CASE ANALYSIS:

9Live

9LIVE S LONG TERM OBJECTIVE 9Live aims to venture an interactive concept for a TV channel where viewers would actively participate in the shows, win prizes, and contribute to channel s finances with their calling fees in the belief that the advertising market will decline drastically after steeply growing for the past five years.

PROBLEM STATEMENT 9Live faced the problem of coming up with a viable concept for a television channel that is independent of advertising revenue.

Page | 1

CASE ANALYSIS:

9Live

INTERNAL ANALYSIS
Internal Factors Implications As the first mover to the untapped market, tm3 with its transmission into 9Live could cater to viewers who are interested in gambling and betting. Interactive gambling and betting provides customers with the convenience of being able to do them while at home or simply with a TV and a phone.

Advantage of First Initiative in German Market

Low operating cost compared to others

In comparison with other companies which are operating dependently to gain revenue from the advertising fees while putting up with related high costs, 9Live is practically operating on lower costs due to its limited advertising content. With lower operating costs tied to their financial structure, higher margins could be assumed.

Established Brand awareness

With the company s 10 year presence in German media industry, brand awareness is initiated to a significant number of viewers.

Two sources of Revenue (calling and advertising fee)

The 9 Live project earns the company the revenues through its two sources of income which are derived from viewers calling the live TV game show to participate in the games and advertisers who would like to advertise their products/company through the TV channel.

Inability to identify its target market

Even as the company had gained an idea about the popularity of interactive TV shows in French and British media, the management team still has no clue whether it will also garner much success with the German viewer. As a new concept, the 9live project also has a wide scope for its initial target market which actually comprises a lot of age group segment which have the potential to participate which makes it hard to focus on such a segment.

No trained hosts and talented staff available

The critical importance of trained hosts and talented staff is tantamount to the success of the program as the company intends to spearhead the venture towards interactive television. Uncharismatic and unprofessional hosts would not be able to attract much viewers to the program which would lead to disastrous circumstances for the business. Page | 2

CASE ANALYSIS:

9Live

INDUSTRY ANALYSIS

An Industry Analysis is important to provide 9Live with an idea of the complexity of the media industry. Industry analysis involves reviewing the economic, political and market factors that influence the way the industry develops. Major factors can include the power wielded by suppliers and buyers, the condition of competitors, and the likelihood of new market entrants.
FACTORS IMPLICATIONS TO THE COMPANY

Threat of new entrants

The German television market had two dominant players Bertelsmann/ CLT-Ufa and the Kirch group where 9Live was part of. Since this industry in Germany is oligopolistic, there is a higher barrier to entry for new entrants. New entrants to the television market, therefore, do not pose a big threat to the major players in the industry.

Bargaining power of suppliers

Laws and fees in the industry are highly governed by the state parliaments which make the bargaining power of suppliers low.

Bargaining power of buyers

There is a low bargaining power of buyers since the monthly viewer licensing fees are determined by the state parliaments.

Threat for product substitutes

Substitute for the television market includes radio broadcasting which is becoming less demanded due to higher demand for more technologically advanced products. There is, therefore, a low threat for product substitute.

Competitive Rivalry

The competition among the TV channels in Germany is high since there is low to no shifting costs for the consumer in case they change their preference. The government also created public channels that had to be carried in all cable networks by law limiting the capacity for private channels in the country.

Page | 3

CASE ANALYSIS:

9Live

TOWS MATRIX

Threats
  

Opportunities
   

Other firms low budget on advertising Regulation by the Government Future expansion of UK and France interactive TV Fickle customers

Betting and gambling popular in Germany Innovation in the TV industry Emerging market new to Germany Wide target market (betting, gaming, quizzes)

Weaknesses
 

Strengths
   

Inability to identify its target market No trained hosts and talented staff available

Advantage of First Initiative in German Market Low costs compared to others Established Brand awareness Two sources of Revenue (calling and advertising fee)

Page | 4

CASE ANALYSIS: 9Live

MATCHING KEY FACTORS

Key Internal Factor

Betting and Gambling First time on German TV (strength)

+
+

Key External Factor

Betting and Gambling very popular in Germany (opportunity)

