digital business strategy and value …...digital business strategy and value creation margherita...
TRANSCRIPT
© M. Pagani 2014 EMLYON Business School
DIGITAL BUSINESS STRATEGY AND
VALUE CREATIONMargherita Pagani
EMLYON Business School
1
Conference «Data, Digital Business Models,
Cloud Computing and Organizational Design»
Paris, 25 November 2014
© M. Pagani 2014 EMLYON Business School
MOTIVATION
The multi-channel digital revolution coupled with the
development of interactive digital technology,
virtualization, peer-to-peer networks etc. generate much
more complex and dynamic ecosystems for growth and
innovation
The profits and competitive advantages of participation
in a given value network reside dynamically within the
chains, accumulating at the positions of greatest value
and/or power (control points). The enterprises that hold
these positions have a great deal of control over how the
network operates and how the benefits are redistributed
(Rülke et al. 2003)
© M. Pagani 2014 EMLYON Business School
ARGUMENT
Support the Double Helix Model (Fine 1998) in
framing the dynamic cycle of value creation and
value capture points in digitally-enabled networks
following the emergence of:
(1) an incremental innovation and
(2) cross-boundary industry disruptions
Paper published in MISQuarterly in 2014 and
selected finalist for the “Best European Paper”
© M. Pagani 2014 EMLYON Business School
OUTLINE
Conceptual framework
The opinion
Methodology and supportive arguments
Implication to research/practice
© M. Pagani 2014 EMLYON Business School
OUTLINE
Conceptual framework
The opinion
Methodology and supportive arguments
Implication to research/practice
© M. Pagani 2014 EMLYON Business School
THE VALUE NETWORK PERSPECTIVE
Digital business strategies call for coordination
across firms along product, process and service
domains, thereby creating complex and dynamic
ecosystems (Moore 1996; Iansiti and Levien
2004; Adner 2006) for growth and innovation.
Products and services increasingly have
embedded digital technologies, and it is
becoming more difficult to disentangle business
processes from their underlying IT
infrastructures (e.g., El Sawy 2003; Orlikowski
2009).
© M. Pagani 2014 EMLYON Business School
THE VALUE NETWORK PERSPECTIVE
View of the value network as a configuration of
control points, which comprise the various service
transactions involved in implementing the functional
components required to deliver a product or service
offering (Basole and Rouse 2008)
Control points are analyzed in terms of how, and to
what extent, they create and capture value, and in
what forms.
© M. Pagani 2014 EMLYON Business School
OUTLINE
Conceptual framework
The opinion
Methodology and supportive arguments
Implication to research/practice
© M. Pagani 2014 EMLYON Business School9
Open architectures
vibrant edge
Pressure for
openness/
disintegration
Policy
tussles
Innovator
market power
Frustration and
subterfuge at
the edges
Proprietary
System
profitability
Centralized control
vertical integration
proprietary standards
Incentive to
integrate & lock
in advantage
Competitive
triggers
Regulatory
triggers
Competitive
triggers
3
THE OPINION
1
2
3
4
Incremental
innovation
Cross-boundary
industry
disruptions
The double helix model (Fine 1998) to frame the dynamic cycle of
value creation and value capture points in digitally-enabled network
© M. Pagani 2014 EMLYON Business School
H1 : when the industry structure is vertical and the
product architecture is integral, the emergence of an
incremental innovation push toward a horizontal and
modular configuration and a fragmentation of value
creation and value capture points
H2: if an industry has a horizontal structure, the
emergence of a disruptive digital business strategy
pushes toward more vertical integration and integral
product architectures generating an incentive for the
innovator to integrate and create a lock in advantage
THE OPINION
© M. Pagani 2014 EMLYON Business School
OUTLINE
Conceptual framework
The opinion
Methodology and supportive arguments
Implication to research/practice
© M. Pagani 2014 EMLYON Business School
EMPIRICAL SETTING: THE BROADCASTING
INDUSTRY
Analog TV Digital TV MSPs
© M. Pagani 2014 EMLYON Business School
DATA COLLECTION
45 Semi structured interviews with industry experts from
15 leading companies in Europe and US in order to
understand the ecosystem challenges
Analysis of 8 years leading industry journals
Longitudinal data collected on a sample of 792 firms in
Europe and US (april 2000-may 2008): 15% content
providers, 15% semiconductor and electronic suppliers,
13% broadcasters, 17% software, 14% terminal
providers, 12% platform aggregators, 14% Telcos
Internal, external validity and reliability
13
© M. Pagani 2014 EMLYON Business School
DATA ANALYSIS PROCESS• Core and edge capabilities are the key explanatory
variables along with types of relationships among firms.
