Project Report of Strategic management of Technology and Innovation

Megatrends: TV Industry
Submitted by Group 5
WMP6029: Manu Chauhan WMP6031: Nikhil Nangia WMP6044: Sanjeev Maurya

To Prof. Arun Kumar Jain

WMP 2013

Indian Institute of Management, Lucknow Noida Campus

2012

Contents
Contents..................................................................................................................... 2 Megatrends................................................................................................................. 3 New technologies buzzing in TV industry.....................................................................4 Megatrend in TV industry: OLED TV.............................................................................5 Technology S-curve.....................................................................................................7 Implications in TV Business.........................................................................................8 Pattern of innovation................................................................................................8 Design Dominance...................................................................................................9 What kinds of players would succeed?......................................................................10 Framework: 6 themes of success...........................................................................10 Multi-level Framework............................................................................................12 Dynamic Analysis of TV Industry................................................................................18 Government and Regulatory Impact on Television Industry.......................................21 Importance of Complementary Technologies in TV industry......................................22 Three Types of Interactive TV Service....................................................................25 Future of TV Industry.................................................................................................28 Channels Go Away................................................................................................. 28 Gestures control the action: Say goodbye to remote..............................................28 Screens Do Double Duty........................................................................................30 Conclusion................................................................................................................. 32 References................................................................................................................ 32

Megatrends
Television wont be able to hold onto any market it captures after the first six months. People will soon get tired of staring at a plywood box every night.
Darryl F. Zanuck, President of 20th Century Fox, 1946

A trend is a long term similar kind of movement in a time series. It is the result of influences such as population growth, price inflation and general economic changes. By definition, a trend is an emerging pattern of change likely to impact society and require a response. (i.e. adult children taking care of parents) Does it impact the states? Is it significant? Is it broad-based? Is it national or regional in scope? Is it short-term or long-term? Is it measurable/trackable/observable? Is it actionable? Is there an innovative response to address new circumstances? On the other hand, a megatrend is a large, social, economic, political, environmental or technological change that is slow to form. Once in place, megatrends influence a wide range of activities, processes and perceptions, both in government and in society, possibly for decades. They are the underlying forces that drive trends. Well known social forecaster John Naisbitt popularized the term Megatrends with his first major book in 1982. He has identified megatrends as a means for explaining how emerging technologies and social forces will affect our lives. Although, he focused on the megatrends in emergency medicines, but his paper gave a way to identify the megatrends in other industrial and technological sectors.

New technologies buzzing in TV industry

Liquid crystal displays (LCD) LCD is the current dominant technology and is the earliest type of flat-screen solidstate display. It employs an electric field to alter the light-absorbing properties of each element in the display, each pixel. An LCD display panel rests on top of a backlight, and the individual display elements are addressed electronically, to either block this backlights emission or allow it to pass, effectively acting as optical switches. Although the inherent technology is monochrome, filters can be used to colour the output from the individual elements, creating a full-colour image. The drive technology used to apply controlling voltages to the elements can be passive or active, but the active method is now the most common, since it gives a faster response and higher picture quality. Such displays are manufactured using semiconductor process techniques with steps of masking for deposition in a lithography type process inside a clean room environment. This is capital intensive and in terms of sustainability is becoming more questionable, especially on a large scale. The LCD market has grown to dominate the electronic displays market over the past decade, now accounting for about 85% of the value of the total market of about $125 billion. The dominant players in 2007 were in order Samsung, (around 17%) then LG Electronics, followed by Sharp, Philips, NEC and Sony, with others taking 25% of the market. The plasma display panel (PDP) The plasma display video panel is fairly well established, being invented in the 1960s for a computer terminal device with a monochrome screen. The first monochrome PDPs did not use a phosphor coating on the front panel as in a CRT. The PDP was made in large production runs for consoles such as for the IBM 3290 display of 1983. In 1993, Fujitsu introduced a 21-inch colour TV by using phosphors. Pioneer and Matsushita/Panasonic also produced TV screens with ever-larger sizes, the largest TV in the world in 2008 being a 150 inch plasma screen from Panasonic, 11 feet wide and 6 feet high (3.35 m x 1.83 m. Until 2006, plasma dominated the TV market for larger screens above 40 inches but increasingly LCD can compete for these screen sizes. Plasma TVs are expensive to produce but offer high resolution, response time and brightness, compared to LCD panels and so are favoured for HDTV and large size screens, as they also offer a thin form-factor. They are good for full motion colour video. Organic Light Emitting Diodes (OLEDs) 4

Organic Light Emitting Diodes (OLEDs) are a next-generation display technology comprising small dots of organic polymer that emit light when charged with electricity. Much of the first research was in Europe, especially in the Netherlands, Germany and the UK, although Kodak in the USA did some very early research. In percentage terms, OLEDs are the fastest growing flat panel display technology today, with Europe playing a key role as a technology developer.

Research into OLED display technology is being conducted in over 80 companies and universities, with major players including Samsung SDI, CDT, GE/Osram, Universal Display Corporation, Sony, Novaled, LG Electronics, Philips, Dow Chemical, KodakSanyo, Pioneer, Sharp, DuPont, eMagin, Three-Five Systems and others. Same technology (OLED displays) has already entered the market in the form of digital cameras, cell phone screens, radio displays, and handheld games. Research is also underway for highly flexible OLED display panels on plastic substrates.

