Creative Destruction hammering on the TV industry

Posted by Gianluigi Cuccureddu SMP in Writers on December 04, 2010  |  4 Comments More from this author  |    |  Follow Gianluigi Cuccureddu SMP on: Facebook | LinkedIn | Twitter |

Last week Agora Media Innovation/AppMarket.tv exhibited and spoke at the AppsWorld conference in London. Having spoken to people and heard outcomes of the different sessions, it made me think on of the core components of economic theory.

I always had an interested in economic theory and more so in the popularized theory by Joseph Schumpeter of Creative Destruction:

That in capitalism, it is natural and necessary for companies and industries that rise to virtual monopoly status to be transformed or replaced through entrepreneurial innovation, the force that sustains long — term economic growth.

Duke Law & Tech Review adds:

And it is "Creative Destruction" that high-tech innovations produce that allow another growth curve to start with incremental market and technological development.

Since the start of AppMarket.tv we've been reporting and analysing much of what is happening in media convergence and the transformation and digitization of the TV industry. One cannot neglect the many forces that are hammering upon the rigid and conventional TV industry, even if some companies surprised us — with the neglect — at the AppsWorld conference last week in London.

An important addition to Creative Destruction is that there's the possibility of current value/company destruction in order to free up the path for new innovation. That is exactly what new entrants are doing, think of Google, Apple, Netflix and Boxee and the many others, challenging and impacting the broadcasters and their executions.

Another implication from the abovementioned is internal change, internal product and business model innovation need to occur to be able to adapt to changing consumer behavior and have a stance against the (technology) entrants. Instead of trying to lock in consumers with the available product portfolio — one of the statements made at AppsWorld — broadcasters and other existing TV players need to enhance or broaden their portfolio. It's self-preservation versus annihilation.

Blue Ocean's Value Innovation

Duke's addition on high-tech innovations is just one side of the coin. In order to create another growth curve is the needed value innovation. Technology innovations are meaningless if value innovation isn't an integral part of it.

In relation to the TV industry and media convergence, the value innovation is triggered by the Web, increasing portfolio of "screens" and changing consumer behaviors of prosumerism, content snacking and societal hyperconnectivity.

Another addition derived from Blue Ocean strategy is Tipping Point Leadership that equals the internal change mentioned before. Tipping point leadership focuses on people, acts and activities that exercise a disproportionate influence on the organization's performance to overcome hurdles fast and at low cost while winning employee's backing for implementing a new blue ocean strategy. If leaderships don't stand behind their change, companies cannot intrinsically transform.

Normalisation

Another effect of Creative Destruction is normalisation of the industry, just as it did with the music industry. Broadcasters for example are skeptic or neglecting new opportunities. Why, because revenues for one, are not alike the current ones. Here could normalisation kick in.

*Who says revenues and margins aren't abundantly right now and over the top?

*So, is it realistic trying to innovate or in the broadcaster's case adapt/self-preserve at the same current levels?

Economic or industry distress, layoffs and obsolete working skills are said to be some of the downsides of creative destruction, if we analyse previous cycles (from industry to service society for example), we all known it's part of the process. 

The TV industry must focus on co-creation, making use of the will to produce and consume of their target audiences. This will bring forth differentiation at a low(er) cost (due to relevancy in the eyes of target audience) which is inherent to Blue Ocean strategy. 

When do you think critical mass is being achieved in order for Creative Destruction to truely hammer on the TV industry?