We control for unobserved differences across firms by
including firm dummies in a firm-generation panel
(Wooldridge, 2002):
yigt = β0 + Xigtb + Dil + Tt d + aig+uigt
yigt : firm i’s market share in a generation g in year t ;
Xigt : vector of independent and control variables;
Di : vector of dummies for each firm;
Tt : vector of dummies for each year;
aig : unobserved heterogeneity for a firm in a generation that is assumed to be
uncorrelated with the explanatory variables;
uigt is the error term.
© M. Pagani 2014 EMLYON Business School
Black box modeling (Norgaard et al. 2000)
Phase 1 – Empirical results
Phase 2 - Selection of the model structure (graph-
generating model)
Phase 3 - Model estimation and validation: two
meetings with practitioners and academics
15
DATA ANALYSIS PROCESS
© M. Pagani 2014 EMLYON Business School
TYPOLOGY OF CONTROL POINT
CONSTELLATIONS
Closed vertically integrated model
Loosely coupled coalition model
Multi-sided platforms
16
© M. Pagani 2014 EMLYON Business School
TYPOLOGY OF CPCS
Closed vertically integrated model
Loosely coupled coalition model
Multi-sided platforms
17
© M. Pagani 2014 EMLYON Business School18
Phase 1 : Analog TV
Need of the single company to develop along the vertical
dimension of the value chain
Functional
components
Matsushita
Microsoft
Telefonica
MCI
BT
BIB BSkyB
News Corporation
Midland Bank
Digital
Video
Laboratories
Sony
General
Magic 7%
Colombia /Tristar 100%
Viva 20%
Iris Associates
Integrated Systems
Edge Research
Approach Software
Soft Switch
Tivoli
Telecom Argentina
STET
IBM
Stream (cable TV)
BBW Planet
Interactive Digital
Solutions
3DO
PlanetInternet
US West
Continental CableVision
Bravo
UK Gold
UK Living
Flextech
Telewest
Sega Channel
WarnerBros
Titus (Japan)
European Business News
General
Magic 7%
AT&TWorld Partners
Lotus
Time Warner Entertainment
Matsushita
Microsoft
Telefonica
MCI
BT
BIB BSkyB
News Corporation
Midland Bank
Digital
Video
Laboratories
Sony
General
Magic 7%
Colombia /Tristar 100%
Viva 20%
Iris Associates
Integrated Systems
Edge Research
Approach Software
Soft Switch
Tivoli
Telecom Argentina
STET
IBM
Stream (cable TV)
BBW Planet
Interactive Digital
Solutions
3DO
PlanetInternet
US West
Continental CableVision
Bravo
UK Gold
UK Living
Flextech
Telewest
Sega Channel
WarnerBros
Titus (Japan)
European Business News
General
Magic 7%
AT&TWorld Partners
Lotus
Time Warner Entertainment
Hardware
Software
Telecoms
Packaging