Megatrend in TV industry: OLED TV

Television sets are one of the most widespread and important electronic display applications. In 2006, 190 million units were sold worldwide. In recent years the market has been given a boost by with the availability of lower cost flat screen LCD displays. The global market for LCD TV is estimated to have grown to about $40 billion in 2008 (iSuppli, 2008), due to fast growth in demand for flat panel TVs and a move to wider screens and larger screen sizes (dominant design in television industry). Older technologies, such as CRT, are in rapid decline. The prospects for growth in OLED TVs are promising, although forecasts are highly influenced by an industry that currently is seeking to reap the benefits of its investments in LCD manufacturing. In 2008, IDTechEx forecast that OLED TV sets will 5

account for around half of all revenue for OLED panels in 2012, growing rapidly from just $150 million in 2011 to $1.5 billion in 2013.15 iSupplis similarly forecasts the global OLED TV market will reach 2.8 million units by 2013, managing a compound annual growth rate (CAGR) of 212.3% from just 3,000 units in 2007. In terms of global revenue, OLED TV will hit $1.4 billion by 2013, increasing at a CAGR of 206.8% from $2 million in 2007.1617 The arrival of Sonys XEL-1 OLED TV in late 2007 spurred development and market forecasts, as it was the first relatively largescreen OLED display (11) launched into the market, although the price was high compared to LCD ($2500). Not to be outdone, Samsung unveiled a prototype 31 TV in March 2008. Other manufacturers, such as LG, Toshiba and Panasonic, quickly announced plans for commercial rollout of 30 and larger screens, typically by 2011. In July 2008, Sony said that they were awfully close to selling a 27 OLED version commercially.18 However, industry analysts views cooled somewhat when it became apparent that there were still significant problems with the longevity of the display,19 and also as the financial and economic crisis began to deepen in the summer and autumn of 2008. TV screens, of all types including LCD and CRT, are the largest display market segment, worth about $40 billion globally each year. Growth has been strong over the past decade but may slow in the medium term as a result of a global economic downturn. There is undoubtedly an opportunity for OLEDs to take a significant proportion of this market but this will only transpire if costs come down as a result of investment in mass production. This is unlikely in the short term while doubts over the longevity of OLEDs and other technical difficulties remain. Opinions differ strongly on the market prospects for OLED TVs depending on whether they come from proponents of the LCD manufacturers or those with an interest in OLEDs. Overall Market Potential In summary, there are clearly some significant market opportunities arising from the commercialization of these new display technologies. Most obviously, it seems likely that OLED TVs will gradually enter the market over the next few years initially as a premium product. The extent to which they take market share from LCDs is as unclear but will critically depend on the resolution of technical obstacles. If these can be overcome, mass production could see them undercutting LCD in price while offering higher picture quality leading to them dominating the market. However, LCD technology is still maturing and there is substantial investment in production facilities that will not be cast aside in the short term. It is unlikely that we will see significant market share for OLED TVs until 2015-2020. Before that, however, OLED screens are likely to make significant in-roads in the market for mobile handset screens, where their advantages will be most sought after. 6

Similarly, desktop monitors, notebook screens, MP3 players and so on are likely to be significant markets and could become dominated by OLEDs within ten years.

Technology S-curve

(Source: SCF Associates Limited) Introduction of OLEDs in television industry can be called as a discontinuous technology as it fulfills a similar market need by building on an entirely new knowledge base. Initially technological discontinuity may have lower performance than the incumbent technology. For example, being organic, OLEDs suffer from degradation in the basic material which affects their lifespan. Longevity no doubt will improve, but early OLED TV screens have perhaps only one-third of the lifetime of an LCD. Moreover, OLEDS degrade in such a way that the red, green and blue colors deteriorate at different rates, adding to the complexity in producing them.

Implications in TV Business
Pattern of innovation
CRT (cathode-ray tube): The most common screens were direct-view CRTs. These are the least expensive, and are a refined technology that can still provide the best overall picture quality value. As they do not have a fixed native resolution, they are capable of displaying sources with different resolutions at the best possible image quality. Rear Projection (RPTV): Most very large screen TVs (up to 254 cm (100 inch) and beyond) use projection technology. Three types of projection systems are used in projection TVs: CRT-based, LCD-based, and DLP (reflective micromirror chip) -based, D-ILA and LCOS-based. Projection television has been commercially available since 8

the 1970s, but at that time could not match the image sharpness of the CRT; current models are vastly improved, and offer a cost-effective large-screen display. A variation is a video projector, using similar technology, which projects onto a screen. This is often referred to as "front projection". Flat panel display (LCD or plasma): Modern advances have brought flat panels to TV that use active matrix LCD or plasma display technology. Flat panel LCDs and plasma displays are as little as 25.4 mm (1 inch) thick and can be hung on a wall like a picture or put over a pedestal. Some models can also be used as computer monitors. LED technology has become one of the choices for outdoor video and stadium uses, since the advent of bright LEDs and driver circuits. LEDs enable scalable ultra-large flat panel video displays that other technologies are currently not able to match in performance. Each has its pros and cons. Flat panel LCD and plasma displays have a wide viewing angle (around 178 degrees) so they may best suited for a home theatre with a wide seating arrangement. Rear projection screens do not perform well in daylight or welllit rooms and so are only suited to darker viewing areas.

Design Dominance
Models of competition in innovative and standard-based industries have advanced considerably in recent years. Two terms that have become important competitive considerations are dominant designs and industry standards. We are seeking the potential for confusion between dominant designs and TV industry standards and attempts to clearly delineate between them. The role of standards is narrowly driven by the relative importance of network effects while dominant designs are persistent architectures with established implications for industries. However, standards are often important elements of dominant designs. There are many implications of this distinct, yet complementary, relationship between standards and dominant designs for managers. Perhaps the most important is that while dominant designs have been shown to presage industry shake outs, standards do not. In addition, a firm that establishes a dominant design does not often appear to reap competitive advantages from it, though one that establishes a standard may. Although TV technology doesnt show, in specific, the characteristics of network externalities, but its associated technologies are characterized by this phenomenon, i.e. positive consumption externalities. Considering the cable technology, where the benefits from using it increases with the number of users increase. Network externalities are also prominent in TVs complementary technologies like Internet TV. More and more users to internet will increase its benefits, and will have daunting effect on TV demands.

What kinds of players would succeed?

