SWOT Analysis of MTV
MTV or Music Television brought about a new era where music defined popular culture. Never has music been so widely distributed and demanded by the masses before the dawn of MTV. The first video MTV had ever aired last August 1981 was that Video killed the Radio Star and this became true as video or visuals took music to another level. More than its contribution and reshaping of music is how MTV redefined today’s youth, or the 12-34 year old demographic. They are suddenly given the attention they want and all their demands and desires can be met and used as basis, in the case of MTV’s content and programming. However, the youth are impulsive and chaotic in their interests. It is difficult to track them down. As the world is fully digitalized, “globalized” and as it fully integrates new technologies, the possibilities are endless and out of hand. The question remains as to whether it can still be successful and competitive in the following generations to come and whether it can still be able to define popular culture and today’s youth as Generation X reaches their forties and as a new Generation enters today. Undoubtedly the circumstances of the 80s are far different than the 21st century where MTV does not only meet new inventions but also new competitions. Whether the MTV concept will survive and whether cable TV can sustain the onslaught of digital media and wireless applications is still a question to answer.
This paper tries to bring understanding to the future of MTV by presenting a comprehensive analysis of the case so as to formulate strategic options for the business organization, generate sound recommendations and develop feasible implementation plans that will address the issues that confront the long-term operations of the company. As such, assumptions, SWOT analysis, key industrial success factors, Porter’s Five Forces Model, company, financial, stakeholders’ and strategic options that are significant to the success of the company were discussed in the succeeding sections of this research activity.
Never has MTV been so challenged until the dawn of the 1990s to the 21st century. It will meet several hungry competitions not only by rival music channels but through other multimedia applications brought by technology’s further innovations. As it diverts attention from the television to mobile phone and the Internet, MTV’s claim as one of the most influential television channels is in peril until it finds a way to truly make a transition or integrate itself to wireless and digital applications.
MTV will need to be aggressive and dynamic in order to fit the turbulent market's sensibilities. There needs to be a proper shift from Music Television to Music in the Internet, Music in Wireless solutions such as those provided by the Mobile Phone among other digital forms and substitutes.
Globalization had presented a wide scope of alternatives and possibilities which will be MTV's challenge to meet. MTV will need to work on its multi-domestic strategy by providing more local content to their target market. The target market demands to want their MTV, the way they like it and this will mean localization in the part of MTV in order to be distributed and appeal successfully to this population.
Situational analysis, being a part of the market planning process, is an integral procedure and a very powerful tool for organizations and businesses to instigate effective marketing plans. As the initial procedure of creating a market plan, situational analysis aims to comprehend the environmental as well as the organizational influences that surround a particular business establishment. To put it simply, situational analysis is the process of reviewing the present situation of the company, which includes the review of relevant matters such as the history of the firm, analysis of its market environment, competitors and consumers. There are actually two types of situational analysis that are both equally significant. One is the external analysis and the other focuses on the internal environment. When conducting an external situational analysis, the business’ customers, market and competitors are analyzed. Relevant information regarding the company’s market segments, their competitor’s relative weaknesses and strengths as well as the industry as a whole. An analysis of the external environment requires more than just a summary of what the competition is doing. The external environment is comprised of two elements -- the societal environment and the industry. The societal environment includes a review of major trends in society affecting organizations across all industries. These trends include political, economic, social and legal. While not necessarily having a direct, immediate impact on the business, these trends are important to the long-run health and direction of the business. For example, the number of dual career couples does not directly impact the short-run performance of the company, but does certainly impact future policies and directions the company may take in the long run. An analysis of the industry takes a look at factors that have a more direct bearing on the business. Hence, in addition to analyzing the competition other groups must be similarly evaluated to ascertain that no opportunities or threats within the environment are overlooked (Buhler, 1994).
On the other hand, internal situational analysis focuses on the identification of the company’s distinctive competencies, expected growth, their assets as well as their liabilities. The internal analysis also illustrates the core values of a company, and in what ways can these values be enhanced or beneficial to the market plan (Cooper, 2002). The evaluation of the internal environment of the company involves the analysis of the company’s structure, culture and resources. When a strategy is selected for implementation, it must be appropriate given the way the organization is structured or the way an organization must be restructured. The strategy must be consistent with the organization's culture. Finally the organizational resources must be available to actually implement the strategy that was formulated. Without the proper people, skills, abilities, finances and physical resources, the strategy cannot be implemented (Buhler, 1994).