Content
creation
Functional
components
Matsushita
Microsoft
Telefonica
MCI
BT
BIB BSkyB
News Corporation
Midland Bank
Digital
Video
Laboratories
Sony
General
Magic 7%
Colombia /Tristar 100%
Viva 20%
Iris Associates
Integrated Systems
Edge Research
Approach Software
Soft Switch
Tivoli
Telecom Argentina
STET
IBM
Stream (cable TV)
BBW Planet
Interactive Digital
Solutions
3DO
PlanetInternet
US West
Continental CableVision
Bravo
UK Gold
UK Living
Flextech
Telewest
Sega Channel
WarnerBros
Titus (Japan)
European Business News
General
Magic 7%
AT&TWorld Partners
Lotus
Time Warner Entertainment
Matsushita
Microsoft
Telefonica
MCI
BT
BIB BSkyB
News Corporation
Midland Bank
Digital
Video
Laboratories
Sony
General
Magic 7%
Colombia /Tristar 100%
Viva 20%
Iris Associates
Integrated Systems
Edge Research
Approach Software
Soft Switch
Tivoli
Telecom Argentina
STET
IBM
Stream (cable TV)
BBW Planet
Interactive Digital
Solutions
3DO
PlanetInternet
US West
Continental CableVision
Bravo
UK Gold
UK Living
Flextech
Telewest
Sega Channel
WarnerBros
Titus (Japan)
European Business News
General
Magic 7%
AT&TWorld Partners
Lotus
Time Warner Entertainment
Functional
components
Matsushita
Microsoft
Telefonica
MCI
BT
BIB BSkyB
News Corporation
Midland Bank
Digital
Video
Laboratories
Sony
General
Magic 7%
Colombia /Tristar 100%
Viva 20%
Iris Associates
Integrated Systems
Edge Research
Approach Software
Soft Switch
Tivoli
Telecom Argentina
STET
IBM
Stream (cable TV)
BBW Planet
Interactive Digital
Solutions
3DO
PlanetInternet
US West
Continental CableVision
Bravo
UK Gold
UK Living
Flextech
Telewest
Sega Channel
WarnerBros
Titus (Japan)
European Business News
General
Magic 7%
AT&TWorld Partners
Lotus
Time Warner Entertainment
Matsushita
Microsoft
Telefonica
MCI
BT
BIB BSkyB
News Corporation
Midland Bank
Digital
Video
Laboratories
Sony
General
Magic 7%
Colombia /Tristar 100%
Viva 20%
Iris Associates
Integrated Systems
Edge Research
Approach Software
Soft Switch
Tivoli
Telecom Argentina
STET
IBM
Stream (cable TV)
BBW Planet
Interactive Digital
Solutions
3DO
PlanetInternet
US West
Continental CableVision
Bravo
UK Gold
UK Living
Flextech
Telewest
Sega Channel
WarnerBros
Titus (Japan)
European Business News
General
Magic 7%
AT&TWorld Partners
Lotus
Time Warner Entertainment
Hardware
Software
Telecoms
Packaging
Content
creation
© M. Pagani 2014 EMLYON Business School
Multimedia Packaging
and services
Network and Infrastruct.