Framework: 6 themes of success

(Source: Strategic Management by Robert A BURGELMAN) Business Focus: When a company grows and establishes a second product line, it should be closely related to first. For example, Samsung is into manufacturing of electronic goods mainly TVs (LCD, LED). If they are willing to manufacture OLED TV and they have required skilled workforce, machinery and industry know-how, this would lead to higher probability to succeed than any other firm manufacturing this new technology from the scratch. Companies spending higher proportion of their sales dollars on R&D maintain technological leadership than their competitors. Adaptability: Technology can change rapidly and along with it markets and customers served also change. Therefore, a high technology firm must be able to track and exploit the rapid 10

shifts and twists in market boundaries as they are redefined by new technological, market and competitive developments. Organization Cohesion: To succeed and get ahead, the energy and creativity of the whole organization must be tapped. Anything that restricts the flow of ideas or undermines the trust, respect, and sense of a commonality of purpose among individuals is a potential danger. Being a technology-based company, it should provide training to its employees on new technology available which can build in confidence in employees and also help in increasing their efficiency. Samsungs invests heavily on employee training and development which is core to the companys success. The objective is to secure bright and innovative human resources to lead the digital era. Companies are training people to become leaders who will act as agents of change and also have systematic training programs to cultivate experts in the areas of marketing and technology. Entrepreneurial Culture: Willingness to allow a variety of funding channels has an important consequence as it encourages the pursuit of alternative technological approaches particularly during the early stages of a technologys development, when no one is sure of the best course to follow. The successful high technology firms tend to be very tolerant of technological failure. It should be well understood that when something new is tried chances of its failure increases. Sense of Integrity: While committing to individualism and entrepreneurship, at the same time successful high-tech companies tend to exhibit a commitment to long-term relationships with all the interest groups employees, stockholders, customers, suppliers, community: their objective is to maintain stable associations with all of these stakeholders. Hands-on Top Management: CEOs and leaders of the highly successful technology companies are actively involved in innovation process to such an extent that they are sometimes accused of meddling!

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Multi-level Framework

Figure: Adopted from Sandberg and Hofers (1987) multi-level framework

Impact on overall industry by incumbent players

Samsungs Impact on TV Industry
Ten Years Back Samsung has goal to catch up with Sony and other global players and getting No 1 position in flat-panel TVs. Samsung had emphasized innovation in its management strategy since the early 2000s and it again highlighted innovation as part of core strategies when it announced the Vision 2020 in which the company set an ambitious goal of reaching the $400-billion sales revenue within 10 years. In order to cement its leadership in the areas of memory chip and TV production, Samsung has invested aggressively in research and development. The company currently has 24 R&D centers around the world. Samsung LCD business area focuses on producing TFT-LCD and organic light-emitting diode (OLED) panels for laptops, desktop monitors, and televisions. Samsung Electronics TVs and display products have undergone a race toward everslimmer panels. In 2009, the company succeeded in developing the super-slim panel for 40-inch LED TVs, with the thickness of 3.9 millimeters (0.15 inch). Dubbed the Needle Slim, the panel is as thick (or thin) as two coins put together. This is about a twelfth of the conventional LCD panel whose thickness is approximately 50 millimeters (1.97 inches). Samsung Electronics has created a new market by introducing the Finger-Slim LED TV. Launched in March 2009, the super-slim LED TV. Samsung has led the flat-panel TV market for the past five years with the 2006 introduction of its Bordeaux line, followed by the 2007 Bordeaux model, the 2008 Crystal Rose line, and the Finger-Slim in 2009 Samsung is developing new LED TV models too. After expanding its TV lineups, Samsung became the industry-first 10-million-seller challenge. One of the new

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products is the full HD 3D LED TV that was launched the first time in March 2010 Combining LED features with 3D functionality. Because of these innovations there has been a growing competition in the market. Local players have been wiped out. This innovation has become the Dominant design and standards in the industry to be followed by the other players in industry.

Sonys Impact on TV Industry

It is an undeniable fact that Sony has lorded over the electronics manufacturing arena and has been the brand that many are compared to and has dreamt of surpassing. This Japan based company has built for itself a rock solid reputation in terms of quality and innovation and has made excellence the standard in all their products. And when it comes to Sony Televisions, no other manufacturer can claim such dominance that only Sony possess. Sony has produced cutting edge designs and engineering in their television products for every era it has been produced, and today, they continue this pursuit of excellence and have remained at the helm of the TV arena. Starting from its first highly regarded TV innovation, the worlds smallest black and white TV, to its first collared Chromatron technology based TV, to its acclaimed release of the Trinitron TV, to its HDTV Trinitron, the Wega, and now the Bravia, Sony has revolutionized the TV industry and has kept its loyal followers on its toes to what comes next. One of the first successes in Sony Televisions in the modern day standards came when the company introduced the FD Trinitron WEGA, a flat screen TV with speakers mounted on the side and a dazzling silver collared cabinet. 2005, Sony decided to discontinue the brand name and soon started to call their LCD TV and other Sony Televisions as BRAVIA. For the entry level on the current line-up, Sony televisions has the 300 and 400 series, divided into four sub series with two sub series each, the BX and the EX. The sizes varies with the smallest having a 22 inch screen to the largest having a 46 inch display. The main differences between the two sub series are the availability of more connectivity and the availability of ambient sensor technology, with the EX having the edge. Because of these innovations there has been a growing competition in the market. Local players have been wiped out. These innovations have become the Dominant design and standards in the industry to be followed by the other players in industry.

Impact of Market on Sony and Samsung

Seeing the current trends and innovations Sony has been struggling in there sales while Samsung keeps on track with it sales goal of flat-screen TVs. Samsung have fared notably better than Sony, which since 2003 will have into its troubled TV division by the time fiscal year 2011 comes to a close.

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Because of the current trends Sony has to restructure its TV division and has launched a 'TV Business Profitability Improvement Plan', and like Panasonic, the company now seems to be moving away from chasing the numbers and concentrating instead on products on which it can make money. Sony puts it, 'Realignment from volume expansion to establishing a stable platform for revenue growth; with a target of getting the TV division back in the black by the end of the 2013-14 financial year.

