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Environmental scanning Analysis of the external environment: Political

Discuss about the Satagic Planning Sky TV Limited in New Zealand.

Sky TV ltd is a pay satellite TV provider operating in New Zealand. It also doubles as a wholesale channel provider to the cable television providers such as Vodafone and to global pay television service like Igloo which it possesses and operates.by 31st December 2015 Sky had reached 860445 subscribers which made it the biggest pay television platform in the country.

Sky TV Ltd provide a range of broadcasting services which includes general basic entertainment channels, movie packaged channel, sporting packaged channels, Public service basic channels, Informational basic channels, News coverage basic channels, children and family basic entertainment channels, music video entertainment channels and religious basic channels.

It also has collaboration with China, Korea and Japan to show channels of Asian origin which are state run. In addition, it also provides radio services as well as special services.

A strategic management plan enables managers to sharpen their organisation’s future by making current decisions that place their firm in the best possible state considering the prevailing conditions.

Strategic management planning will benefit the Sky TV ltd in several ways in brief: applying the right choices to make the right decision as well as enables foreseeing and setting the environment for a successful future.

The introduction of New Zealand Screen Production Grant meant to improve the amount of budget directed to the film industry provides a cash grant of up to 40% for large productions of New Zealand TV contents. This is an advantage the Sky TV management can utilise to improve their profitability.

As per the Transparency International’s 2016 report New Zealand is one of the least corrupt countries in the planet. This means obtaining government services or contracts are based on transparent conditions. A situation that presents an advantage to sky TV as it can easily secure government services such as licences for operations as well as obtain contracts in a competitive basis. (O'Reilly, 2017)

As per (Andrea Millwood Hargrave, 2006) the New Zealand government is considering new regulatory measures to control contents of television productions as well as online media. Should the outcome put further constraints in the online service providers this will be an advantage to Sky TV on the other hand a policy favouring online streaming will negatively interfere with the customer base of Sky TV.

The firm was unable to acquire a deal for English premier league in New Zealand due to hefty asking price.

Economic

The increase in the cost of contents. A deal signed to retain the rugby broadcasting rights will see the cost of operation of the firm rise further.

Competition from the streaming providers is a huge challenge to the managers of the firm. With Netflix offering its services to as low as $10 per month Sky is at a risk of losing more and more subscribers if it does not work on its product pricing.

The population of New Zealand is largely composed of the working class with the unemployment rate just below 6%, this means that the income distribution among the population is favourable for businesses in the country. Sky limited is not an exception.

The lifestyle in New Zealand is favourable to the entertainment industry. This is based on the huge subscription being realised by Sky TV ltd as and the Streaming service providers. Despite this the taste preference for the online content is proving to be a negative condition for Sky sport as the streaming service providers continue to experience massive growth.

Majority of the population enjoy watching rugby for recreational population, this means the new rugby giving Sky TV exclusive rights in providing video contents will be an advantage (Kovacs, 2015).

New Zealand has a unique educational sector which is ranked 7th best in the world. The areas dealing with mathematics and science showing progress among the students. The country’s introduction of IT and internet use in both the urban and rural areas in excessive is favourable for streaming service providers an external factor which favours the Sky TV ltd competitors (an example is Netflix and neon). The mobile service providers in the country are offering their services at an affordable rate making communication cost cheaper for the company (Telecom Tech News, 2013).

The country has a special ecological system. The literacy level has further helped create pollution awareness among the population. As a result, the use of modern technology is in place to deal with garbage and cut pollution. This comes with a responsibility to the firm to maintain its physical environment to get along with the population

The country also has a favourable climate a factor which improves the performance of workers in the region

The existence of unique species of birds also mean the environment is attractive to work in hence attracting qualified personnel to the area. This is in favour of the business as it has few limitations importing professionals

Social

New Zealand conduct its elections every 3 years meaning rules and regulations associated with regimes keep on changing. This is a source of uncertainty as the management may not be able to predict the long-term policies for or against the operations of the firm

The country experiences low crime rate making it secure for employees of the firm

There is adequate legal cover for international companies moving into the area something which opens the country for competition from other international firms.

Major forces affecting the structure of Network Television Industry

For the past, up to 15 years from now the change in Television industry have been very slow, but if you focus on the next 30 years then the change is likely to be un imaginable.