Equipment Provision
Software
Hardware
19
(Telecom Service
Provision)
Government
Service ProviderTier 1 SubsystemTier 2 Component
Auxiliary Enablers
Broadcaster Terminal
providersSoftware
Content
creator TLC
Tier 2 Component Tier 1 Subsystem Service Provider
Value
Control point in value creation
Control point in value capture
Value network of the analog TV
Core Competencies
Edge Competencies
Existing relationships or contractual links Potential relationships or contractual links
Electronic
publisher
creationContent
© M. Pagani 2014 EMLYON Business School20
Value creation logic Presence of giant strongly connected components
Value capture logic Value is captured by the giantPrimary activity categories - Content provision
- Packaging- Network provision- Conditional access
Main interactivity Sequential relationship logic Primary activity - Pooled interdependence - Sequential Key cost drivers - Scale
- Capacity utilization Key value drivers - Market positioning and access to new capabilities
- Possibility of user channel control- Shifting to value chain areas with higher added value- Facing competition of companies in connected sectors- High Costs of New Digital technologies
Business value system - Interlinked chains structure
Model 1 - Closed vertically integrated model
© M. Pagani 2014 EMLYON Business School
TYPOLOGY OF CPCS
Closed vertically integrated model
Loosely coupled coalition model
Multi-sided platforms
21
© M. Pagani 2014 EMLYON Business School22
Connectivity
(Cable
network)
STB distribution
Content
delivery
Content
Acquisition &
aggregation
Comcast
TV content
production
Advertising
Content
production
3P TV
Content
distribution
3P TV
Content
Production
(studios)
3P Film
Distribution
3P Film
Production
(studios)
Connectivity
(private content
capture
network)
Connectivity
(private content
capture
network)
Content
distribution
TV
Distribution
(Screen)
TV
Viewing
(TV/DVD)
TV
Manufacture
(Screen)DVD player
distribution
DVD player
manufacture
Playing DVDs
DVD retail –
Content
Acquisition &
aggregation
USB
Connectivity
PDA
distribution
PDA video
software
Portable
product
PDA
creation
PDA OS
creation
DRM
Sonic MyDVD
Software
distribution
DVD burning
Sonic MyDVD
Software
creation
On
lin
e
sh
ari
ng
Internet
connectivity
Online
distribution
(YouTube,
MySpace, etc.)
Yahoo! TV
TiVo EPG
Online TiVo
programming
PC
Manufacture
(screen/DVD)
PC
distribution
MS Windows
distribution
MS Windows
Creation
PC Viewing and
manipulation
Digital TV in US (case study)
Recording/
TV interface
TiVo
Manufacture
(EPG + DVR)
TiVo
Distribution
(EPG + DVR)
Online
TV listingsYahoo! TV
TiVo EPG
Con
ditio
nal
Acc
ess
Tu
ne
r
EP
G
DV
R
STB manufacture
Con
ditio
nal
Acc
ess
Tu
ne
r
EP
G
DV
R
N. Klym, 2008
© M. Pagani 2014 EMLYON Business School23
Content Provider
Network Provider
Concessionario MUX
Pubblicità
Capogruppo
Canali di prprietà
Canali di terzi
Other
LEGEND
Content Provider
Network Provider
Licence owner
Advertising
Holding
Tv channels owned
Third channels
Technical production
MUX TIMedia
MTV Italia
La7 Cartapiù
La7
Music Box
Primocanale
MUX 1 RAI
Rai 1
Rai 2
Rai 3
MUX 2 RAI
Rai Sport Sat
Rai Edu 1
Rai News 24
Rai Doc
Rai Utile
MUX RTI
BBC World
Rete 4
Class News
Video Italia TV
Coming soon
24 ore TV
Boing
Mediaset Premium
MUX HSE
Canale d
MUX Dfree
Sportitalia
La Châine Info
Video Italia TV
Canale 5
Italia 1
MEDIASET
RTIPublitalia
Videotime
Sipra
Rai Way
Rai Sport
Rai
Education
alRai News
Tele PA
Rai Fiction
Rai Cinema
Ballandi Ent .
BBC World
Class Editori
Radio Italia
Anica Flash
Il Sole 24 ore
Turner Inc .
Fascino PGT
Mediavivere
Endemol Italia
Magnolia
Einstein
Major Americane
CONI / Lega Calcio
Elettronica
Industriale
HSE
Broadcasting
Telecom Italia
La7 Televisioni
S.p.A.
TIMedia
MTV
Italia S.r.l.
MTV USA
Telecom Italia
Media
Broadcasting
Cairo
Communication
Cairo TVMTV
Pubblicità S.r.l.
Maurizio Rossi Ed.
Giglio Group
Elefante TV
BBC
NBC
HBOFBC
MediaGroup
Discovery /
History Channel
Frenter S.r.l.
Holland
Coordinator
and Service
company
EurosportTF1
Interactive
Group S.r.l.
