a) The answer to this is question is – “Hits” are about both. It dramatically depends on the time frame in which we talk about this question. Conformity – In present context, a lot of books and movies that are being produced every year. Technology is growing, and major video-streaming houses, e-book sellers budding up. There is huge range of choices for a customer to select from. One can find any book in Amazon or eBay etc. , similar is the case with movies. It doesn’t cost much to an e-book seller to produce a copy of the book ordered. Video streaming companies can stream the rarest of the movies which is liked by only few people.
In such circumstances, if a movie or a book is a hit, it more because of conformity. We live in a society and interact with each other. We need something to talk and discuss about. A bestseller book or a mega-hit movie is always atop the list of items discussed about or communicated among colleagues. The fact being many people would have watched the movie or read the book provides a platform to discuss common interest. So, Hits are about conformity. Also, most of the hits that we see have derived from the previously successful book or movie. A sequel of a hit movie or a book is most likely to be a hit.
Many successful books that were made into movies and have become mega hits, Harry-potter, Batman series, Superman, Thor, Sherlock Homes are a few to name. The brand value of the actors, directors and production house also plays a significant role. Movies that are produced at the Disney, Warner Brothers, movies that have actors like George Clooney, Oprah Winfrey etc. or directed by Steven Spielberg are more likely to be successful. This all concludes that hits are about conformity. Lack of choice – In the past, when there were fewer cinema screens playing even lesser number of movies, lesser number of books available at the stand.
The customer/moviegoer/reader had less options to choose from. The hits were made more because people did not have anything else to read or watch. And had to go the same movie. There was much more control in the hands of movie production houses and publishing houses to make a movie or a book a hit or a miss. They could artificially inject success into a movie or a book. b) People have always faced the problem of not having enough options to choose from. More often than not the customer has to settle for what is available.
As mentioned by Chris Anderson, “The other constraint of physical world is physics itself. ” For example, there is only certain number of radio and TV channels that can be available. The distribution of movies and books from different part of the world don’t make it to all its prospective viewers and readers. For example, Bollywood produces almost 800 movies a year but the only few make it to the US. Internet has broaden the scope of this whole supply chain. Today, one can get a movie from Netflix, no matter what location he/she is in. By 2009, Netflix was offering a collection of 100,000 titles on DVD. 1]
The companies like Netflix can store a single copy in their archive and they can serve their customers the world over. Technology and internet growth has made it possible to find the product of our choice from around the world. Information technology has enabled the content producers to produce quality content at very low prices and distribute it globally. In a nutshell, the barriers of scarcity of channel has been alleviated with growth in internet. Yes. In present context both misses and hits are having the same margin and stand similar business opportunity to the sellers.
While the hits are characteristic of the fat end of the long tail which means that they have a huge demand in a given time frame. As per the Chris Anderson report on Long Tail, he mentions that Wal-Mart must sell at least 100,000 copies of a movie to meet the overhead expense. Generally there is huge competition among the sellers. The sellers are bound to sell the book copies, or stream the movies for a really lower margin. The profit per sale is low, however, the economies of scale is functional and the seller can make money from the lower margins as well. But, when we talk about the misses, there is not much competition.
There most probably be a few sellers who would be selling it and would charge a premium margin for such products. From economic point of view a sale is a sale whether a hit or a miss. While these products sell lesser they sell for higher profits and so equals the profit margin earned with hits. Hence, the misses and hits have same margin to a seller. Google knows a lot about a person. Every individual is creating their “digital footprints” every day. The websites we search, the purchases that we make, and the products we browsed, the places we checked-in, clickstreams history etc. ives insight into our needs and desires. Companies like Google are equipped with technology to understand and profile an individual based on “Know who you are” from “where you go”.
Google provides AdSense and AdWords services. AdWords allow the advertisers to promote their service/product based on the search term. Google makes most of its revenue from smaller advertisers. Based on the search terms, the advertisements, banner ads and search engine returns are given to the users. A customer can find a product that is not in demand and might not be available locally. A niche market for a movie or a book can be served.
Long tail is all about catering the niche markets. AdWords and AdSense help the niche market to find the customers they can cater based on their choices. It is easy to find a customer who is looking for a product that otherwise would not find a buyer in the local market. With Google the seller can find the buyer anywhere around the world. The seller can charge the buyer for all the profit margin, shipping and other cost as well. 2. Netflix, Quickflix, Stan and Presto are the major video content provider/streaming companies in Australia. There is fierce competition in this industry.
The major competitive dimensions in this industry are: • Customer acquisition and retention – With Australia being a comparatively small market and with lesser number of users willing to pay for the content. It is a real challenge for the companies to acquire and retain the customers.  There will be less room for too many big players. In such conditions to become successful and remain successful the companies would have to compete to get the bigger portion of the available market. • More number of movies – The demand for more is never ending. The customers’ demand vary from hits to less known niche programs.