Indian Television Industry Growth in Last 5 Years

In the past 5 years, the Indian television industry has witnessed drastic changes intensity of competition, promotional schemes and deferred payment options. The entrenched position of Indian market leaders such as Videocon, BPL and Onida have challenged by MNCs such as LG ,Samsung ,Sony ,Panasonic ,Phillips and Sharp. The changing environment needs fresh thinking to gain cutting edge advantage. Various strategic initiatives have been adopted to leverage on favourable forces and prevent adverse ones. (Source: www.slideshare.com)

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Future growth drivers

Source: http://www.slideshare.net/sudeepnair84/indian-televison-industry-analysis

Porters 5 forces: Television Industry Analysis

Michael Porters Five Forces Model provides a robust and time-tested framework for analysing any industry, reflected in the strength of the five forces (industry competitors, potential entrants, and threat of substitutes, power of buyers and power of suppliers). The collective strength of the five forces determines the ultimate profit potential in an industry, where profit is measured in terms of long term returns on capital invested (Porter, 1980). The elements of each of the above forces and the extent and /or effect of each element in the context of the television industry have been analysed and enumerated below. Degree of rivalry

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Degree of rivalry denotes the intensity of competition within the industry. LG is the market leader with 26% market share followed by Samsung and Onida. Although LG is the market leader, its average realisation is lower than the industry average due to competitive pricing. India is one of the biggest global markets for LG; therefore its strategies are much more aggressive to ensure huge growth. On the other hand, Samsung is far stronger than LG globally, and while India is a key market, there is no crushing need to ensure immediate big growth numbers. Sony, Philips, Akai, Sansui, Aiwa, Toshiba and now Hyundai are the other foreign brands in the market. The industry is based on numbers game and companies will have to maintain a fine balance between catering to lifestyle requirements and meeting the needs of average consumer. The sales value of the top six CTV players has increased more than proportionately to the corresponding increase in their market shares. Although the top players have drastically reduced prices, they have gained more volume due to increasing market size and higher penetration levels, coupled with conscious shift towards flat colour televisions (FCTVs). Threat of Entry Threat of entry is determined by the entry barriers, which act to prevent new firms from entering the industry. A lower entry barrier makes it difficult for the existing producers to remain profitable for long. When profits increase, additional firms will enter the market to take advantage of the high profit levels and over time drive down profits of all firms in the industry. When profits decrease, some firms will exit the market, thus restoring the market equilibrium. Barriers to entry arise from several sources: 1) Access to distribution channel: A strong distribution network is absolutely essential to compete in this industry. Not only does it guarantee a country wide reach for a companys products but is also necessary for providing good after sales service. LG Electronics sells in 1800 towns and cities with a population of 1, 00,000 and above. Samsung also has a widespread service network, which includes 123 exclusive service centres and 200 distributors in any town with more than 1 lakh population. All BPL dealers are linked via VSAT nodes, ensuring online availability of information on inventory status and sales movement. 2) Brand salience: With little product differentiation and parity products, it is imperative that distinct images are created in the minds of consumers through positioning and brand building. MNCs have been able to compress the cost of brand building by amortising the cost of sponsoring international events across a larger footprint straddling multiple countries. LG sponsored ICC World Cup 2003 along with Pepsi and Hero Honda and got tremendous mileage in terms of increased sales and brand building. Similarly Samsung sponsored the Indo-Pak series in 2004. Domestic players are constrained in their brand building due to not being global in their operations.

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Threat of substitutes: In Porters model, substitute products refer to products in other industries. Internet though emerging as an infotainment medium is very low in penetration. Moreover the industry has responded to the future threat by introducing a TV that can provide functions of the Internet along with regular features, e.g., BPL digital that includes Internet and cellular facilities.

Buyer Power: The power of buyers is the impact that consumers can have on a producing industry. Buyer power influences the prices that a firm can charge. The television market can be broadly segmented into following categories: 1) The Upgraders : This segment of buyers has upgraded from Black and White TV to Colour television. This segment is by far the largest in the Indian TV market and constitutes approximately 62% of the market. The principal reason behind the up gradation is the C&S (cable and satellite) boom that has hit India and the increasing coverage of major sports events like cricket tournaments and Olympics. 2) First time buyers: This constitutes people who are purchasing a colour television for the first time. They comprise 18 per cent of the market. They primarily belong to nuclear families. The structure of these families is either DINK (double income and no kids) or SINK (single income and no kids). The other section that makes up this segment is the bachelors living alone for the purpose of jobs or higher studies. The fixed or planned budget and the compatibility with the small establishment are two major factors that drive the nature and direction of information search in this segment. 3) Multiple set purchasers: This segment represents those people that are purchasing more than one set and are looking for specific need gaps to fill. They comprise the lowest share of the market in terms of volume with just 8% being commanded. The family demographics of this segment are mostly joint families and full nests. The principal reason behind most of the purchases is an increasing family size and desire to own a personal TV set.
4) Replacement Purchasers: This segment usually trades in its old CTV for the new models. It forms around 12% of the market and holds immense potential in the future. The expansion of innovative technology and cable compatibility has thrown the old sets, with their eight programmable channels, completely out of favour. This segment also shows a keen interest in the grey market and is not

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completely against the idea of purchasing a feature-laden brand from the unorganised market. Neither the price of the set nor the offers of warranty periods and promotional sops, is an important criterion.

Supplier power: Suppliers bargaining power influences the cost and quality of input material. Higher supplier power raises the input cost, thereby reducing the industry profitability. The most critical component in manufacturing television is the picture tube. It constitutes around 50% of the cost of television. While Black and White picture tubes are made in India, many manufacturers still need to import colour picture tubes. The other important components include electronic circuit boards, tuners, high-tension transformers and moulded plastic casings. The demand for colour picture tubes (CPT) has been rising steadily (Source for Porters 5 forces: http://www.ximb.ac.in/ximb_journal/Publications/Article12-13.pdf)

