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Will Tv Succumb to the Internet

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| Case Study 1 | Will TV Succumb to the Internet? | | | 1/27/2013 |
CISK 511

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Case Study: Will TV Succumb to the Internet?
Problem: Cable/Satellite Provides have adopted a business model of expanding select programing services online while remain competitive with an increasingly digitized world. The very technology they have embraced poses a threat to the future of mainstream TV as more and more household have cut the cord and terminated standard TV service in favor of Internet programing.
Challenge: Recommend the best course of action to take for cable/satellite providers to expand their online product offerings without cannibalizing revenues from traditional TV programming
Facts:
* High-speed internet connections, powerful computers, and portable software devices have become widespread in use and ease of access. It’s changed the way people obtain songs, videos, TV shows and books. File sharing and DVR service have increased the ease which TV shows and music can be uploaded to the internet and shared with others for free. Although these TV shows and music files are illegal to share, current laws against those who supply and download these digital files have near zero effect on users because the laws are hardly enforced. * YouTube, which was started in 2005, is the most popular video-sharing website in the world. Over 150,000, unauthorized video clips of copyrighted television programs appeared on YouTube. * Hula.com, a website offering streaming video of television shows and movies from NBC, Fox, ABC, Comedy Central, PBS, USA Network, Bravo, FX, Speed, Sundance, Oxygen, Onion News Network, and other networks. Hula also syndicated its hosting to other sites, including AOL, MSN, Facebook, MySpace, Yahoo and Fancast.com, and allows users to embed Hula clips in their website. Hula.com is supported by advertising commercials, and much of its contents are free to viewers. Viewers can view contents over IPhones, IPods, IPads as well as computer screens. * By 2010, nearly 800,000 U.S. households had “cut the cord” dumping their cable, satellite, or high-speed television services and in its placed favored web-based videos from Hula, downloadable shows from ITunes, by mail video services such as Netflix, and over-the-air broadcast programming.
Cable/Satellite networks have real issues to contend with regarding increased internet use for entertainment. The ease of access to copyrighted materials on the internet is so widespread that it’s becoming increasingly difficult to locate and impose fines on violators. How can U.S. laws enforce file sharing and website content in different countries around the world where there’s still a void to close here at home? Technical MIS applies to this case in that problems stem from new threats from advanced technology and inefficient business processes and operation research by programmers. Technology is advancing as such an alarming rate that’s it’s difficult to put reigns on violators in this information age. TV Programming studios are right to be wary of the type and quality of content they put on the web for fear of illegal reproduction and dissemination.
Behaviorally, the MIS applies because TV studios are in the business of making a profit while attempting to satisfy the customer with choices. Cable/satellite fees are steadily increasing along with new technology and the general public is willing to pay it when choices are restricted. Innovation can be a double-edged sword because these new choices could potentially put consumers at an advantage over companies. Though programing networks are beginning to embrace the change that is inevitable, they also must come up with creative strategies of remaining competitive in the marketplace for as long as possible. With the emergence of handheld, portable media devices will TV eventually succumb to the internet? I believe it is really a question of when it will happen—not if it will happen. Technological changes such as this could take decades or it could be on the horizon within the next few years. Powerful computers along with those mentioned above are able to stream videos and allow users to have the same video and sound quality they already enjoy on their TV sets. These innovative, but disruptive technologies create a huge issue for the cable/satellite companies today.
The internet (Hula) could potentially cannibalize TV as we know it today as programing services; digital quality and quantity are expanded. The number of TV cord cutters in U.S. households is expected to climb to 1.6 million in the not too distant future. Much like the cell phone is doing to the residential landline in homes. However Hula, for all its success, is experiencing growing pains in that it is still unprofitable for the cable networks. Content suppliers usually receive between 50 to 70 percent of the advertising revenues, but are increasingly becoming dissatisfied with the bottom-line profits generated. Supplies have to be able to amass enough profit to justify offering free programing to the viewing public. Some suppliers have pulled their programing from the Hula site and others that remained are pressuring the cable/satellite networks to charge a monthly fee to users who’d like to view premium programing online.
Cable networks have taken proactive steps to expand its cable TV subscription model by making more television shows available to users who keep their current cable subscriptions. The cable company’s vision is “you can watch your favorite network programming on any screen.” However, until all networks are on board and offers 100 percent TV programming on the internet, this statement is only partially true. HulaPlus, launched in 2010 for paid subscribers at a low rate of $9.99 per month. It offered several popular network programs as it continued to show a few recent episodes for free online. Paying subscribers receive the same number of ads as users on the free website in order to keep subscriptions costs low. Paying subscribers are also able to watch shows in high definition and on multiple devices, including mobile phones and videogame consoles as well as television screens.