Resultant Strategy
Appeal and attract population that is attached to gambling and betting in different places

Inability to identify its target market (weakness)

Wide target market (betting, gaming, quizzes) (opportunity)

Scan and study the wide market and decide if what market must the company focus

Advantage of First Initiative in German Market (strength)

Future expansion of UK and France interactive TV (threat)

Differentiate the services and establish an alliance with other TV companies to protect the German market Conduct research and match results for proper implementation

Inability to identify its target market (weakness)

Future expansion of UK and France interactive TV (threat)

Page | 5

CASE ANALYSIS: 9Live

COMPETITOR ANALYSIS
Current Strategies y Integrated Cost Leadership and Differentiation First Mover Future Assumptions y y To increase market share To improve firm s profitability Core Competencies y First interactive television service in the country Good human resources Part of the Kirch conglomerate

y 9Live (formerly TM3)

y y

y RTL

Broad Differentiation

Further optimization of the core business Developing future growth

y y

Market Leader Part of the Bertelsmann conglomerate

y Sat. 1

Broad Differentiation

y y

Strengthening the core business Diversifying into related areas

Part of the Kirch conglomerate Strong brand awareness

y ARD

Broad Differentiation

y y

Build brand awareness Diversify into related areas

y y

Innovative formats Extensive experience in the industry

Page | 6

CASE ANALYSIS: 9Live

OUTCOME IMPACT MATRIX Current Company Strategy Outcome Impact

Viewers would actively participate in the shows, win prizes, and contribute to the channel s finances. Interactive television. Joining the games and shows were accessible with the use of television. Due to large number of callers who wanted to play the game, a long queue of phone calls occurred.

Increased income. Customer enjoyment. Customer loyalty. Decrease in phone calls since callers went disgruntled.

Hire charismatic hosts.

Attracted more viewers and phone calls.

Customer loyalty. Increased income. Sustained profitability. Customer enjoyment through involvement.

Increased revenue. Phone calls with fees. Joining the games and shows were accessible with the use of phones.

Vague rules of game shows.

Viewers/interactive players thought that they were being deceived by the show. Increase in revenue since interactive players cannot win the game.

Decrease in customer loyalty. Reputation of the company to its viewers/interactive players declined. Sustained profitability in a short period of time. Reputation of the company to its viewers declined. Decrease in customer loyalty.

Soft core pornography and phone sex advertisements.

Triggered promiscuity among young viewers.

Page | 7

CASE ANALYSIS: 9Live

Diversified by airing telenovelas and lifestyle programming.

More programs to be watched. More diversified viewers. Decrease in number of game shows.

Decrease in customer loyalty particularly coming from the interactive players. Increase in market share.

No game shows to be joined and played. Game shows were replaced with infomercials for a fee. Confusion from the viewers/interactive players. Revenue from informercials.

Decrease in customer loyalty. Zero viewers/interactive players. Big decrease in revenue. Decrease in market share. Bankruptcy.

Page | 8

CASE ANALYSIS: 9Live

RECOMMENDATION
ACTION PLAN: Strategy : INTERACTIVE TELEVISION
DESCRIPTION KEY PERFORMANCE INDICATOR RESOURCE REQUIREMENT PERSONS/DEPARTMENT INVOLVED TIME FRAME

TACTICAL ACTION: Scan and study the wide market. Correctly identify the specific target market to effectively come up with programs that captures the right market. target market is identified through figures from statistics Financial Resource Research Agencies Consultancy Groups CEO Research and Development Department Top-level Managers Broadcasting Team 2001

TACTICAL ACTION: More defined rules and regulations 9Live should come up with clear game mechanics to avoid negative feedback and perception that may lead to customer dissatisfaction. less dissatisfied customers gain customer loyalty Human Resource Organizational Resource CEO Top-level management 9Live staff 2001

TACTICAL ACTION: Replace soft core pornography ad phone sex advertisements Replace soft core pornography ad phone sex advertisements with more sensible programs More positive company image to its market Human Resource Financial Resource Organizational Resource Marketing Department CEO Marketing Department Top-level Managers 2001

Page | 9