Radio e Reti
Direzione
Produz TV
Owner controls Content providers Multiplex Concession
60,43%
100%
49% 51%
51% 49%
100% 100%
100%
100%100%
50%
50%
50%
99%
100% 100%
100%
100%
100%
Rai S.p.A
MUX TIMedia
MTV Italia
La7 Cartapiù
La7
Music Box
Primocanale
MUX 1 RAI
Rai 1
Rai 2
Rai 3
MUX 1 RAI
Rai 1
Rai 2
Rai 3
MUX 2 RAI
Rai Sport Sat
Rai Edu 1
Rai News 24
Rai Doc
Rai Utile
MUX 2 RAI
Rai Sport Sat
Rai Edu 1
Rai News 24
Rai Doc
Rai Utile
MUX RTI
BBC World
Rete 4
Class News
Video Italia TV
Coming soon
24 ore TV
Boing
Mediaset Premium
MUX RTI
BBC World
Rete 4
Class News
Video Italia TV
Coming soon
24 ore TV
Boing
Mediaset Premium
MUX HSE
Canale d
MUX HSE
Canale d
MUX Dfree
Sportitalia
La Châine Info
Video Italia TV
Canale 5
Italia 1
MUX Dfree
Sportitalia
La Châine Info
Video Italia TV
Canale 5
Italia 1
MEDIASET
RTIPublitalia
Videotime
Sipra
Rai Way
Rai Sport
Rai
Education
alRai News
Tele PA
Rai Fiction
Rai Cinema
Ballandi Ent .
BBC World
Class Editori
Radio Italia
Anica Flash
Il Sole 24 ore
Turner Inc .
Fascino PGT
Mediavivere
Endemol Italia
Magnolia
Einstein
Major Americane
CONI / Lega Calcio
Elettronica
Industriale
HSE
Broadcasting
Telecom Italia
La7 Televisioni
S.p.A.
TIMedia
MTV
Italia S.r.l.
MTV USA
Telecom Italia
Media
Broadcasting
Cairo
Communication
Cairo TVMTV
Pubblicità S.r.l.
Maurizio Rossi Ed.
Giglio Group
Elefante TV
BBC
NBC
HBOFBC
MediaGroup
Discovery /
History Channel
Frenter S.r.l.
Holland
Coordinator
and Service
company
EurosportTF1
Interactive
Group S.r.l.
Radio e Reti
Direzione
Produz TV
Owner controls Content providers Multiplex Concession
60,43%
100%
49% 51%
51% 49%
100% 100%
100%
100%100%
50%
50%
50%
99%
100% 100%
100%
100%
100%
Rai S.p.A
Content Provider
Network Provider
Concessionario MUX
Pubblicità
Capogruppo
Canali di prprietà
Canali di terzi
Other
LEGEND
Content Provider
Network Provider
Licence owner
Advertising
Holding
Tv channels owned
Third channels
Technical production
MUX TIMedia
MTV Italia
La7 Cartapiù
La7
Music Box
Primocanale
MUX 1 RAI
Rai 1
Rai 2
Rai 3
MUX 2 RAI
Rai Sport Sat
Rai Edu 1
Rai News 24
Rai Doc
Rai Utile
MUX RTI
BBC World
Rete 4
Class News
Video Italia TV
Coming soon
24 ore TV
Boing
Mediaset Premium
MUX HSE
Canale d
MUX Dfree
Sportitalia
La Châine Info
Video Italia TV
Canale 5
Italia 1
MEDIASET
RTIPublitalia
Videotime
Sipra
Rai Way
Rai Sport
Rai
Education
alRai News
Tele PA
Rai Fiction
Rai Cinema
Ballandi Ent .
BBC World
Class Editori
Radio Italia
Anica Flash
Il Sole 24 ore
Turner Inc .
Fascino PGT
Mediavivere
Endemol Italia
Magnolia
Einstein
Major Americane
CONI / Lega Calcio
Elettronica
Industriale
HSE
Broadcasting
Telecom Italia
La7 Televisioni
S.p.A.
TIMedia
MTV
Italia S.r.l.
