IDEA FORUM: the impact of subscription-based video on demand on traditional distributors' value chains and business models. Issue 1 (3rd April 2018)

• Record Type: Journal Article
• Authors: Clement, Michel; Otten, Cord; Seifert, Rouven; Kleinen, Ole; Houston, Mark B.; Karniouchina, Ekaterina V.; Heller, Christoph
• Is Part Of: Journal of media economics. Volume 31:Issue 1/2(2018)
• Page Start: 50
• Page End: 67
• Publication Date: 2018-04-03
• Subjects: Mass media -- Economic aspects -- United States -- Periodicals; Mass media policy -- United States -- Periodicals; 338.4730223
• DOI: 10.1080/08997764.2020.1796687
• Languages: English
• ISSNs: 0899-7764

Abstract

ABSTRACT: This paper introduces the new Idea Forum at the Journal of Media Economics and provides an overview of the challenges in the movie industry caused by the market entry of subscription-based video on demand (SVOD) providers such as Netflix and Amazon (Prime). Specifically, we focus on the fundamental shift in traditional distributors' value chains and business models that are threatened by the market entry of global SVOD services. We focus on the need for distributors of filmed entertainment to reinvent their operations in order to stay relevant by leveraging their unique, hard-to-imitate resources. Following the Resource Based View (RBV) of the firm framework, we identify four key sources of competitive advantage associated with traditional distributors, namely their ability to (1) accurately assess product quality and forecast performance, (2) exploit B2C markets through sequential distribution system that combines both physical and digital distribution channels, (3) strategically use their push power, and (4) effectively monetize content via elaborate relationship networks with both production studios and exhibitors. We use competitive market analysis to explain how the distributors' current competitive environment affects these four resources in response to SVOD. Related to each of the four key resources, we discuss key managerial opportunities for distributors aiming to regain and sustain competitive advantage.