IPTV Business Model (Utilizing STOF Framework)

BUSINESS MODEL&A BUSINESS CASE

Presented ByPRNKaranveer Singh12020541103Saurabh Thakral12020541127Shweta Rani12020541131Sweta Sharma12020541139Soumya Ranjan Dalai12020541148Archit Malhotra12020541154Business Model

What is a business model?A business model involves:The products and services a firm offersThe infrastructure and network of partners The customer relationship capitalAnd the financial aspects

We define a business model as consisting of two elements:what the business does, and How the business makes money doing these things

What does it do?It provides a concise representation of how an interrelated set of decision variables in the areas of venture strategy, architecture, and economics are addressed to create sustainable competitive advantage in defined markets.Types of business models

The Business Model Canvas (Osterwalder & Pigneur)The Four-Box Business Model (Johnson)The STOF model (Bouwman, De Vos & Haaker)Business Model Schematics (Weill & Vitale)Technology/market mediation (Chesbrough & Rosenbloom)Entrepreneurs business model (Morris, Schindehutte & Allen)e3-value (Gordijn & Akkerman)

The Business Model Canvas (Osterwalder & Pigneur)

The Business Model Canvas is design- and innovation-oriented.

Osterwalder and Pigneur stress the role of design in business to imagine that which does not exist and want to offer support in the form of design tools and techniques.

They address a number of design techniques and tools: customer insights, ideation, visual thinking, prototyping, storytelling and scenarios.

Visualisation also allows for clearer discussions and changes because the model becomes more concrete and tangible.The Four-Box Business Model (Johnson, 2010)

Four-Box Business Model focuses on companies entering the white space where there is a poor fit with the current organization and where new customers or existing customers served in fundamentally different ways are targeted. Four Box business model should provide a structure to reveal and categorize all of the issues that must be must be addressed in the white space where, relatively speaking, assumptions are high and knowledge is low. Customer Value Proposition: An offering that helps customers more effectively, reliably, conveniently, or affordably solve an important problem (or satisfy a job-to-be-done) at a given price.

Profit Formula Revenue Model Cost Structure Target Unit Margin Resource Velocity

Key Resources: People, technology, products, facilities, equipment, funding, & brand .

Key Processes: Design, product development, sourcing, manufacturing, marketing, hiring & training, ITBusiness Rules and Success MetricsBehavioural Norms: Opportunity size needed for investment, approach to customers and channels.Comparison of the two modelsBusiness Model Canvas makes the use of a visualization template which is not the case for the Four-Box Business Model.

This visualization is a major strength when it comes to designing and communicating business models.

Johnson positions business rules, behavioral norms and success metrics as part of the key processes and also sees them as connecting the boxes of the business model and keeping it in proper balance.

They ensure that the customer value proposition can be delivered in a repeatable and predictable way while fulfilling the profit formula. This links the business model to the day-to-day operations.The Current ScenarioFierce competition from cable companiesCable companies entering into Telcos domain80% of large European telecom operators looking into providing IPTVTelcos to compensate for falling revenuesThey can leverage on brand equity and offer bundled servicesUnclear IPTV Business modelThe STOF Model

Successfully designed business models for mobile services, insurance intermediaries & e-commerceHow a group of organizations can create and capture value form innovative services4 domainsExternal factorsExternal FactorsSERVICE DOMAIN

IPTV Business Model (Utilizing STOF Framework) SERVICE DOMAINDescription of a firms service provisionSpecific Market Segments & CustomersExpected Value to IPTV CustomersDeliveredNot exceed Tech & Fin Capability of OrganizationTelecom operators perspective:- Need for value propositionIndicate Technical & Financial feasibilityMarket Analysis to understand CustomersMinimize Gap between Perceived & Delivered

Telcos can Enhance services & meet expectations by:- Adding more channelsAdjusting tariffsDefining KPIs & KQIsImproving user-friendlinessResources & Finances required to deploy IPTV Services by Telcos, the three possible types of leverage:-Bundling of video services with broadband & VoiceOffering VAS (e.g. Interactive services, VoD, PVR) Attractive service portfolio - exclusivity or long tail niche channelsIPTV as Mass Market ServiceCompete with Satellite & CablePresence in Voice & Broadband ArenaLeverage Current Expertise & Customer LoyaltyIPTV Business Model (Utilizing STOF Framework) TECHNICAL DOMAINTECHNOLOGY DOMAIN (Area of Functionality)TRANSPORTMIDDLEWARECONTENTSERVICE DESIGNContent LayerInfluenceThree Levels Influence the Financial as well as the Organizational DomainTELCOS FACE ISSUES The telecom operators can use design approaches:-Adding large capacity immediately Gradually increasing the capacityEnhancing Quality of Service:-Better transmission infrastructure High End Encoding/Decoding equipment Offer different service levels to different customers.Middleware improvement involves:-Integrating platformsCustomer relationship management Balance b/w advanced STBs & middleware Cost effective & Stable technology deploymentUser Friendly EquipmentNew Revenue Models still a Question Mark?Infrastructure Meeting Transmission Requirements

