Search
1980s
2010s
1990s
2000s
© Annet Aris
PC
9
Impact of digitization
Technological game
changers
Tipping point behavior
Value capture by new entrants
New rules of game for
incumbents
© Annet Aris
Technological game changes are adopted exponentially
Old behaviour and preferences will not disappear but new behaviour will gain ground quickly
Expert pre-selection(media companies)
Social recommen-dations
Usage based recom-mendations (e.g. col-laborative filtering)
Search
How do people find content?
Old New?
Per piece
Subscription
Free + advertising
Piracy
How do people pay for content?
Old New?Entertainment
Information
Opinions
Data
What type of content?
Old New?
Employed Professionals
Talent Communities
Users
How will content be generated?
Old New?
FreelanceProfessionals
Mass (e.g. TV, newspapers)
Behavioural targeting (e.g. search,Portals)
Personal recommendations (e.g. social media)
How will advertising evolve?
Old New?
Niche (e.g. magazines, cable TV)
© Annet Aris
Smart phone adoption surpasses Internet adoption
11Source: Mary Meeker, www.kpdc.com/internettrends2013
12
Household broadband penetration* and Internet advertising EMEAPercent
1 2 3 4 5 6 7 8 9 10 11 12 13 14f 15f 16f 17f0
10
20
30
40
50
60
70
13
* Estimation for 2001-2007Source: PWC Outlook, OECD, own analysis
Household broadband Penetration (%)
Internet AdvertisingShare (%)
Year
Reach, frequency
by segment
Payment
14
Adoption barriers in advertising ecosystem
Consumer
AdvertiserMedia
company
Agency
Digital Capa-bilities
Measurment/ ROI
Quality of inventory
Complex technology landscape
© Annet Aris
15
Marketeers late adopters of new technology
Technology roll-out
Consumer adoption
Marketeer adoption
Time
Percentage
Source: Annet Aris
16
Impact of digitization
Technological game
changers
Consumer/advertiser
Tipping point behavior
Value capture by new entrants
New rules of game for
incumbents
© Annet Aris
The traditional media industry mostly in a reactive mode with regard to digitization
17
New global giants are taking over the game in digital world
18
http://www.businessinsider.com/alibaba-ipo-facts-2014-3
10 out of 25 “non-USA”, of which:• 6 from Asia• 2 from Russia• 1 from Latin America• 1 from Europe
$150-$200bn?
There is a difference between international scale effects and network externalities
19
Scale effects
Network Externalities
© Annet Aris
Facebook is one of main drivers of increased time spend on social media
Type of network externalities
CONSUMER
© Annet Aris
Apple’s ecosystem
Apps
iBooks
AdsiTunes
account
iTunes account
© Annet Aris
Type of network externalities
CONSUMER
PRODUCTS
© Annet Aris
Google network effects
Mor
e an
d be
tter
free
se
rvic
es
© Annet Aris
Will Google drive the change in the advertising eco system?
Adwords
Adsense
Admob
Ad technology platform
Unsold TV inventory
In game advertising
Intelligent display advertising
Real Time Display Ad auction
Search
Display
© Annet Aris
Advertising optimizationfor publishers
Bui
ld u
p of
ope
ratin
g sy
stem
s
Adwords Adsense Admob
Larger and better advertising offering
BIG Data analysis!
Paid content services
Mor
e an
d be
tter
free
ser
vice
s
© Annet Aris
Google network effects
The virtuous cycle
27
External network effects
Cash
© Annet Aris
Dominant revenue positions
Acquisition best start-
up’s/ talents
Googles acqusitions since Motorola
28Source: http://en.wikipedia.org/wiki/List_of_mergers_and_acquisitions_by_Google
Type of network externalities
CONSUMER
ECOSYSTEM
© Annet Aris
BIG DATA
Impact of digitization on industry structure
30
Key characteristics• No competition• High barriers to entry• High profitability• Low consumer benefits
Monopoly OligopolyPerfect competition
• Limited competition• Medium barriers to entry• Profitability depends on
industry conduct• Medium to high consumer
benefits
• High competition• Low Barriers to entry• Low profitability• Medium to high consumer
benefits
Examples • US telco’s/cable co’s• US local newspapers• Internet giants?