Dynamic Analysis of TV Industry

Today, audiences are becoming increasingly fragmented, splicing their time among myriad media choices, channels and platforms. For the last few decades, consumers have migrated to more specialized, niche content via cable and multichannel offerings. Now, with the growing availability of on demand, self-programming and search features, some experiencers are moving beyond niche to individualized viewing. With increasing competition from convergence players in TV, telecommunications and the Internet, the industry is confronting unparalleled levels of complexity, dynamic change and pressure to innovate. Segment: Invest in divergent strategies and supply chains for bimodal consumer types. Identify, develop and continually refine data-driven user profiles in order to optimize product and service development, distribution, marketing messaging and service migration. Dynamically tailor content, advertising, pricing and reach. Innovate: Innovate business models, pricing, windows, distribution and packaging by creating not resisting wider consumer choice. Take risks today to avoid losing position over the long term. Experiment: Develop, trial, refine, roll-out. Repeat. Conduct ongoing market experiments, alone and with partners, to study real life consumer preferences. Invest in new measurement systems and metrics for the on demand world of tomorrow. Mobilize: Create seamless content mobility for users who require on-the-go experiences. Help ensure easy synchronization across devices and without required user modification. Open: Drive open and standards-based content delivery platforms to optimize content and revenue exploitation, and to create high business flexibility and network 18

cost-efficiency. Position open capabilities to bolster digital content protection with consumer flexibility, and for plug-and-play business upgrades necessary in the fastchanging marketplace. Reorganize: Reassess your business composition against future requirements. Identify core competencies needed for future competitive advantage. Isolate non-core business components for outsourcing, consolidation or partnering. From an external perspective, reconfigure the business to leverage market and financial levers to buy, build or team for future competitiveness. Unparalleled levels of complexity and dynamic changes in TV Technologies The picture is bright for consumers TV content is more popular than ever with consumers despite the availability of myriad alternatives, including digital music subscriptions, film DVD rental services, satellite radio and massively multi-player video games. Total TV consumption hours have continued to grow, with the average U.S. household estimated to spend 1826 hours with its TV in 2005 (the equivalent of more than five hours per day).2 Hours viewed from content downloads and TV DVDs can be added to this traditionally measured consumption. Audiences become finer and finer Consumers love content, but are having their attention more finely fragmented by over-choice and evermore proliferating channels and platforms. In days of yore, a consumer had only a few broadcast channels from which to choose. Today, the average U.S. household has 91 TV channels8 and, in both the U.S. and abroad, the number of offered channels ranks in the hundreds. Consumers changemodels lag One of the key revenue sources in TV, advertising (which funds approximately 50 percent of the market14), should theoretically be most elastic to audience changes. And to some degree, revenues have adjusted. From 2000 to 2004, niche advertising CAGRs for U.S. and European cable/multichannel networks were 7.4 percent and 6.2 percent respectively, compared to a 2 percent CAGR for broadcast/terrestrial advertising.15 Yet, cable in the U.S. collects only 30 percent of advertising revenues today, despite garnering almost double that percentage of viewership (see Figure 1). Convergence has finally arrived Convergence in TV, telecommunications and the Internet is pitting the giants of industry against one another. Two key aspects of converged competition are video distribution and content aggregation. First, we look to convergence in distribution and assess how the triple play (offering video, voice and high-speed data) and quad play bundles (triple play plus mobile) may evolve. In the video distribution marketplace, incumbents and new entrants alike are battling to provide TV and other services to the living room. In doing so, players have been engaged in a network upgrade cycle to win consumer loyalty and higher average revenues per unit. 19

Between 1996 and 2004, the U.S. cable industry spent over US$95 billion on upgrades to move to two-way plant, with its potential for High Definition television (HDTV), digital cable, video on demand and digital phone.22 With more than 90 percent of U.S. households passed by activated two-way infrastructure by the end of 2004, the foundation was laid to convert 28.5 million households to digital cable and 23.9 million for video on demand by year-end 2005.

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(Source: http://www-935.ibm.com/services/us/imc/pdf/ge510-6248-end-of-tv-full.pdf )

Government and Regulatory Impact on Television Industry

The role of the government as the supra environment for business, creating the rules for competition is crucial. It creates boundaries within which the industry must operate. Following its policy of liberalisation, the Indian government completely de licensed the television sector in November 1996. In the year 2004, custom duty on television sets was reduced from 25% to 20% and the Special Additional duty of 4% was dispensed with. Reduction in customs duty is unlikely to affect the industry in a major way because a substantial chunk of the industrys products is manufactured in India. The key benefit will be to the brand owners with high-end models that are primarily imported. Abatement rate on CTV has been hiked from 35% to 40%. Excise duty on CTV was brought down from 18% to 16% in 2001 whereas on B&W TV it has been hiked from 4% to 8%. Companies may benefit marginally from increase in excise duty on B&W TVs to 8%, as they would now be able to claim CENVAT credit for the excise paid on raw materials. Hence so long as the industry is vigilant against large scale dumping of television sets from countries like China, these measures are largely positive for the industry in bringing down the cost. The customs duty and excise duty on components has been reduced to 20% and 16% respectively. But this is unlikely to be major benefit because 21

of the relatively low import content in most products (except high-end products) but will benefit MNCs more as they rely more on imports. Colour picture tube players are taken aback due to recent rollback in customs duty in glass parts. Glass parts are being used in manufacturing picture tubes. Imports of glass parts were levied with a uniform 20% basic customs duty. Following the Free Trade Agreement with Thailand, the import duty on CPT and CTV was fixed at 10% and for its inputs glass parts the duty was 20%. In the process there is a lopsided duty structure wherein the import duty on inputs is higher than the output, which is not conducive for domestic manufacture/ value addition. Except Sony, all major domestic colour TV manufacturers like Samsung, LG and Videocon source their requirements from Samtel. Thus the duty structure favours brands like Aiwa, Sansui and also the top-end CTV models, which are imported. Hence Indian players like Onida, BPL, and Videocon are at a disadvantageous position vis--vis their multinational counterparts. Industry wants that there should be customs duty differential of 5% between CTV, colour picture tube and colour glass parts to encourage value addition. Industry also wants that excise duty on non-dual use components of B&W TV i.e. B&W picture tube, B&W glass shell, B&W deflection yoke and mechanical tuner should be reduced from 16% to 8%, i.e. at par with B&W TV.

Importance of Complementary Technologies in TV industry

Following are the prominent complementary technologies that affect (or affected) Television industry: Cable TV Cable television is a system of providing television programs to consumers via radio frequency (RF) signals transmitted to televisions through coaxial cables or digital light pulses through fixed optical fibers located on the subscriber's property, much like the over-the-air method used in traditional broadcast television (via radio waves) in which a television antenna is required. FM radio programming, high-speed Internet, telephony, and similar non-television services may also be provided. The major difference is the change of radio frequency signals used and optical connections to the subscriber property.