The success of the business organization entails detailed understanding and examination of political, social and economic factors that influence the growth and continuous operations of the company. Studying the important consideration relevant to the organization to serve the purpose and objectives of the company will determine its success. Consequently, decision-makers of the company should be sensitive of the general trends and changes that are taking place in their industry. This will include efforts to maximize the opportunities available while reducing the risks that confront the business organization. The strengths, weaknesses, opportunities and risks that characterize the operations of MTV are detailed in the discussions that follow.
MTV's association to popular culture means it also dominates the young adult population who are some of the strongest money spenders. MTV is able to appeal to this population not only through the music but also through its coverage on lifestyle, film, fashion and other forms of leisure and entertainment that captured this market. It is easy to be loyal to MTV as it gives the young adults what they want and at the same time, this market determines what MTV should show them. MTV is a channel that has a personal appeal that cable networks and advertisers come knocking on MTV's door. The demand of the market has no way to go but up. To the young adult market, MTV is an empowering vehicle which allows them to have a more pronounced self-esteem, power and personality which allows MTV to constantly claim the dominating position.
Another strength is brought by MTV's appeal to its advertisers. During its many programs such as the Music awards, MTV has been receiving sponsors from companies that are confident to enjoy exposure in MTV's sought after programs. PepsiCo and Ford are two of the companies that have taken the MTV opportunity in order to reach out to the young adult market. Many artists seek the alliance of MTV knowing fully that this is a launch pad of present favorites and successful artists.
MTV has been constantly expanding and exploiting other media and entertainment forms other than music such as those brought by films and video games. Its constant mergers with companies such as the Philippines' National Broadcasting Company will further localize MTV and fit the interests of its audience and bridging cultural as well as regional differences. MTV has since expanded to India and China and has been continuing its move towards alliances and mergers for wider distribution and for tailored products. Partnerships will allow MTV to cement its influence in a fast moving insatiable consumer market.
MTV's constant support for social and political causes will allow greater relevance and presence. Its involvement with such issues strengthens its power and influence in the realm of entertainment media. Its expansion to other media forms will allow it to deliver more services other than just mere music. MTV's VH-1 will allow MTV to maintain its dominant position among other markets.
The weakness of MTV is that it caters to instant fleeting on-demand interests. As such MTV is bound to lose its dominating position because there are bound to be other interests the audience and market wants to be met. Thus MTV will need to find out what exactly these interests are and expand to this if they would want to maintain a dominating position. Cable Television offers several other choices that MTV is removed from its monopoly.
MTV had encountered obstacles in reaching the local audience through their cultural misunderstandings. It must understand the cultural milieu they are penetrating by making appropriate aspects such as advertising, brand, and cultural contexts.
The digital age may present an opportunity for MTV to merge into mobile and Internet companies with regards to the wider distribution of their products. Information technology can provide MTV better solutions in determining what the market demands. Video Awards and Countdowns may hold polls through mobile phone or websites. At the same time, MTV may enjoy visibility in wireless technologies allowing the market to "have its MTV" when they want it. MTV's presence in the web and mobile will allow an enhanced on-demand viewing experience.
Globalization has opened MTV to international deals and the emerging markets such as China, India and Brazil are definitely rich growth opportunities to venture into. Up to two thirds of Asia's population belongs to the 12-34 age group which is MTV's Target market. This will be a large market to explore and cater to. Asia has also been increasingly interested in Western Products. It is expected that MTV has up to 54 million homes in China. With China's advertising also on an upsurge along with India, MTV has marketing and advertising revenue growth opportunities.
The emergence of Digital cable and other substitute platforms will be a threat to MTV's current dominance. Different countries such as Germany had created their own local music channels that would compete with MTV. Their advantage is their familiarity of the audience that MTV must be able to match. Locally produced content and the government reinforcing deregulation in several countries had allowed global media to proliferate.