MTV USA
Telecom Italia
Media
Broadcasting
Cairo
Communication
Cairo TVMTV
Pubblicità S.r.l.
Maurizio Rossi Ed.
Giglio Group
Elefante TV
BBC
NBC
HBOFBC
MediaGroup
Discovery /
History Channel
Frenter S.r.l.
Holland
Coordinator
and Service
company
EurosportTF1
Interactive
Group S.r.l.
Radio e Reti
Direzione
Produz TV
Owner controls Content providers Multiplex Concession
60,43%
100%
49% 51%
51% 49%
100% 100%
100%
100%100%
50%
50%
50%
99%
100% 100%
100%
100%
100%
Rai S.p.A
MUX TIMedia
MTV Italia
La7 Cartapiù
La7
Music Box
Primocanale
MUX 1 RAI
Rai 1
Rai 2
Rai 3
MUX 1 RAI
Rai 1
Rai 2
Rai 3
MUX 2 RAI
Rai Sport Sat
Rai Edu 1
Rai News 24
Rai Doc
Rai Utile
MUX 2 RAI
Rai Sport Sat
Rai Edu 1
Rai News 24
Rai Doc
Rai Utile
MUX RTI
BBC World
Rete 4
Class News
Video Italia TV
Coming soon
24 ore TV
Boing
Mediaset Premium
MUX RTI
BBC World
Rete 4
Class News
Video Italia TV
Coming soon
24 ore TV
Boing
Mediaset Premium
MUX HSE
Canale d
MUX HSE
Canale d
MUX Dfree
Sportitalia
La Châine Info
Video Italia TV
Canale 5
Italia 1
MUX Dfree
Sportitalia
La Châine Info
Video Italia TV
Canale 5
Italia 1
MEDIASET
RTIPublitalia
Videotime
Sipra
Rai Way
Rai Sport
Rai
Education
alRai News
Tele PA
Rai Fiction
Rai Cinema
Ballandi Ent .
BBC World
Class Editori
Radio Italia
Anica Flash
Il Sole 24 ore
Turner Inc .
Fascino PGT
Mediavivere
Endemol Italia
Magnolia
Einstein
Major Americane
CONI / Lega Calcio
Elettronica
Industriale
HSE
Broadcasting
Telecom Italia
La7 Televisioni
S.p.A.
TIMedia
MTV
Italia S.r.l.
MTV USA
Telecom Italia
Media
Broadcasting
Cairo
Communication
Cairo TVMTV
Pubblicità S.r.l.
Maurizio Rossi Ed.
Giglio Group
Elefante TV
BBC
NBC
HBOFBC
MediaGroup
Discovery /
History Channel
Frenter S.r.l.
Holland
Coordinator
and Service
company
EurosportTF1
Interactive
Group S.r.l.
Radio e Reti
Direzione
Produz TV
Owner controls Content providers Multiplex Concession
60,43%
100%
49% 51%
51% 49%
100% 100%
100%
100%100%
50%
50%
50%
99%
100% 100%
100%
100%
100%
Rai S.p.A
MUX TIMedia
MTV Italia
La7 Cartapiù
La7
Music Box
Primocanale
MUX 1 RAI
Rai 1
Rai 2
Rai 3
MUX 1 RAI
Rai 1
Rai 2
Rai 3
MUX 2 RAI
Rai Sport Sat
Rai Edu 1
Rai News 24
Rai Doc
Rai Utile
MUX 2 RAI
Rai Sport Sat
Rai Edu 1
Rai News 24
Rai Doc
Rai Utile
MUX RTI
BBC World
Rete 4
Class News
Video Italia TV
Coming soon
24 ore TV
Boing
Mediaset Premium
MUX RTI
BBC World
Rete 4
Class News
Video Italia TV
Coming soon
24 ore TV
Boing
Mediaset Premium
MUX HSE
Canale d
MUX HSE
Canale d
MUX Dfree
Sportitalia
La Châine Info
Video Italia TV
Canale 5
Italia 1
MUX Dfree
Sportitalia
La Châine Info
Video Italia TV
Canale 5
Italia 1
MEDIASET
RTIPublitalia
Videotime
Sipra
Rai Way
Rai Sport
Rai
Education
alRai News
Tele PA
Rai Fiction
Rai Cinema
Ballandi Ent .