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To obtain premium television most televisions require a set top box called a cable converter that processes digital signals. The majority of basic cable channels can be received without a converter or digital television adapter that the cable companies usually charge for, by connecting the copper wire with the F connector to the Ant In that is located on the back of the television set. Satellite TV Satellite television is television programming delivered by the means of communications satellite and received by an outdoor antenna, usually a parabolic mirror generally referred to as a satellite dish, and as far as household usage is concerned, a satellite receiver either in the form of an external set-top box or a satellite tuner module built into a TV set. Satellite TV tuners are also available as a card or a USB stick to be attached to a personal computer. In many areas of the world satellite television provides a wide range of channels and services, often to areas that are not serviced by terrestrial or cable providers. Direct-broadcast satellite television comes to the general public in two distinct flavors - analog and digital. This necessitates either having an analog satellite receiver or a digital satellite receiver. Analog satellite television is being replaced by digital satellite television and the latter is becoming available in a better quality known as high-definition television. This has been a major reason for sale of LCD, HDTV, LED and now OLED. Digital signals received have better picture quality and sound effects which are essential if one wants to have good experience of HDTV technology. IPTV Internet Protocol television (IPTV) is a system through which television services are delivered using the Internet protocol suite over a packet-switched network such as the Internet, instead of being delivered through traditional terrestrial, satellite signal, and cable television formats. IPTV services may be classified into three main groups: Live television, with or without interactivity related to the current TV show; Time-shifted television: catch-up TV (replays a TV show that was broadcast hours or days ago), start-over TV (replays the current TV show from its beginning); Video on demand (VOD): browse a catalog of videos, not related to TV programming.

IPTV is distinguished from Internet television by its on-going standardization process (e.g., European Telecommunications Standards Institute) and preferential deployment scenarios in subscriber-based telecommunications networks with high-speed access

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channels into end-user premises via set-top boxes or other customer-premises equipment. 3D TV 3D television programs have been offered on an occasional basis since the 1950s using anaglyphic technology and colored glasses. Now there is growing momentum, and unprecedented industry backing, focused on providing 3D programming and equipment to the home on a mainstream basis. A 3D TV experience in the home includes semiconductor and software solutions, 3Dready TVs and game consoles, set-top boxes, goggles, 3D encoders, etc. 3D Blu Ray players provide one of the ways of watching 3D DVD movies on a suitable home TV or monitor, battery operated LCD 3D shutter glasses or cinema style passive glasses that automatically open and close shutters quickly to give you the 3D effects. These are essential for good 3D experience but the shutter glasses supplied by 3D TV manufacturers with the sets are not likely to be compatible with either projectors or monitors that use active technology, and many glasses will actually only work with the specific manufacturers set. This is one of the disadvantages as its accessories are limited to particular sets and lacks compatibility. Set-Top Box Set Top boxes are likely to remain one of the key elements enabling the consumer video experience for the foreseeable future. Having evolved from simple channel expanders to todays advanced computer engines that facilitate controlled distribution and storage of TV content across all platforms. Recent innovations have included advanced DVRs that enabling multimedia content for storage and distribution throughout the home, remote access set top boxes, hybrid set-top boxes which optimise the use of bandwidth, highly optimized IPTV gateways, cost-reduced advanced feature boxes, etc. Advanced User Interface With the evolution of television to include the intent to provide the viewer with a vast array of content, some of which may be interactive, a good user interface becomes an increasingly important tool to navigate, control and interact with this content, and hence will be vital to the success of the TV 3.0 concept. Mobile TV TV 3.0 is not entirely about providing bigger and better video experiences to the home, as it also includes the ability to view content on mobile devices. This creates an array of new challenges, as programmers, equipment providers and operators attempt to provide users with a compelling experience on a much smaller screen. Innovations in this area include TV-enabled ultra mobile devices, applications that enable content to be easily navigated, as well as innovative applications targeted 24

specifically at mobile devices. High performance, compact, and simple antenna tuning solutions, proven process technologies, and high volume capability are critical to the successful adoption of complex mobile TV products. It also requires good battery life, reception and range, screen size and picture quality for good experience. Interactive TV There are wide range of interactive TV applications and experiences being promoted by operators around the world. However, while some of these are truly advanced applications, others only include a one-way interaction from the viewer. This Include technologies and solutions that enable a two-way interactive experience using some form of back channel. This can be between the viewer and either the TV program itself or an interactive application using the TV as the portal to interact the content provider. This will include TV shows where the viewer can influence the content being shown, interactive advertising, intuitiveprogram guides, shopping, betting, gaming, etc. Interactive TV (iTV) is any television with what is called a return path. Information flows not only from broadcaster to viewer, but also back from viewer to broadcaster. Another feature common to all iTV systems is the ability to offer each TV set, or each viewer who uses that TV set, a different choice of content. There are different hardware configurations and it is possible to build a crude interactive service using analog systems. But the type of systems now being offered, that will dramatically change how viewers live, are digital either cable or satellite. Three Types of Interactive TV Service 1. Cable 2. Satellite 3. Personal Video Recorder (which can be joined to either of the above or stand-alone.). An interactive TV includes a memory, storage and Modem. Content Protection One of the critical issues facing the TV paradigm of virtually all video content being available anytime, anywhere on the device of choice is the protection of that content to ensure its producers and distributors continue to receive fair revenues. The industry is cognizant of what happened to the music and video industries, and is anxious not to lose control of its programming and content. Content Protection in TV is provided by High-bandwidth Digital Content Protection.