MTV exists in the turbulent world of Popular culture. It needs to constantly take risk and commit changes in order to curb MTV to the fleeting interests of its impulsive market. Digital platforms provide other alternatives for the population to spend their past time and thus MTV must know well to penetrate this. For MTV to continue setting trends, it must be open to other possibilities as its consumers are known to be demanding and possessing short attention spans.
Many competitors also would like to try their hand in challenging MTV's success. New cable networks and channels have been eager to take a chunk out of MTV's advertising share.
However, the advertising revenue that has been sustaining MTV has began to decrease as cable networks lose their appeal. The presence of new digital and media forms provide advertisers other new and emerging ways and alternatives in marketing their products.
The MTV Generation, the young adult 12-34 market is also growing old. MTV will need to anticipate a new generation and have a new market to please. The threat in MTV's chosen market is that the young adult stage is a turbulent and short-lived stage. Not to mention, the young adult's sensibilities and interests are quick to change.
The New Technologies encouraged the production of more channels allowing local cable and satellite technology to create more and increase bandwidth.
Key Industry Success Factors
One of the core characteristics of a successful organization is focus. Since the business environments are fast becoming more and more complex added to the fact that it changes rapidly and dynamically, businesses need to concentrate on a few key elements that are most important to their organizations survival. Thus, it is not surprising the critical success factors keep the organizations from straying too far with external issues not relevant to their company’s success.
Critical success factors (CSFs) in business, are the limited number of areas in which results, if they are satisfactory can ensure that successful competitive advantage for the company (Thierauf 2001). Determining these factors is an old concept in business because there were great leaders throughout history who have identified and addressed key factors to achieve their successes. There is no one definition of CSF but it is considered that these are the areas which the company needs to concentrate on to flourish. Therefore, the activities should be carefully monitored and guided by the management.
Chung (1987) defined critical success factors as managerial factors that create a competitive edge for a company in its respective industry. There is no specific process in identifying and executing critical success factors in strategic management planning. This is the reason why Thierauf (2001) asserts that different companies which have similar structure can conduct its market entry forming different strategies which lead to the development of various critical factors. As the primary means for an organization to achieve its strategy, critical success factors must take into account the differences in the environment and organization that exists.
In the case of MTV, there are significant success factors that can determine and predict the positive outcomes and benefits of the organization strategic options. This is regardless of the scope of the operations and business transactions of the (local or international) of the organization. Such success factors are the significant considerations of variables that can directly and indirectly influence the growth and development of the company. In the broadcast industry, the relevant or key success factors include the (a) content, (b) distribution, and (c) marketing. These are three of MTV's core competencies
As long as music companies continue to approach MTV to feature its music as raw material, MTV will continue to meet success. For this to be possible, MTV's credibility as the number 1 music channel with a widest range of distribution needs to be constantly acknowledged.
MTV must meet the challenges of the Globalizing world and continue its expansion and global distribution in order to meet success. The determinant of success is to produce local content because viewers are known to enjoy watching programs that feature aspects of themselves. Thus in order to meet success MTV must constantly meet is multi-domestic strategy.
In the light of Globalization and new methodologies, MTV is challenged to be more aggressive in its partnerships, alliances and merges with other companies to further its marketing efforts. To market itself with the likes of PepsiCo and Ford is to allow it to have wider exposure and target viewer market. The keyword here is penetration through the products and services that MTV's markets are known to be purchasing and enjoying.
Porter’s Five Forces Model
Michael Porter and his five forces model concentrates on the threat of entry, power of the buyers, power of the suppliers, threat of substitutes and competitive rivalry.
Understanding the dynamics of the competitors in the industry helps assess the potential opportunities of every business venture by differentiating the similar products or services offered by the company against other business organizations. According to David (2003), there are at least four types of resources which the company can use to achieve its objectives: financial, tangible, human and technological resources. As such, it is necessary to realistically assess potential levels of profitability, opportunity and risk based on five key factors within an industry so as to determine the long-term profitability of a market or market segment.
