Introduction
Advancements in technology have revolutionized the entertainment industry. Many people have for instance switched from reliance on analogue cable signals to digital transmission technology. Set-top boxes have been instrumental in facilitating digital migration and they are currently in very high demand in both developed and developing countries. These devices are perfect for the market since they avail more TV channels to customers, high-quality pictures, Digital Video Recording (DVR) among other fantastic and revolutionary features. As such, a business dealing in such gadgets would be viable at the present and in the future. In India for instance, the sale of Set Top Boxes is growing at a very rapid pace with an annual growth rate of 22.3% (marketandreports.wordpress.com). Several governments in developing countries have passed legislations that compel their citizens to adopt digital transmission. This move has prompted massive business for set-top box manufacturers. This business proposal is premised on the act that set-top boxes can be further improved to offer more customized entertainment to customers.
The product and its primary features
The company we envisage will be an online video provider whereby it shall combine a set-top box as the main product and a movie-downloading service as its service component (Dhir, 2004). In this case, the product and the service are highly linked and one will be worthless without the other. The product is supposed to draw revenue from sale of the boxes at a relatively cheap retail price of $99. It shall be lowly priced since the value of the product is not in the product itself but in the service (downloading movies) that comes with the product.
We shall set a time limit in which a client can watch a movie immediately or save it and watch later but within a certain timeframe say 24 hours. The set-top box will need to be connected to the internet via Wi-Fi or Ethernet. It shall have a capacity to store up to ten movies at any one time. In addition the box shall offer full playback capabilities such as rewind, pause and fast-forward. All movies and TV shows will be shown in DVD-quality the speed of the internet connection used notwithstanding (Dotzel, Shankar & Berry).
The service component of the company and how it stands to enhance the set-top boxes
The service component of our product (set-top box) is downloading movies and watching them straight to a TV without the need for a computer. Our customers can watch the movies as they are being downloaded or have the pleasure to have them downloaded and later watch them within a specified time period.
There will be no monthly subscription for the service and the core of the business lies in cheaply priced movie rentals. Renting a movie or a TV show will cost clients between $1.95 and $3.95. This means that we shall target a mass market and provide a large pool of movies and TV shows in order to generate mass downloads and earn huge our profits by moving large volumes of downloads. To enhance our service we shall get into strategic partnerships with movie producing companies so that we are able to offer our clients new releases and classics.
Downloading movies to a cheaply priced set-top box and having the choice to store and watch them later or watching them direct to a TV is the gist of this business. Though both the service and the product complement each other, it is the service component (downloading movies) that largely enhances the sales of the tangible product (set-top boxes).
How the product could be expanded to a product line, and the depth and breadth of the line
The product could be expanded into a product line in several ways. The best way would be to team up with movie producing companies such as Warner Bros, Universal Studios, and Sony Pictures among other leading companies in order to have priority in streaming new releases. Moreover, the assurance of a large library of movies say 10,000 films will give the clients a wide selection to choose from and hence help in the expansion of the business. Customers will have the pleasure of accessing all categories of films ranging from comedies, science-fiction, and dramas among others. The movies and entertainment industry is diverse and entirely all movie lovers can watch any movie genre so long as they deem it to be interesting.
Adding services to products as in this case has several benefits that generally expand the depth and breadth of the lines of business being sought. According to Ding, Susman and Warren, (2009), adding services to products aids in differentiation from competitors and establish closer relationships with customers. Increased customer loyalty results in lower costs of production and higher sales and profitability to fund expansion of the business to international markets.
How the core business may change in response to industry or market changes
The core of the business may change in response to the industry and market changes. The changes may be necessitated by the fact that there are other similar businesses and some competition is expected. At the moment, competition is expected from the following companies; Apple TV, TiVo, Netflix, Roku and Vudu. These businesses have structured their business in almost the same manner as we shall structure ours. This may necessitate us to seek over avenues through which customers can access our film stores. Some of the ways include kiosks, portable content-enabled devices, mail, downloading among others.
The core of the business may also change when we opt to partner fully with one film producing company instead of several. In this case we may partner with a company like Sony Pictures in marketing and market research, collecting movie reviews for our partners among other business aspects mutually beneficial to our comedies. In such a case Sony Pictures and our company would conduct joint marketing of films. In this case, we seem to extend our product range to include promotional and consultancy services on marketing for our partner company. On the other hand we obtain free advertisement in the films through short commercials.
We may also change our line of business from all films to specialize in certain genres of movies. We may for instance choose to exclusively offer our customers dramas, comedies and animations. Though this may seem like restricting ourselves to a narrow line of business it allows us to concentrate in offering the very best types of films in those genres. In an industry where thousands of films are produced yearly, it would give us some competitive edge if we were known to offer a larger variety of some genres of movies.
Our product could also be extended to include a set-top manufacturing line that manufactures other types of set-top boxes that do not have the capability to download movies. This line of business caters for customers who may wish to use set-top boxes to exclusively enjoy digital TV content and not movies available via the internet (Ding, Susman & Warren, 2009). The target market for such includes countries that have poor internet and telecommunication infrastructure unsuitable in supporting usage of the internet.
References
"Set Top Box Industry In India (2011-15) | Market and Report." Market and Report | Your one-stop-shop for business information. N.p., n.d. Web. 29 July 2013. <http://marketandreports.wordpress.com/2012/11/05/set-top-box-industry-in-india-2011-15/>.
Dhir, A. (2004). The digital consumer technology handbook: A comprehensive guide to devices, standards, future directions, and programmable logic solutions. Amsterdam: Newnes.
Ding, M., Susman, G., & Warren, A. (2009) Adding Services To Products – An Innovation Challenge “ThoughtPiece” from The Farrell Center for Corporate Innovation and Entrepreneurship. Smeal College of Business, Penn State University. Retrieved 29th July 2013 from http://www.smeal.psu.edu/fcfe/more/white/hybinnov.pdf
Dotzel, T., Shankar, V., & Berry, L. (n.d.). A Practical Guide to Combining Products and Services - Harvard Business Review. Harvard Business Review Case Studies, Articles, Books, Pamphlets - Harvard Business Review. Retrieved July 29, 2013, from http://hbr.org/2009/11/a-practical-guide-to-combining-products-and-services
