Itv in Uk Assignment

ITV ASSIGNMENT

Introduction

ITV operates as a commercial broadcaster in the UK. The company generates it revenue from advert space the give their customers. TV advertising is slowing down with 24% of the advertising market and this mode of advertising has annual growth of 3% . Internet advertising has a bigger market share in advertising industry with 50% of the market and is growing annually by 9% annually.

Main strategic issues facing ITV

With the advent of improved technology and affordable internet, clients are consuming entertainment content digitally. Traditional media have to contend with new entrants that have a lower asset base and a better value proposition. The main strategic issues facing ITV are:

Internet as TV substitute

Online TV viewing was growing at 38% whilst traditional TV was growing at 3%. Internet provides viewers the flexibility and convenience to access content from any location and any devices. Increased accessibility will possibly increase the market that is not currently consuming entertainment content via traditional TV. This is a significant threat to ITV’s operations.

Advertisers turning away from TV advertising to internet

With more viewers switching from traditional TV to internet TV, advertisers have followed suit. By 2015, internet had overtaken television platform in the UK. With ITV having an inferior online platform compared to competitors, this implies that approximately 50% of its revenue could be lost to competitors with a well subscribed online platform.

Subscription-based on-demand only providers

Industry disruptors such a Netflix and Amazon Prime focused on delivering on its value proposition of delivery entertainment efficiently to its customers (original content, multiple viewing options and lower price), using the latest streaming technology which has become its competitive capabilities and resources.  ITV’s resources and capabilities were based on traditional media and will take time to adapt to the changing consumer market. Netflix and similar players have the first mover advantage.

Proposed Strategies

UK government had just decided to sell channel 4 through public offering of shares or selling directly to a company. Our suggestion would be for ITV to pursue its growth strategy through acquiring channel 4. Channel 4 has capability to raise funds through advertising and has a good reputation for good content. This acquisition will bring additional content to ITV in addition to the 4000 hours of content they already have. Channel 4 had a good reputation for its content quality, had its own content library, recording studios and broadcasting capability and would be attractive to other media operators. This acquisition will have no impact on the operations of both businesses.

We would secondly propose that ITV pursue their ITV player and focus on governance and addressing current problems regarding adverts which current customers were complaining about. They should create capacity through appointing highly qualified people to address customer complaints and resolve issues arising from the adverts popping up when customers are streaming content. My recommendation is for ITV to first head hunt people from competitors like iPlayer, Hub and YouTube by offering them more money, benefits or shares.

The third strategy we propose for ITV is for them to widen their scope for ITV hub from just operating in the UK, to operating globally. This strategy will allow them to play on the same playing field as Amazon prime and Netflix as global players. ITV has a strong balance sheet which allows it to provide an improved platform in the firm of ITV hub without adverts. ITV has licenses to broadcast live events and sport events. This gives ITV competitive advantage over its competitors who do not have licenses.

SAFe strategic options