An organization that offers products as well as services also depends on suppliers that deliver the company’s raw materials. This condition leads to the buyer-supplier relationships within different industries. Such relationship is directly influence by the changes in the supply and demand variables based on the existing needs of the consumer population. The influence of the supplier is defined by its ability to dictate price and influence availability of materials. Other strengths of the supplier include their ability to (a) increase prices without suffering from a decrease in volume, (b) reduce the quantity supplied, (c) organize in a formal or informal manner, (d) compete in an environment with relatively few substitutes, (e) provide a product/material that is a critical part of the end product or service, (f) impose switching costs on their customers when they depart, and (g) integrate downstream by purchasing or controlling the distribution channels.
As such, every company that depends on the services and materials from key suppliers need to be sensitive on the variables that are highly important and considered by the suppliers. In the case of MTV, the supplier is the music industry which provides content and programming. The decision-makers of the company should have a clear understanding of the business dynamics in which suppliers are directly involved in. These include the suppliers’ concentration or their focus and core business interests, variety of products and design offered, and the alternative resources that are available. In this light, it is most appropriate to build win–win relationships with suppliers or arrange the use multiple suppliers in order to protect the interests of both ends.
The power of buyers describes the impact customers have on an industry. When buyer power is strong, the relationship to the producing industry becomes closer to market conditions wherein the buyer has the most influence in determining the price. As such the bargaining power of buyers increases when they have the ability to (a) make agreements with other companies providing similar products and services, (b) purchase a product that represents a significant fraction of the expenses incurred by the company, (c) purchase of a product that is undifferentiated, (d) incur low changes in costs when they change vendors, (e) be price sensitive by bearing in mind the options available, and (f) integration to purchase the goods of the suppliers.
In the case of MTV, the impact customers have there are two possible scenarios that will determine the organization’s buyer power. If the company will maintain its integrated organizational structure wherein distinctions between the advertisers, music industry and cable television operators are part of one all-encompassing market player, buyer power will be high since it will be able to dictate the prices of its raw materials incurred from the suppliers.
The possibility of new companies entering the industry influences the pace of the competition. Thus, the key is to evaluate the methods of entry and exit for a new player to the industry. Although any company should be able to enter and exit the sector, each industry presents different levels of difficulty influenced by economics. These unique characteristics of the each industry are referred to as barriers to entry which may come from different aspects of the business ranging from supplies to technology. They seek to reduce the rate of entry of new entrants which leads to maintenance of a level of profits for the existing players.
In the case of MTV, barriers to entry are low as more music channels are beginning to emerge such as Germany's Viva among other countries. With the digital platforms widely propagating in the entertainment industries, there are several companies pitching in. MTV's competitors can only multiply through substitute platforms that will attempt to topple down MTV due to viewing alternatives. Cheaper means to present music has since multiplied thanks to wireless solutions.
As barrier to entry is low, MTV can definitely expect threats from other competing channels from all over the world. The government also will get in the way by regulating the channels entering their countries.
“Substitute products” as those that are available in other industries that meet an identical or similar need for the end user. As more substitutes become available and affordable, the demand becomes more elastic since customers have more alternatives. The treat of substitutes often impacts price-based competition since substitute products may limit the ability of firms within an industry to raise prices and improve margins. Other concerns in assessing the threat of substitutes include the presence of new technologies that can contribute to competition though more diverse and economical substitute products and services. A segment is unattractive when there are actual or potential substitutes for a product.
In the case of MTV, new cable networks had been fast emerging ever since the 1980s. Cable networks would enjoy enormous growth during the 90s to the dawn of the 21st century and they provide viewers, audience and markets other viewing options.
Firms strive to secure a competitive advantage over their rivals. The intensity of rivalry varies within each industry and these differences can be important in the development of strategy. Industries that are “concentrated,” versus “fragmented,” often display the highest level of rivalry. In pursuing an advantage over its rivals, a firm can choose from several competitive moves: (a) changing prices, (b) improving product differentiation, (c) creatively using channels of distribution, and (d) exploiting relationships with suppliers.