BBC World
Class Editori
Radio Italia
Anica Flash
Il Sole 24 ore
Turner Inc .
Fascino PGT
Mediavivere
Endemol Italia
Magnolia
Einstein
Major Americane
CONI / Lega Calcio
Elettronica
Industriale
HSE
Broadcasting
Telecom Italia
La7 Televisioni
S.p.A.
TIMedia
MTV
Italia S.r.l.
MTV USA
Telecom Italia
Media
Broadcasting
Cairo
Communication
Cairo TVMTV
Pubblicità S.r.l.
Maurizio Rossi Ed.
Giglio Group
Elefante TV
BBC
NBC
HBOFBC
MediaGroup
Discovery /
History Channel
Frenter S.r.l.
Holland
Coordinator
and Service
company
EurosportTF1
Interactive
Group S.r.l.
Radio e Reti
Direzione
Produz TV
Owner controls Content providers Multiplex Concession
60,43%
100%
49% 51%
51% 49%
100% 100%
100%
100%100%
50%
50%
50%
99%
100% 100%
100%
100%
100%
Rai S.p.A
MUX TIMedia
MTV Italia
La7 Cartapiù
La7
Music Box
Primocanale
MUX 1 RAI
Rai 1
Rai 2
Rai 3
MUX 1 RAI
Rai 1
Rai 2
Rai 3
MUX 2 RAI
Rai Sport Sat
Rai Edu 1
Rai News 24
Rai Doc
Rai Utile
MUX 2 RAI
Rai Sport Sat
Rai Edu 1
Rai News 24
Rai Doc
Rai Utile
MUX RTI
BBC World
Rete 4
Class News
Video Italia TV
Coming soon
24 ore TV
Boing
Mediaset Premium
MUX RTI
BBC World
Rete 4
Class News
Video Italia TV
Coming soon
24 ore TV
Boing
Mediaset Premium
MUX HSE
Canale d
MUX HSE
Canale d
MUX Dfree
Sportitalia
La Châine Info
Video Italia TV
Canale 5
Italia 1
MUX Dfree
Sportitalia
La Châine Info
Video Italia TV
Canale 5
Italia 1
MEDIASET
RTIPublitalia
Videotime
Sipra
Rai Way
Rai Sport
Rai
Education
alRai News
Tele PA
Rai Fiction
Rai Cinema
Ballandi Ent .
BBC World
Class Editori
Radio Italia
Anica Flash
Il Sole 24 ore
Turner Inc .
Fascino PGT
Mediavivere
Endemol Italia
Magnolia
Einstein
Major Americane
CONI / Lega Calcio
Elettronica
Industriale
HSE
Broadcasting
Telecom Italia
La7 Televisioni
S.p.A.
TIMedia
MTV
Italia S.r.l.
MTV USA
Telecom Italia
Media
Broadcasting
Cairo
Communication
Cairo TVMTV
Pubblicità S.r.l.
Maurizio Rossi Ed.
Giglio Group
Elefante TV
BBC
NBC
HBOFBC
MediaGroup
Discovery /
History Channel
Frenter S.r.l.
Holland
Coordinator
and Service
company
EurosportTF1
Interactive
Group S.r.l.
Radio e Reti
Direzione
Produz TV
Owner controls Content providers Multiplex Concession
60,43%
100%
49% 51%
51% 49%
100% 100%
100%
100%100%
50%
50%
50%
99%
100% 100%
100%
100%
100%
Rai S.p.A
Digital TV in Italy (case study)
© M. Pagani 2014 EMLYON Business School
Value network of the digital TV
Control point in value creation
Tier 1 SubsystemTier 2 Component
Electronic
publisher
Content
creator
Content creation
Multimedia Packaging
and services
Network and Infrastruct.