Actors

Content ProvidersEquipment ProvidersMiddleware providersAdvertisersConsumersCONTENT PRODUCE or PURCHASE ???Maintain the Physical Network, Hardware and SoftwareCORE RESPONSIBILITY: Distribute the content(Video)Middleware provides a seamless service to the end-userSystem Integrator + Telco Operators = Efficient Middleware Advertisement - small revenue

Vertical Integration

IPTV Business Model (Utilizing STOF Framework) ORGANIZATION DOMAINVALUE NETWORK

TECHNICAL DESIGNCAPITALCOSTPERFORMANCE INDICATORSREVENUERISKOPERATION COSTFINANCIAL ARRANGEMENTPRICING MODELREVENUE SOURCECOMPETITIONSERVICETARIFFSCo-DetermineCo-DetermineDivide over actors according toDivide over actors according toIPTV Business Model (Utilizing STOF Framework) FINANCIAL DOMAINFIXED COST : Technical & Service designHigh availability : High end ServersInteractive Services: Network Equipment FINANCIAL PERFORMANCE : Result of COST & REVENUEPRICING depends on:Market CompetitionOperational CostsCompany StrategyAvailable Models :Flat Rate (Subscription)Pay-per-ViewAdvertising (VoD)Customization & Personal Services (Future scope)Service Design issuesService DomainOther DomainsService BundlingTriple play, quartet playComplex organization structureValues added servicesNew and unique servicesLarge investments and risk of failureCurrent portfolioContent through only available platformRequires cost-effective network and advanced middleware complex organization arrangementService DesignDesign Issues and Trade-offs (1 of 2)Organizational Design issuesOrganization domain Other domainVertical IntegrationVertical integrated firmBundling serviceHorizontal IntegrationHorizontal integrated firmCost revenue sharingOrganizational DesignTechnical IssuesTechnical design issuesTechnical domainOther domainBandwidthHigher BandwidthLarge investment on InfrastructureQuality of ServiceHigh QoSLarge investment or extra customizationMiddleware capabilityExtensive capability for interacting, conditional access, security, CRMLarge investment or low revenue generationFinancial Design issuesFinance domainOther domainRevenue/cost sharingHorizontal integrationContent portfolioMiddleware capabilityRevenue modelValue added serviceContent portfolioHorizontal/Vertical IntegrationFinancial Design20IPTV BUSINESS MODEL SCENARIOS

Scenario 1: Telecom operators MammothScenario 2: Head- to- head competitionScenario 3: Market deadlockScenario 4: Back to basics

SCENARIO DIMENSIONS, SCENARIOS & CRITICAL ISSUES

SCENARIO 1: TELECOM OPERATORS MAMMOTHMEASURESIntroduce bundled productsHorizontal integrationPricing strategy: Aggressive approach

CRITICAL ISSUES/ CHALLENGESLimited resourceCo-ordination between newly established unit & other unitSeamless bundles & efficient billing system

SCENARIO 2: HEAD- TO- HEAD COMPETITIONMEASURES

Operators able to satisfy peoples individual choices & provide value in the long-tail

IP- based distribution technologyCRITICAL ISSUES

Ability to create content diversity

High distribution costSCENARIO 3: MARKET DEADLOCKSeveral large merger deals create natural monopolies.

Regulators propose bringing back strict anti-trust policies.

Cable and satellite companies take advantage of the regulatory environment. They consolidate their businesses and become dominant and vertically integrated national players.

In this scenario, consumers are already quite experienced with digital TV and they are interested in new services.CHALLENGESHard to generate profit for telecom operators in a stagnating market.

The key critical design issue has to do with providing new value-added services.

Conflict with content oriented firms in case they open up long tail strategy for value added services (e.g. :- PVR services).MEASURESTo embed advertisements in programs that consumers are willing to watch.

Provide entertaining or informative advertising that consumers do not want to miss.

Reward consumers who watch advertisements.

Telecom operators can also agree to tolerate consumers copying contents and avoiding advertisements if the value-added services manage to attract enough new subscribers.SCENARIO 4: BACK TO BASICSIn this scenario, regulators adopt strict anti-trust policies toward the big telecom operators in the market.

Several vertically integrated and global companies dominate the television market.

Most consumers are satisfied with the television services currently provided by cable and satellite companies.

There is little demand for interactive services and internet TV.

Consumers have decided to use bundling services for reasons of convenience and to facilitate easier configuration.CHALLENGES In this scenario, regulatory barriers and consumer indifference make it hard for telecom operators to offer IPTV services.

Bundling may still be an effective strategy, however it will be difficult to persuade consumers to switch from cable companies to telecom operators.

The potential market is limited.

The content supply side is dominated by several vertically integrated global companies. MEASURESTo make better use of the existing technologies, services and resources that are there to support IPTV development.

Better program quality and customer service.

Secondly, telecom operators should leverage their customer base in the broadband and telephony market.

Thirdly, they can create complementary programs and content on the television and broadband platforms.