In the case of MTV, Globalization has opened competition especially in the case of local channels. There is new technology to be exploited that will expand broadcasting capabilities. Locally produced material has become the goals of every TV channel in order to truly suit the personal tastes and sensibilities of the viewers. Governments also encourage local materials. Globalization has opened the doors for other entities internationally to join the competition as they are able to access new markets. Competition will perceivably become stiffer in the growth of new competition and rivals all around the world. Rivals include France's M6, Germany's Viva and Turkey's Kral.
A considerable number of companies have developed into an essential part of the period of global competition, increasing development, improved business paradigms, and corporate reorganization. The continuing transformation from the traditional industrial framework with its hierarchical companies to a worldwide, knowledge-founded financial system and intelligent corporations necessitates human resource purposes to realign and relocate itself. Considering alternatives and ideals on the relationship between and among employers and employees resulted to more adaptable pool of skilled staff members and efficient body of workforce.
Born in August 1, 1981, MTV or the Music Television Channel was created in collaboration of Media Company Warner Communication and Credit Card Company American Express. In a span of more than 10 years, MTV had become a popular culture icon so much so that the Generation of MTV has been dubbed the MTV generation. Its influence stretched out to becoming the launch pad of artists and records to producing reality shows, politically inclined campaigns and becoming a whole lifestyle in itself. MTV popularized music and particularly music videos which will change how music would be earlier conceived from an audio spectacle to a visual one.
MTV was conceived during the emerging and hard times of Cable Networks. The Cinema and the coin-operated video games had been formidable opponents as well as the video recorder. It was the live coverage of Mohammed Ali and Joe Frazier that brought an influx of people to subscribe. More of these special events multiplied until the viewers steadily grew. The video game machine became yesterday's fad and the consumers are increasing in their financial power.
It has introduced new forms of music such as rap and punk and broadened popular music. The channel reached a wide audience and as time goes on, the channel will be localized to fit the sensibilities of specific nations and regions. It had pioneered through the creation of the Video Music awards and the countdown as well as concerts and campaigns with a cause. MTV had since multiplied into different variants while upon continuously merging and seeking alliances as well as buy-outs from other networks to strengthen its competitive position.
The Music Industry produces the content and programming while the advertisers and viewers provide the revenue.
The cable television operators distribute the music.
The music companies pay MTV to feature their music videos. At the same time, there are advertisers who pay MTV to feature their products. Thus the advertising revenue MTV receives is doubled.
As the nature of financial management become more and more complex in this information and efficient communication era of international business, finance managers face a wide array of challenges, opportunities and options for him or her to enhance the investing and financing activities of the organization as well as the inherent risks and circumstances of the decisions that will be made. The challenge now for the financial mangers is to explore the options and take advantage of the opportunities while taking caution in managing the risks. Financial management was defined by Macmenamin (1999) as the determination, acquisition, allocation and utilization of financial resources with the aim of achieving a particular goal. It consist of analyzing the financial situations, making financial decisions, setting financial objectives, formulating financial plans and providing a system of effective financial control to ensure the progress of the plans towards the attainment of the company aims and objectives. All these are supervised by the financial manager in the process of financial management.
As MTV expands to new markets and embark further on international deals not only in MTV but also its TV networks such as Nickelodeon and VH1, MTV may foresee financial advantages despite the fact that MTV is no longer a dominating force in Cable networks. By expanding to emerging markets and engaging in their global strategy they may meet financial success as Asia’s youngest comprise of nearly two thirds of the population. These youth below 35 years old comprise three billion and more so, have a growing interest to Western products. Once China, India and Brazil reach full potential, they will be able to have a larger spending power in cable or television advertising. This also involves the eventual growth of mobile and Internet sectors where MTV must work on expanding in the arrival of the Digital age and new technologies which people will occupy more in. By 2010, MTV should foresee enormous growth along with China being the world’s fourth largest market and Brazil claiming the third largest spot. By investing on 60-70% on local programming, they will be able to provide viewers the MTV that they want.
In addition, MTV’s expansion to mobile phones and Internet among large developed text messaging markets such as Europe and Japan holds promise to further financial growth. Asia in itself has also a promising text messaging market that MTV may be able to explore and expand.