Technological advancement has greatly affected the television viewing habits. The below are some of the factors which are more likely to play a bigger role on the set up of television industry in the future (Crawfordy, 2015).

Mobility; as much as people still surrounding their YVs for contents viewing is rapidly shifting to other areas. The use of mobile devices (tablets and smartphones) are playing a bigger role in in shifting content access from the large screen TVs

Alternative content provision, the use of internet is enabling access to media contents without the need for cable or even subscription of satellites, this has seen small streaming devices like Apple being able to provide viewers with sports, news as well as movie channels. As internet use becomes more popular other means of streaming media contents are quickly developing USB plug just joining the list.

Multi-tasking, viewers are more likely to engage in two or more activities while watching TV that means the ability to watch what you want whenever you want is will be a strong factor towards defining consumer demand. Video on demand services or downloading for future view are rising among the consumers (Gentzkow, 2007).

The mushrooming of prosumerism have seen consumers developing more power over their viewing habits. They are in apposition to mix the services their preferred services in their own way and do away with services they no longer prefer. This has seen streaming service providers struggling to secure contents or even produce on their own. An example is a recently deal between Amazon Prime and HBO for streaming of previous seasons of their shows, on the other hand Netflix has developed original programming as well YouTube initiating individual channels (Brian, 2016).

Factor

weight

rate

Weighted score

Opportunities

Broadcasting English premier league deal

0.05

1

0.05

Availability of government grants for the industry

0.09

1

0.09

Rugby broadcasting rights deal

0.06

4

0.24

Cricket broadcasting rights deal

0.05

3

0.15

Increase in the pay rise for rugby players

0.02

3

0.06

The New Zealand improvement in the use of internet

0.1

1

0.1

The culture of rugby watching

0.1

4

0.4

Threats

Customers less willing to pay for traditional channel bundles

0.12

1

0.12

Competition from streaming services

0.15

2

0.3

Loss of subscribers

0.08

1

0.08

Changes in consumer taste to streaming services

0.1

2

0.2

Rising of the cost of contents

0.05

2

0.1

The no new news period

0.01

1

0.01

Bidding up the price of online contents

0.02

1

0.04

Total

1.84

Technological

The total weighted score is 1.84 representing a weak company. This shows that Sky TV limited is doing very little to take advantage of the available opportunities to expand its profits on the other hand the company’s response to the threats affecting the industry had not been adequate. From the case study, we can see loss of subscribers to competing firms as an indication of this.

The threat to new firms entering the industry

New firm’s entry in to the industry will be limited, broadcasting rights are owned by the incumbent firms through contracts. For a new firm to secure a contract it will have to wait till the existing deals expire of which it will face a very stiff competition from already established firms who would like to renew their contracts or have renewal clauses in its preceding contract. In the case study, we see that Sky TV have exclusive right for television broadcasting of crickets and rugby which cost a huge amount of money.

Also for consumers to switch to the new TV content they will have to purchase new set top boxes something most consumers may not be willing to go through easily.

The increasing popularity of internet use have led to emergence of streaming providers. They avail their services at a very cheap price compared to the prices Sky TV charges for its subscriptions. The streaming services are also appealing to most of the population who would like to access contents at their own time instead of having to use the TV schedules. The existence of the above substitute has seen Sky TV loose so many of its clients to the rival firms offering such services.

The significant technological and structural changes taking place in the broadcasting sector have given consumers access to a large variety of media services. Consumers can now access contents in arrange of wireless portable devices. In general, the consumers now have more control and power over the contents they consume making them the dictators in the industry.

The emergence of new technology in the television and film industry have created new avenues for entry in to the market by other firms. Provision of content through portable wireless devices such as tablets and smartphones is putting more pressure on the Sky TV Ltd. The streaming services are cheaper and appealing to the younger generation. For this purpose, the network television is becoming obsolete slowly by slowly and for sky sports to regain its advantage in the provision of media contents there is need to consider other avenues in line with consumer tastes.

Environmental

The production companies are majorly doubles as the supplies to an extent the suppliers influence in the industries competition is very limited, but due to the industries dependant in the quality of contents the firms who are the leading quality producers can have a stronger bargain in the industry.

