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Navigating the Collapse of ITV Digital: Lessons Learned for Future Broadcasting Strategies

Explore the implications of the collapse of ITV Digital on the broadcasting and sport industries, analyzing its market entry decision, economic impact, technological challenges, and competitive strengths. Delve into the social, political, and economic factors at play, and assess the future of broadcasting post-ITV Digital. Learn about the forces of competition, implications for sport, and potential strategies for success in the evolving media landscape.

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Navigating the Collapse of ITV Digital: Lessons Learned for Future Broadcasting Strategies

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  1. The collapse of ITV Digital Implications for broadcasting Implications for sport Lessons in International Marketing Strategy

  2. The Market Entry Decision Opportunities • Technological : • digital = multichannel-interactive- subscription • need to be in ‘lead market’ • Economic: • ITV ad revenues stable or falling • Digital offers new revenue streams • access to global markets via satellite or JVs • evident success of BSkyB

  3. Social • fragmentation of consumer markets into niche lifestyle and interests segments • market for premium products -sports, movies, documentaries, news? • Gap in provision of basic terrestrial package • Political • government desire to create international success of UK communications industry • deregulation of ownership • promise to switch off analogue (by 2010?)

  4. Mode of entry • Carlton and Granada form ON Digital • joint venture, limited company • share and limit risk • originally BSkyB were also partners • ruled uncompetitive by EC & ITC ‘ create internationally successful UK company or ensure diversity and plurality in a democracy’ Hargreaves FT ‘it is now clear we cannot have both’ Bell, Guardian

  5. Forces of Competition BBC plans £100 digital box by spring 2002 BSkyB hold top sports & movie rights BSkyB v ONDigital BSkyB free boxes and installation Conventional terrestrial (why change?) The winner will be the one with the better value-delivery network Kotler

  6. Competitive Strengths • Expertise • no experience in pay TV • Resources • unable to secure top sports rights • unable to sustain price-war • Markets • failed to create premium niche channels • fall in ad revenue after 11.9.01 • Product quality • paid too much for second-division football • home-made channels low quality and downmarket

  7. Technology • software prone to crashing • easy to hack - est. 100-300,000 non-paying viewers • poor reception and incomplete coverage of UK • Distribution • delays in supplying boxes • Image • expensive rebranding as ITV Digital • now tarnishes parent brand image ‘Never try to out Sky BSkyB’ Guardian

  8. Implications for broadcasting Part of a wider crisis • Kirsch Media, Germany, bankrupt after paying too much for F1 and World Cup rights, NewsCorp invited to the rescue • ‘NTL is broke, BSkyB losing money’ ‘digital terrestrial is a license to lose money.. Will cost taxpayers £10bn to achieve’ Elstein • Is there a ‘killer application’ to drive sales? • Is content really king? (AOL case) • Should governments intervene?

  9. Implications for sport • Channel theory (Sims) distinguishes • insiders (the elite that control the channel) • strivers (who want to become part of the elite) • transients (who exploit the channel but have no long term commitment) • Expansion strategies • organic growth leading to export success • growth through acquisition, alliances and venture capital

  10. The virtuous circlesWarner, Guardian 6/4/2 Sporting success Merchandise Sponsorship & rights Recruitment & retention of top players Shareholder value Investment

  11. Has the bubble burst? • Kirsch’s rights up for resale at bargain prices • ITV can’t find a sponsor for World Cup • Worthington pull out of FL Cup • BSkyB pull out of 6 Nations Rugby • Chris Akers says sporting market will still grow. F1 is a $2bn business with 54m viewers (Guardian 12/4)

  12. The future? • Downward pressure on players’ wages and values? • A healthier game with realistic wages? • Increased power of governing bodies • salary cap and pooling on the US model? • Increased gap between elite and the rest? • FLD1 clubs 60% of revenue from ITVD deal FLD3 8%. About 25 clubs in danger

  13. A new model (Warner 6/4/2) • Broadcast and sponsorship levels off • Conventional investors pull out of sport • Does the answer lie in ‘corporate vanity’? • Sporting franchises as marketing tools (US model) • Sponsor as impresario (Meenaghan) as well as investor • Manufacturers are taking over motorsport (Holbrook 2002) • Reebok or mm02 take over Middlesborough?

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