HDCP uses three systems: 25

1. Authentication prevents non-licensed devices from receiving content. 2. Encryption of the data sent over DisplayPort, DVI, HDMI, GVIF, or UDI interfaces prevents eavesdropping of information and man-in-the-middle attacks. 3. Key revocation prevents devices that have been compromised and cloned from receiving data. HDCP devices are generally divided into three categories: Source: The source sends the content to be displayed. Examples include set-top boxes, DVD, HD DVD and Blu-ray Disc players, and computer video cards. Sink: The sink renders the content for display so it can be viewed. Examples include TVs and digital projectors. A sink has one or more HDCP/HDMI receivers. Repeater: A repeater accepts content, decrypts it, then re-encrypts and retransmits the data. It may perform some signal processing, such as upconverting video into a higher-resolution format, or splitting out the audio portion of the signal. Repeaters have HDMI inputs and outputs. Examples include home theater audio-visual receivers that separate and amplify the audio signal, while re-transmitting the video for display on a TV. A repeater could also simply send the input data stream to multiple outputs for simultaneous display on several screens. On-Demand Solutions The concept of TV 3.0 is to provide any content, at any time, to any place, to be received on the viewers chosen device. To facilitate this, solutions that enable the provision of truly on-demand content are essential. This on-demand experience can be facilitated in a number of ways, depending upon the method of distribution, and the device on which it is being viewed. For example, the content may be provided locally, broadcast or streamed with the user able to control the flow of that content using a traditional remote control or other form of user interface. Video on Demand (VOD) or Audio and Video on Demand (AVOD) are systems which allow users to select and watch/listen to video or audio content on demand. IPTV technology is often used to bring video on demand to televisions and personal computers. Television VOD systems either stream content through a set-top box, a computer or other device, allowing viewing in real time, or download it to a device such as a computer, digital video recorder (also called a personal video recorder) or portable media player for viewing at any time. The majority of cable- and telco-based television providers offer both VOD streaming, including pay-per-view and free content, whereby a user buys or selects a movie or television program and it begins to play on the television set almost instantaneously, or downloading to a DVR rented from the provider, or downloaded onto a pc, for viewing in the future. Internet television, using the Internet, is an increasingly popular form of video on demand. Immersive TV

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The concept of immersive TV is to provide the viewer with the most lifelike experience to all senses. This may include 3D, full field of view, movement simulators, total audio immersion and even smell-o-vision. Typically this will be restricted to the home theatre environment, but certain immersive concepts lend themselves to the living room TV and even to mobile devices. Immersive TV starts from a short-term solution which can be introduced with available hardware at reasonable costs, also a long-term solution, called IVVV (Interactive Virtual View Video), targeting at a highly interactive TV system. The idea is based on an implicit 3D representation of the video scene supporting head motion parallax viewing, as well as user-guided navigation with a virtual camera. The concept distinguishes between accurate offline 3D analysis of static scene parts and online real-time processing of dynamic video objects. Static and dynamic 3D data are merged at the receiver and used, together with the transmitted video sequences, to create the desired intermediate views by means of image-based rendering. Audio Experience While a lot of attention is focused on the video aspect of TV 3.0, advanced audio solutions are a vital part of the concept. Innovation in audio extends from advanced encoding and decoding solutions, which enable the user to experience the audio as close as possible to the original recording, through to the latest home theatre solutions that provide the ultimate audio experience in the consumers home. Home Networking As the TV experience continues to evolve away from watching video from a single central location, the ability to network multimedia content throughout the home becomes increasingly important. Up until recently, only wired hardware solutions provided satisfactory bandwidth and QoS. More recently, power-line, MOCA and wireless technologies have evolved to better enable home AV networking without the requirement for new wires. Semiconductors Semiconductors are one of the key driving forces that enable many advanced solutions that are now becoming possible as we move to TV 3.0. These semiconductor devices extend from SoC solutions for set-top boxes and TVs, through advanced tuner and audio ICs for CE devices, to solutions targeted at encoders and other equipment in the distribution side of the equation. The single most lucrative portion and largest area of growth for the TV semiconductor market centers on the use of LED backlights for LCD-TV panels, according to Lawson. Compared to the old technology of Cold Cathode Fluorescent Lamps (CCFLs), LED backlights offer higher image contrast, lower power consumption and improved product styling by allowing a thinner panel profile.

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Future of TV Industry
Imagine watching television with no channels, no remote control, perhaps not even a TV set. You might catch the news on the bathroom mirror as you brush your teeth, and then check sports scores after work on the family-room window. If a football game really captures your interest, you could watch the action from any perspective you choosethe end zone, on the 50-yard line, or even in the middle of the huddle. During the commercial break, the irresistible aroma of pizza wafting from the TV might compel you to click on the logo and order a large double cheese right from the screen.

Channels Go Away
Most viewers will watch customized, on-demand streams, or they will access unlimited content from available libraries using powerful search/recommendation engines. As consumers increasingly time-shift their TV viewing (watching what they want, when they want), traditional channels have less mindshare and brand awareness. The number of channels and size of content libraries have grown to the point that channel searching now frustrates consumers. From a technological standpoint, Internet-connected television devices such as the Xbox, Apple TV, and Roku will see an adoption explosion in the next few years. As they do, consumers will start to associate Internet-like search and discovery with the TV. Theyll also demand integrated functionality thats part of a single, simplified interfaceno more multiple boxes.

Gestures control the action: Say goodbye to remote

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(Source: http://www.cisco.com/web/about/ac79/docs/sp/10_Reasons_Future_of_TV_IBSG.pdf) Consumers will use natural language, gestures, and adjunct devices such as smart phones and i pads to interact with their TVs as easily as they do with another person .In the past, interactive TV enhancements stalled, due in part to the lack of a good interface device. Even today, experts criticize the recently launched Google TV device for what they call a clunky remote-keyboard interface. However, interface innovation is making its way into the market. Several companies, including Verizon and Comcast, are already providing software that enables consumers to control their TVs using their iPads or smartphones. The Nintendo Wii, with its unique, gesturebased controller, has had a major impact on the gaming market. Driven by competition, Microsoft has released its own gesture-based interface, Kinect, which is rapidly gaining popularity. Sony has also released its own interface for the PS3. In addition, we are now seeing a third-party applications market develop around gesture interfaces, such as GestureTeks Xbox 360 gesture-control tools, which is likely to further accelerate innovation. Screens Do Anything, Anywhere Today, Nielsen research estimates that 116 million American homes have a device universally recognized as a TV.1 In 20 years, that will no longer be true: Americans will invest in screens. Some will be thinner, larger, and have even higher definition than the ones we know today. Some could occupy a whole wall. Many will be contained within the higher-quality descendents of the portable devices we carry in our pockets today, such as smart phones, tablet PCs, and portable gaming players. Some may be expandable, flexible, or even wearable. Screens will be everywhere, and each screen will be multipurpose. These screens could be used to monitor a backyard security system as easily as to watch TV.