• TV broadcasters• Magazines/ newspapers• Music majors
• Independent TV producers
• Free lance journalists• Book publishing
Impact digitization
© Annet Aris
• Search• Portals• Social
networks• E-commerce
• Telecom
Impact of digital on industry structure
• Mobile• Set top• PC
• Websites• Applications
• Consumers• Hidden
talents• Crowds
Content Creator Content packager
Platform operator
Content bundlerHard-/ Software
provider
Impact on Industry structure
• More competion
• Morehypes
• Competitive oligopolies
• Functional monopolies?
• Competitve oligopolies
• Competitive oligopolies
For discussion Unfavourable
Favourable
Mixed
New entrants
Role in value
chain
© Annet Aris
Use
r ?
Content CreatorContent packager
Platform operator
Content bundlerHardware
provider
• Pay TV• Cable operators
TerrestialSatelitteCable
TV Game console
TV channelsNewspapers/ magazinesMusic majors
ArtistsTV/Movie ProducersSport associationsJournalists
Industry structure
Competition/ Oligoploy
Friendly oligopoly
Regulated monopoly/ competitive oligopoly
Regional monopoly/ competitive oligopoly
Competitive oligopoly
32
Impact of digitization
Technological game
changers
Consumer/advertiser
Tipping point behavior
Value capture by new entrants
New rules of game for
incumbents
© Annet Aris
The traditional media industry mostly in a reactive mode with regard to digitization
33
Traditional strategy approaches do not work in the current situation..
Levels of uncertainty
3
Adoption of internet services
Range of possible out-comes around 2-3 key uncertainties
A range of futures
Portfolio of Big bets, Options to play, No regret moves
Roll out of networks
Description
Example situations
Can develop a strategically relevant forecast
1
A clear future
3-5 year strategy plans
Strategic Approach
2
Sale of mobile licenses
A few distinct outcomes define the future
Alternative futures
123
Scenario planning
4
Next Technogical game changers
Multiple dimensions of uncertainty; most difficult to forecast the future
True ambiguity
?
Strategic capability building?
Source: Curtney, Kirkland and Viquerie, Strategy under uncertainty © Annet Aris
THE STRATEGIC BUILDING BLOCKS IN LEVEL 3
Large investment
Small investment
High risk Low risk
No-regret move
Big bet
Safety net
Real options
Source:“Robust Adaptive Strategies,” by Eric Beinhocker, Spring 1999, Sloan , Management Review, Vol. 40, no. 3
KEY STRATEGY DECISIONS NETWORK OPERATORS
35
Network operators
Upgrade network• Fibre• LTE/4G
Regulation• Network
Access• Net
neutrality
Internet services• Content• Payment• Cloud
Data offering• Pricing• Customer
service• Sales-
channels
© Annet Aris
KEY STRATEGIC INITIATIVES
Large investment
Small investment
High risk Low risk
No-regret move
Big bet
Safety net
Real options
Source:“Robust Adaptive Strategies,” by Eric Beinhocker, Spring 1999, Sloan , Management Review, Vol. 40, no. 3
• Network investments
• Mobile/fixed integration?
Internet services
Regulatory agreements?
Operational excellence
(pricing, service,
channels..)
© Annet Aris
37
Traditional strategy approaches do not work in the current situation..
Levels of uncertainty
3
Adoption of internet services
Range of possible out-comes around 2-3 key uncertainties
A range of futures
Portfolio of Big bets, Options to play, No regret moves
Roll out of networks
Description
Example situations
Can develop a strategically relevant forecast
1
A clear future
3-5 year strategy plans
Strategic Approach
2
Sale of mobile licenses
A few distinct outcomes define the future
Alternative futures
123
Scenario planning
4
Next Technogical game changers
Multiple dimensions of uncertainty; most difficult to forecast the future
True ambiguity
?
Strategic capability building?
Source: Curtney, Kirkland and Viquerie, Strategy under uncertainty © Annet Aris
Googles acqusitions since Motorola
38Source: http://en.wikipedia.org/wiki/List_of_mergers_and_acquisitions_by_Google
New role of management: create an agile and learning organization
39
Strategy planning
Strategic learning
• Portfolio of intiatives• Do it, Try it, fix it• Capture learnings across organization
© Annet Aris
THANK YOU!!
40
