Impact of New Media on Old

Category: Entertainment

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All rights reserved. Copyright © 2006 Vringo Inc. This file may not be redistributed without prior written permission Benjamin Levy March 2007


Topics Do old media have a problem? The dynamics of competition An innovator’s dilemma for old media The evidence for old media displacement What’s next

A paradoxical snapshot of old media: 

A paradoxical snapshot of old media At first glance, the evidence for old-media decline appears contradictory Are old media in decline? Or doing better than ever? And how can we make sense of this mess? Edison Research. (2006). Time Spent Listening by Teens (12-17) down 22% since 1993. from Radio: Time Spent Listening by Teens since 1993 TV: Average viewing time p/ HH since 1995 Nielsen Media. (2006). Television's Popularity is Still Growing. 2006, from 55dc65b4a7d5adff3f65936147a062a0/?vgnextoid=4156527aacccd010VgnVCM100000ac0a260aRCRD


Ecosystems: Natural & Business: 

Ecosystems: Natural andamp; Business Populations compete for resources Water, food, space Business resources Finding one’s niche Orthogonal niches  no competition The more niches overlap  the stronger the competition Coexistence Competition Displacement Extinction? All rights reserved. Copyright © 2006 Vringo Inc. This file may not be redistributed without prior written permission

6 Dimensions of media competition : 

6 Dimensions of media competition Gratifications sought Entertainment Information Sociability Gratification Opportunities Times Places Relevant opportunities Time spent on media Easy to measure Last one to change A function of opportunities Advertising investment Cost of sales Reach Paid content Variety Cost of goods sold Distribution Subscriptions Dimmick, J. (2003). Media Competition and Coexistence: The Theory of the Niche. Mahwah, NJ: Lawrence Erlbaum Associates.


The Innovator’s Dilemma: 

The Innovator’s Dilemma Established companies excel at Incremental improvements Tailored to the largest, most demanding customers Driven by technology advancement that outperforms market needs The challenges come from innovations that Do not perform as well Are more convenient Address untapped markets Disruptive innovation opportunities are asymmetrical They are unattractive to large enterprises; but Look like wonderful opportunities to small ones All rights reserved. Copyright © 2006 Vringo Inc. This file may not be redistributed without prior written permission Performance Reliability Convenience Price Performance Reliability Convenience Performance Reliability Time Functionality Technology trajectory Christensen, C. M. (2000). The Innovator's Dilemma. New York: Harper Business.

The Innovator’s Dilemma: an illustration: 

The Innovator’s Dilemma: an illustration

But, pâté is not easily found in the jungle: 

But, pâté is not easily found in the jungle


Gratifications sought : 

Gratifications sought Information Entertainment Sociability Information Entertainment Sociability (micro) dimensions of competition Stafford, T. S., Stafford, M.R. (2001). Identifying motivations for the use of commercial Web sites. Information Resources Management Journal, 14(1), 22. Ruggiero, T.E. (2000). Uses and Gratifications Theory in the 21st Century. Mass Communications andamp; Society. 3(1), 3-37.

Gratification opportunities: 

Gratification opportunities previously empty spaces underutilized spaces core spaces Old Media New Media Games on the handset Reading one’s 'local' newspaper while abroad Playing musical ringtones Watching TV while at work Streaming video on demand, instead of broadcast TV MP3 and podcasts instead of radio in the car

Advertising investments: 

Advertising investments Ad expenditures have been remarkably stable Growing year on year But stable as a % of GDP Growth in Old/New Media ad investment tells another story Old media increased slowly, year on year (5.4%) New media increased rapidly, year on year (45.3%) Old media’s pie is getting smaller

The Innovator’s Dilemma in Practice: 

Smallest ad investment that CBS can profitably accept The Innovator’s Dilemma in Practice Smallest ad investment Google can profitably accept 5¢ $20,000


Content Arguably, old media’s strongest suit Until Napster, KaaZa, etc. are taken into account And the Apple Store Have you noticed that ABC, NBC, CBS now put most of their primetime programs on the net? Think of ringtones, wallpapers, and games downloaded to phones By the way TV and Radio have never had paid content


Subscriptions Virtual worlds Real gambling in virtual casinos Premium 'adult' content Games for consoles make more money than movies

Time spent on media: 

Time spent on media Newspapers and magazines already heavily displaced Any city where craigslist is in, the classified are out Why do newspapers still print the stock prices? Radio is under sustained pressure MP3 players, satellite radio Time spent listening is dropping Ad revenue is dropping TV’s turn Broadband penetration only recently reached levels of dial-up penetration Quality of alternatives constantly improving Other dimensions favor new media




Conclusions There is no coexistence, just the appearance of it Will television companies go away? Doubtful Will TV go the way of the dodo? Most likely


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