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Screens Do Double Duty

(Source: http://www.cisco.com/web/about/ac79/docs/sp/10_Reasons_Future_of_TV_IBSG.pdf) Ads Get Personal Advertisers increasingly believe that their ad spending is not effective; they are looking to reach target customers in ways that were not previously possible. In the future, advertisers wont rely on separate commercials that viewers can easily ignore by skipping over them with their DVRs or by running to the kitchen for a snack. Rather, the majority of ads will be contextual, highly interactive, and laser-targeted to each viewer. Watch Together, Virtually TV will be an enabler of social interaction, encouraging group participation at home with remote friends and family. TVs valuable role as a social-gathering mechanism will grow beyond the living room and water cooler. Technologyfrom motion capture to video tele presence to hologramswill enable remote friends and family to watch TV together and interact naturally. Much as they do today, families will congregate around a central viewing device to watch their favourite shows. However, with the help of social networking technologies, viewers will also invite friends and remote family members to join them in a virtual setting. Viewers will experience a sense of community for the duration of the program. The technology to enable this vision is available todayit just needs an integrated solution. Social networking technology such as Face book could provide an effective platform and user interface, while adjunct devices such as tablet PCs and smart phones could enable interaction off the main viewing screen. 30

Your TV Follows You With superior-quality handheld devices, pervasive screen options, and cloud-based storage, consumers TV contentall of itwill be instantaneously accessible anywhere. Consumers will no longer be tethered to a particular device or network, and there will be limited ties to time itself. As a result, consumers will choose what they want to watch while they stand in line for groceries, travel on the train, sit in the back seat of the car, or walk down the street. Moreover, theyll be able to transfer content seamlessly across devices (for example, from a smart phone to a friends TV screen, just by pointing the phone at the TV). We have already seen a change in the way people consume entertainment content. One notable example is the move from home stereos to iPods. TV is now following the same path: apps for Hulu, Netflix, and Sling already work on smart phones. Beyond consumers personal preferences, external factors will also begin to drive this vision. For example, as the population grows, overcrowding and high energy costs could force more people to mass transportation a transition that will allow them to experience the value of mobile TV. Don't Just WatchGet Involved Consumers are already interacting with some TV content (Lost, CSI) across different modalities: games, social media, and other arenas. In coming years, this trend will gain momentum, and consumers will interact with certain TV content even more seamlessly and often. For example, in an extension of current consumer and industry trends, viewers may friend their favorite TV characters or investigate plot twists using resources in their own communities. They could, for instance, collaborate with other fans to aid key characters in solving a crime or mystery. Although the fan mentality has always existed, it will morph from a process of collecting and following to one of interacting and influencing. Technology innovation and adoption have reached levels where this type of interaction is not only possible, but also can be supported without enormous budgets. Social networking and smart phones, key enablers of this experience, have achieved mass-market adoption. In addition, tools to create special-purpose web pages and collaboration sites already exist. Finally, studios have already invested in transmediastorytelling across multiple forms of mediato create more buzz and loyalty so their content doesnt get lost. Creation Goes Viral Content creators are always looking for ways to stay fresh and in sync with the pulse of the consumer. One of the best ways to do this is to invite consumers directly into the process. Imagine that your favourite show airs on Wednesday night. Until Friday night, you can participate in online collaboration sessions to develop and vote on new ideas for the next weeks episode On Friday night, the discussion is closed, and the 31

producers write and tape the show between Saturday and Tuesday. On Wednesday, we all tune in to see the shows latest episode. Gaming also will provide a new consumer-created content source. Todays massive multiplayer online games have a look and feel that rivals that of newly released films. Given the visual quality of a game like Prince of Persia and the compelling interactions among avid gamers, a portion of that game time can be immensely watchable, even to those not actively participating in the game.

Conclusion
In this report, we described an industry facing changing consumer demand, misaligned traditional business models, converged competition and various small and big technological happenings in this dynamic industry. Players within the TV industry sit on the precipice of an impending upheaval that promises to be no less dramatic than that experienced by the music industry. Given the bimodal demand predicted through 2012, strategists must work amid fragmentation, divergence and opposition in the market to optimize across nascent and long-standing business models; across new and traditional release windows; with old and new content programmers and aggregators; and with both IP and traditional supply chains. At a time of exquisite change in both demand and supply, immediate action is required. We also mentioned six recommended priority actions that can offer a blueprint for proactive strategy. While each tenet is universal, it is incumbent upon each TV industry competitor to view the recommendations through the prism of its own particular business circumstances and uniquely prepare for the disruptiveness and opportunity ahead.

References
1. www.ncemi.org/library/megatrends62.doc 2. http://www.imsconferences.com/index.php/award-categories#stb 32

3. http://en.wikipedia.org/wiki/Satellite_television 4. http://en.wikipedia.org/wiki/Cable_television 5. http://www.innovationexcellence.com/blog/2012/01/12/future-of-tv-leading-byinnovating/

6. http://www.veritasetvisus.com/multiview.htm 7. http://flatpaneldisplay.blogspot.com/2010/04/how-complimentary-technologiescan.html 8. http://www.once.eu/index.php? option=com_content&view=article&id=1031:slow-future-for-oled-tv&catid=24&Itemid=100038 9. http://nopr.niscair.res.in/bitstream/123456789/4965/1/JSIR%2065(10)%20787793.pdf 10.http://www.osa-direct.com/ 11.http://en.wikipedia.org/wiki/IPTV 12.http://www.hitech-projects.com/euprojects/icecream/public-presentations/EUChina%20Forum%20NexTV%20presentation.pdf 13.http://www-935.ibm.com/services/us/imc/pdf/ge510-6248-end-of-tv-full.pdf

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