In conclusion, the network television industry is losing its attraction as the streaming services are maturing and increasing the quality of their contents. With the increasing reduction in the cost of internet all that remains is for the streaming service providers to develop reliability and customer loyalty and the race will be over for network television industry.

Weaknesses

In ability to strike a deal for the New Zealand right to English Premier League

High cost of content production

Rigid managers

High prices of satellite television service

Strengths

Stronghold on key content

Securing a deal to air cricket

Signing of the deal for the exclusive right for rugby broadcasting rights.

Superior content library

The strategic capabilities will be affected by the cultural beliefs of the firm there is need for the management to balance the existing culture and the emerging technology for it to have a competitive advantage, together with this the flexibility of the managers to respond to changes in consumer demands hugely influence have successful the strategies if the firm will be.

The large consumer base also plays a big role when it comes to strategic planning. The main objective of the firm is to be able to retain its consumers as well as see arise in its client’s subscriptions to do this there is need to put strategies that ensure consumes are the ‘boss’. If you add the TV rights to this list then the managers will have been in control of all the internal issues that are necessary for the firm to have a progressive strategy.

Internal factor evaluation

Factor

weight

rate

Weighted score

Strengths

Superior content library

0.12

1

0.12

Signing of the deal for the exclusive right for rugby broadcasting rights.

0.2

4

0.8

Stronghold on key content

0.1

1

0.1

Securing a deal to air cricket

0.09

3

0.27

Weaknesses

High cost of content production

0.2

2

0.4

In ability to strike a deal for the New Zealand right to English Premier League

0.1

2

0.2

High prices of satellite television service

0.15

1

0.15

Rigid managers

0.14

1

0.14

Total

2.18

The total weighted score is 2.18 it shows that the company is weaker, the management is doing very little to counter its weaknesses while on the other hands there are no set policies to ensure maximum benefit from the strengths.

Sky TV have numerous resources that if the management make use of will ensure sure a competitive advantage over the other firms in the industry. Sky TV Ltd have a unique client base a feature which made it be rated one of the most popular network television providers. In addition, it’s got a superior content quality as well as the stronghold of key contents. These resources can be used to combine with the major strengths such as exclusive rights to air rugby and cricket. All the management need to put in place is an advance way of reaching the client’s demands and the firm will way ahead of its challengers.

Sky TV High prices of satellite television service Ltd is run on the virtue of honesty the management made it clear to their shareholders that they are losing subscribers despite knowing very well that such information will lead to reduction of their shares’ value. Also, the firm have taken for granted its clients base by assuming they will stick to the firm despite the rising prices and failure to address the emerging consumer demands. Due to the strong trust the managers have been given by the shareholders they have grown to believe that their decision is the best. We see the management ignoring the opinion of several analysts to seek alternative measures of competing in the firm instead they go ahead to increase their prices to cover their rising cost even after being warned of the negative consequences the present of substitutes have on such measures. The fact that Sky TV Ltd is reluctant to shift form Network Television to the current booming streaming service provision indicates their belief that network TV is the perfect way to reach and offer services to their clients.

References

Andrea Millwood Hargrave, G. L. (2006). Issues facing broadcast content regulation. New Zealand: Broadcasting Standards Authority.

Brian, O. (2016). How consumer TV habits are changing . Fox Business.

Crawfordy, G. S. (2015). The Economics of Television and Online Video Markets. Gregory S. Crawfordy.

Gentzkow, M. a. (2007). Preschool Television Viewing and Adolescent Test Scores: Historical Evidence from the Coleman Study. forthcoming, Quarterly Journal of Economics.

Kovacs, G. (2015). An Analysis of Strategies by Netflix in the Television Market. Department of Business Administration Aarhus University.

O'Reilly, P. (2017, january 25). Transparency International New Zealand. Retrieved May 19, 2017, from https://www.transparency.org/news/feature/corruption_perceptions_index_2016

Telecom Tech News. (2013, January 22). Will TV Everywhere reverse the trend for Pay-TV? -. Retrieved May 19, 2017, from https://www.telecomstechnews.com/news/2013/jan/22/will-tv-everywhere-reverse-the-trend-for-paytv/

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