The companies would have to make sure that they achieve as many licensing rights as possible. As this is quite clear that there is demand for misses as well and the niche customers constitute a large part of the revenue earned. The companies would have no choice but to license everything and anything that is possible. • Tie-ups – It is also visible that the competition in this market is changing. Many of these video streaming companies are now getting into tie-ups with telephone network providers and electronic goods manufacturers to sign in more and more customers.
Presto is getting in a deal with Optus and Netflix has sealed a deal with Vodafone to provide free initial subscription to the customers. Role of CIO – With increasing inclusion of Information Technology into the business and the ways business is done the role of CIO is becoming more and more involving. As the CIO of these companies the major concerns are: • Technology upgrade – There is ever increasing need to tweak the prediction capacity of the company. If the company can’t suggest the viewer what he/she might would like to watch, it is difficult to retain them.
For example, Netflix offers a $ 1M prize every year to increase the prediction accuracy by 10% from the existing accuracy. • Cost-Cutting – More and more the movies and songs are getting available on the internet for free. It is in fact eating into the profit of the companies and this needs to be tackled. The companies need to find out ways to cut the cost and keep the overall overhead expenses in control. • Security and Privacy – There is more need for the secure streaming of the content. The IT department need to make sure that the video is streamed only to the intended viewer.
Other factor is viewers’ privacy. There are financial and banking related data with the company, user’s payments, bank account details, and transactional details. All this need to be handled carefully and properly. The IT department needs to make sure that these data are well protected and never attacked. It is essential that any customerrelated sensitive data is dealt with importance. · Storage, Archive and streaming – Companies have huge amount of data to store. All the movies, series and other contents that the company has need to be stored and archived and kept safe as well.
The quality of the content and the speed at which the same can be rendered to the customer is of great importance from the service point of view. Better Prediction engines – The companies cannot just sit back and wait for the viewers to decide what they want to see and then complete the o The market is more active and the video streaming companies can benefit more from actively suggesting the viewers what they would like to watch can increase the number of streaming orders they receive. This is going to be a decisive factor in the market competition.
The CIO has to keep an eye on this project all the time. OTCS Model As an operator, the CIO has to make sure that the company receives the streaming orders properly and videos are streamed to the viewers at the right time and right money. The tech team management would come under the canopy of the operator aspect of the CIO. As a technologist, the CIO looks forward to the technological upgrades that can keep the company ahead of its competitors. (S)He also needs to ensure that the customers get good quality of videos streamed and better suggestions.
Faster streaming and better high definition videos are a prime concern. Maintain or improve on the videos with less data consumption but still high quality. As the strategist, the CIO has the responsibility to look for different business models that the company may profit from. The CIO is looking into the huge amount of data and trend shifts. The data analysis can help the company to gain insight into the future market. As catalyst, the CIO needs to be able to make the team and the board to look for a new innovative ideas that the company can reap benefit from.
Newer idea like app TV that can stream movies and series on the mobile and tablets directly can be a game winner. The CIO can help/suggest the board take decisions in content creation that are likely to be successful as well. Scenario 5 years from Now: • Over The Top Video on Display services – There is more likelihood of videos getting streamed over the networks providers’ infrastructure. In fact it is happening at the moment. But future would see much more diverse ways this idea is applied. • Ultra high definition movies – The quality of the video streamed would be of top quality and there may be 3D video ontent streaming be done in time.
• Content creation – While the companies stream the content from other production houses. They might as well get involved in creating more and more content on their own. • App TV – The companies would also make a shift to the handheld devices like mobile and tablets, and iPads etc. to stream high quality videos. • Bundling of services – The companies would also look for a few free services to be bundled with the paid services and provide a bouquet of services to the customers. 3. Most of the companies adopt the Dutch auction technique, including the US govt.
As per the Dutch auction the bid is given to the highest bidder to all the way down to the lowest until all the bonds are exhausted. In this case, the total money to be raised = $2B. Now, arrange all the bids in ascending order of their coupon values. Investor with Lowest yield = $ 301M @ 10. 3% Investor with highest yield when the requirement amount is reached = $ 210M @ 12. 6% By the Dutch auction rules the effective interest rate would be 12. 6%. The CIO of a company may suggest to use the Vickrey auction process instead of the Dutch.
In Vickrey, the bidders don’t know what others are bidding. However, the get the second highest value. In this case, a bidder that asks for lowest yield would win. However, he would receive the second lowest yield value. This actually can help the company to get bids that are lower yield. In this type of bidding, the bidder is willing to reveal the actual minimum amount that he is looking to make from this investment. This would help the company to save a lot of coupon money to be paid to the bidders. Many companies like Google and Yahoo! Use this bidding system to select the bidders.