Chapter 7
Strategy and Competition in the Enhanced Television Market
Enhanced television (ETV) or interactive television (ITV) has been touted as the key to transform the television industry since the 1980s. Though the actual product offerings and consumer demand have fallen short of expectations over time and the introduction of ETV (ETV represents all relevant terms hereafter) turned out to be a slow evolution rather than a dramatic revolution, technological advances in distribution systems and computing in recent years have again put these services on the fore- front of the industry road map. Much has been written about the nature of consumer demand for ETV (Gunter, 2003; Ha & Chan-Olmsted, 2002; Vorderer, Knobloch, & Schramm, 2001), the arrays of ETV ven- tures (Kerschbaumer, 2004), and the technical aspects of these services (Martin, 2002; Ranger, 2004); however, few scholars have tackled the strategic and competitive implications of these market activities for me- dia firms. This chapter first discusses the historical development of ETV from the perspectives of strategy and competition. It then reviews the major ETV applications in recent years, discusses the strategic implica- tions of these ventures, assesses leading media firms’ strategic portfo- lios concerning ETV, and finally proposes a value chain framework that depicts the value creation process, sources of competitive advantages, and major players in the evolving ETV market.
The term enhanced television is often used to describe many soft- ware-enhanced television services from streaming online to PCs and shopping via television to video games on all platforms. The fact that the enhancement of a traditionally passive television-viewing behavior encompasses many perspectives of interactivity actually creates con- fusing definitions. Whereas some view ETV as any experience that gives viewers more programming selection, customization, and control, oth-
136Chan-Olmsted, S. M. (2005). Competitive strategy for media firms : Strategic and brand management in changing media markets. Retrieved from http://ebookcentral.proquest.com Created from ashford-ebooks on 2019-03-22 13:03:37.
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ers insist on certain degree of real-time interactivity in both text and video format. There is so far no clear consensus on what ETV means or what it should include. In fact, some cable operators have indicated that they shied away from the unproven ETV services because they wanted to pursue the more profitable VOD service, which is an ETV activity by some definitions. In the context of this study, ETV is defined as services that enhance an audience’s television experience by giving people more entertainment, information, and control through a mechanism capable of interaction between the audience and television (and between audi- ences) and customizing and delivering content in real time. PC-based broadband video and high-speed Internet access services, though also important for this market, is discussed mainly in next chapter.
THE DEVELOPMENT OF ENHANCED TELEVISION
The trials of ETV began in the 1970s, not by market force or consumer demand, but by a desire to improve education and community services through the newly established cable television systems from govern- mental agencies (“Symposium on Experiments,” 1978). With the intro- duction of a then new, multichannel distribution system, public institutions such as the U.S. Department of Health, Education, and Wel- fare initiated ETV tests in an attempt to realize the potential of providing health care information and worker training via this media platform. During this introductory stage (see Table 7.1), the most publicized ETV venture was QUBE, an interactive cable service offered by the then Warner Communications in Columbus, Ohio. QUBE subscribers were able to use set-top decoder boxes to participate in game shows and sur- veys, call plays in a college football game, take part in electronic town meetings, and simulate a vote for the Academy Awards (Constantakis-Valdez, 2004). In a sense, services like QUBE and other trials were driven by either a public-service mandate or technological advancement in the distribution system. Nevertheless, these early ser- vices were very expensive to maintain with little added value to the ex- isting television experience. Furthermore, the content provided was of low quality with limited repurposing utilities.
As the expensive QUBE system failed to survive, the ETV ventures in the 1980s regressed back to simplified text services on television. The videotext-like services continued to have difficulties with the expensive equipment and costly service maintenance. In addition, given the unaffordability of set-top boxes, the use of ETV services at this stage was strategically more for gaining franchising advantages than actual new-product development. Beginning in the late 1980s and into the 1990s, cable operators and telcos, in an effort to define the market of ETV, began a complex strategy of competition and cooperation (Constantakis-Valdez, 2004). AT&T and Bell Atlantic conducted interac- tive television services trials and reported strong interest in games and
ENHANCED TELEVISION MARKET I 137
Chan-Olmsted, S. M. (2005). Competitive strategy for media firms : Strategic and brand management in changing media markets. Retrieved from http://ebookcentral.proquest.com Created from ashford-ebooks on 2019-03-22 13:03:37.
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138
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