The primary goal of private entities in deregulated markets is to provide maximum returns to shareholders. Such goals have led to supply shortages, price competition that forces weaker entrants out of the industry, high prices and anticompetitive behaviour. Experience worldwide indicates that competitive markets encourage electricity generators to strive for supply shortages to keep prices high. While the most dramatic example of this behavior have been evident in California, similar behaviour has occurred in England, Wales and, to some extent, Australia.
Stakeholders are defined as the individuals or organizations which can either gain or lose from the success or failure of a system (Boutelle, 2004). The stakeholder analysis was first introduced by Freeman (as cited by Boutelle, 2004, par.5) to remind management that it is important to evaluate the interests of the individuals or organizations who can influence or can be affected by the activities of the company. The steps to stakeholder analysis are the following: identification of the stakeholders; prioritization of the stakeholders; understand the stakeholders’ perspectives and incorporate the stakeholders’ perspectives to the future plans of the company.
Statement of Strategic Options
I Want My MTV
The slogan I Want My MTV is a loyalty concept targeted to the 12-34 age segment. The idea of "want" and "my" gives off the idea of a personalized desire that can be met by MTV. There is a exclusivity in the part of this age segment that makes them want to declare it proudly. Therefore consumers seek for this exclusivity and want to take part of the MTV revolution. Cable networks and advertisers alike can't help but to include MTV among its ranks.
By forming more spin offs such as MTV dance and through channels like VH1 and Nickelodeon, it is possible for MTV to capture a wider market beyond their 12-34 demographic. MTV is able to reach out to the market older than 34 through VH1 (who are reportedly a group of loyal consumers) while MTV can also win the appeal of those younger than 12 through the Nickelodeon channel and the online game called Neopets. This is possible through mergers, alliances and acquisitions which leads to the next strategy.
MTV has merged with CBS Corporation and thus are able to reach exposure through CBS's advantage in news, sports and distribution. That following year, MTVAsia allied with National Broadcasting Company of the Philippines in order to establish a terrestial channel on the country. In doing so, NBC is able to impart their mastery in distribution and operational expertise in the Southeast Asian country. In this manner, MTV is able to embark on another strategy: the Multi-domestic strategy.
Through its Music awards it is also able to attract bigtime sponsors such as PepsiCo and Ford Motors. This would even attract more market. In PepsiCo's case, its food and drink consumers and through Ford, car consumers.
It has also been endorsing the channel through political and social causes for poverty and AIDS.
In its Multi-domestic Strategy, MTV expands through local content which allows them to divide and reach individual markets who will want a music channel who knows not only their music interests but also their locale. MTV then acknowledges its slogan "I want my MTV" as it is able to give consumers the MTV they really want based on their culture and not merely western or European. The consumers are clearly interested to a channel that knows them enough to speak their own language and sensibilities.
MTV must continue its expansion of local content as competition and rivals decide to attack MTV through local channels. Globalization has only increased the chances for MTV to meet its hungry competitors and it is easy to have the means to try to top MTV through new digital and media platforms. MTV has already its share of imitations from countries around the world and people may not mind this. By integrating these technologies and continuing its expansions throughout the world especially in emerging countries found in Latin American and Asia, it may continue to meet success. MTV's chance of success and survival is not as high in the 1980s and 1990s where MTV has been a pioneer of music television, and establish itself as a cultural icon.
MTV must first correct its weaknesses foremost of which is its need to reach out to a local audience by researching about the market they are entering. This can be repaired through alliances with local companies such as the Philippines' NBC. It also needs to appeal to the governments. In each country there is an obstacle or challenge waiting like the limitation of pay television and the propagation of free channels which will discourage purchase of MTV.
The young generation or the 12-34 demographic is the hardest market to pin down due to changing trends and interests. They are inconstant with their desires and most likely, they would not be the slightest bit similar to the generation that popularized MTV. These are the children of digital and new technologies that would have a shorter attention span and fleeting interests. The 21st century is an even more distracting world. MTV must constantly reinvent itself and start something new in order to ride along the changes and the thirst towards innovations. In order to be the trend-setter it was in the past, it must be able to encompass or conquer its challenges of globalization and technology and create from here.
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