Equipment Provision
Software
Hardware
BroadcasterSoftware
developerISP
GovernmentAuxiliary Enablers
ConsumersService
Provider
TLC
Tier 2 Component Tier 1 Subsystem Service Provider
Value
Terminal
providers
Control point in value capture
Consumers
Core Competencies
Edge Competencies
Existing relationships or contractual links Potential relationships or contractual links
© M. Pagani 2014 EMLYON Business School25
Value creation logicFocus on a specific phase of the value chain managing relations with partners along the value chain
Value capture logic- Network operators have an advantage- SP collect revenues directly from final users and distribute them among the other upstream stages of the value chain- Broadcasters gather relevant additional revenues from indirect sources
Primary activity categories - Content provision- Content and interactive service packaging- Network provision- Managing relationships with customers and partners
Main interactivity Symmetric/Asymmetric Interactivity relationship logic Primary activity - Pooled interdependence - Sequential
- ReciprocalKey cost/value drivers - ScaleBusiness value system - Referred hubsstructure
Model 2 - Loosely coupled coalition model
© M. Pagani 2014 EMLYON Business School
TYPOLOGY OF CPCS
Closed vertically integrated model
Loosely coupled coalition model
Multi-sided platforms
26
© M. Pagani 2014 EMLYON Business School27
Side 4
Side 3
Side 1
Side 2
Core Competencies
Edge Competencies
Network
End user
peers
Control point in value creation
Control point in value capture
Platform
aggregators
Value network of the Multi-sided platforms
© M. Pagani 2014 EMLYON Business School28
Value creation logic
Bringing together two or more distinct groups of customers, building an “infrastructure” that creates value by reducing distribution, transaction, and “search” costs
Value capture logic In multi-sided networks cost and revenue are on each side. The platform incurs costs in serving all the groups and can collect revenue from each, although one side is often subsidized
Primary activity categories - Network promotion- Service provisioning- Infrastructure operation
Main interactivity Simultaneous, parallel relationship logic Primary activity - Pooled interdependence - ReciprocalKey cost drivers - Scale
- Capacity utilization Key value drivers - Capacity utilizationBusiness value system - Layered and interconnected networksstructure
Model 3 – Multi-sided platforms
© M. Pagani 2014 EMLYON Business School29
Open architectures
vibrant edge
Centralized control
vertical integration
Incentive to
integrate & lock
in advantage
3
THE MODEL
Incremental
innovationCross-boundary
industry
disruptions
Business Process 1
Business Process 2
Business Process 3
Closed vertically
integrated
Loosely coupled
coalitions
Multi-sided
platforms
Towards the
emergence of a
giant component?
Pressure for
openness/
disintegration
© M. Pagani 2014 EMLYON Business School
OUTLINE
Conceptual framework
The opinion
Methodology and supportive arguments
Implication to research/practice
© M. Pagani 2014 EMLYON Business School
IMPLICATIONS
• To understand who controls the network we need to
explore in depth where the value is created and who
captures this value:
– Value in the customer access
– Value in Common Infrastructure
– Value in Modularity
– Value in content access
– Value in Orchestration
• In some cases, acquiring control positions for the
access of the final users (as a customer gatekeeper)
was coupled by a parallel upstream integration of
content control leading to the integration of different
stages of the value chain of the same entity.
© M. Pagani 2014 EMLYON Business School
IMPLICATIONS
We support the double helix model (Fine 1998) and
discover three models that characterize the control point
constellations of the multimedia industry.
In order to survive in an increasingly uncertain and
complex environment, the firm has to transform its
"organizational intelligence" into a new “relational
intelligence”, enacting an open communication process
with its stakeholders.
Which outcomes occur, how frequently they occur, and
with what consequences, are all questions that can only
be resolved by thinking jointly about structure and
dynamics and the relationship between the two.