The cable companies were also wise to block Hula TV from being viewed on standard TV screens because the DVR, which can be considered a disruptive technology for the cable companies, would give users the choice to fast-forwarding through revenue generating commercial ads. It’s necessary these two entities remain separate for product differentiation. Cable/satellite prescriptions are expensive, but they also offer choice programming, recording and Ad skipping options. The internet, on the other hand offers free programming for select networks, and a small fee for premium shows, but users cannot pass over revenue generating ads during the programs. Each vehicle offers something for both the tech savvy and tech wary user. Reviewing all the key issues in the case along with measures already taken by Cable networks to preserve their competitive edge, a few other alternatives can be explored as well. One alternative would be for cable networks to offer totally free subscriptions for premium internet TV but also heavily increase time slots for commercial ads. Cable networks may also consider offering a fixed lower cable subscription to those electing to also purchase a HulaPlus online subscription as well. Commercial Ads could be balanced between the two by placing DVR filters to only allow a fixed number of skipped Ads during regular programming. For the more progressive types, cable networks could consider making all cable or satellite programs 100 percent available online and able to stream to the user’s choice device. They could require a full rate online subscription rate in lieu of paying a cable/satellite subscription. Finally, stricter, global laws need to be created and enforced for copyrighted material violators. Evaluating each the proposed alternative actions above, can pose a challenge in that not every alternative is feasible in terms of time, money, research, technology and lack of other resources available. Some program vendors are pulling programs from the internet due to waning profits, so offering totally free subscriptions may not be the best option to keep in line with cable TV’s expansion project. It’s clearly noted in the case study, that the advertisement are not generating adequate profits in spike of the fact that Hula use has skyrocketed in recent years. There are still pirating issues to deal with along with a general lack of programing consistency. Most TVs today are Internet ready as online programming appears to be the way of the future. It won’t happen overnight, but I suspect years from now TV programs will only be viewable via internet connection. In the meantime, cable/satellite companies could work in tandem with online by offering reduced cable prices along with a mandatory fee-based internet TV programming to make up the difference in current prices. It would probably be advantageous for the cable company to restrict the number of commercials the DVR is able to skip. Having laws in place to where all countries collaborate toward one common goal will be almost impossible because there will always be a few difficult nations that refuse to cooperate with others due to perceived inequities in revenue opportunities. In order for this to work, teams of computer programmers sponsored by corporations seeking to protect their copyrighted material and be endorsed by all major nations. These teams would have to patrol the internet and write viruses or blocking software that looks for fingerprint ID of protected material so it can be erased or blocked and having the servers rendered useless to hackers and pirates. This would be a huge and expensive undertaking that probably isn’t worth the effort at this stage of progression. Although the internet is the way of the future, I don’t believe we are quite there yet. The world is in no position to totally give up TV programing. The technology certainly exists for this to be a possible option however; realistically there are just too many bugs, glitches and copyright violators at large for this option to be truly viable at present. There are just too many laws that need to be worked out first. I have no doubt that eventually TV will be a thing of the past as we evolve into a digitized nation. Companies will have to change and adapt to new technologies if they want to remain in business.
I’d recommend for the cable and satellite providers use a combination of the second and third alternatives. To avoid TV succumbing to the Internet, the TV providers must make quality programs available to the progressive, tech savvy public. While I consider myself to be among the last of a dying breed, TV providers must be careful not to alienate loyal, old school tech wary consumers until the tide completely turns and change is forced upon us all. The public in general values choice so I believe the cable companies were right to embrace Hula, but in order to protect its interest, the cable/satellite providers must come up with creative fee packages for online subscribers.
I personally would not cancel my cable subscription in favor of online programming because I have always been one to resist technology. I don’t see the value in having to connect to the internet and be accosted by ads, banners and news crawls while trying to focus on watching the news or a movie. I actually prefer old school cable broadcasting and I heavily resent the fact that all TV in stores today are HDTV digitized. I still have my older model TVs, now adorned with cable converter boxes, but the picture quality is steady without having to deal with the excessively realistic quality and motion of HDTV. The HDTV technology physically sickens me so I find it very difficult to watch without experiencing motion sickness. Maybe I’ll adapt to it over time, but for now I’ll stick to my older models. That said I would consider internet TV over having to deal with an HDTV screen if it ever came down to it. As I read in Laudon’s text, “Technology is advancing, but it must be watched.”

Bibliography
Laudon, K. C. (2012). Management Information Systems Managing the Digital Firm. Upper Saddle River: Pearson Education, Inc.

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