Report: Bsb vs Sky Television

1264 Words May 5th, 2009 6 Pages
1. BSB should have been able to identify potential competitors, particularly News Corporation. News Corporation was successful in US (in the US TV satellite industry), had experience transmitting television programs to Western Europe with a low-powered satellite and they already had presence in the UK with newspapers, which could allowed Sky to realize economies of scope. These economies of scope are even more significant if we take into account that News Corporation owns 20th Century Fox Studios. After purchasing 69% interests in SATV and renaming it to Sky Channel, this was a clear signal of a potential competitor to BSB. Adding to this, other signal was Murdoch’s personality, characterized by being aggressive and used to risk and make …show more content…
A company that would act fast and decisively would be a serious threat for BSB.

2. Before Sky’s announcement BSB should have followed a strategy to increase the cost of entry for any potential entrant. In practice, BSB could have bought exclusivity rights over Astra satellite as a new entrant could provide the same service with a medium-powered satellite. Actually, by signing this exclusivity they would have launched their services immediately (with PAL existing technology), guaranteeing a first move advantage and restricting the room for entrants. Afterwards, with the network established BSB perhaps could upgrade its technology to D-Mac (high-powered) but this time with control over market. Speed in getting to the market was crucial in this case, but BSB missed it, having technology concerns prioritized over marketing concerns. Besides, if they insisted in this technology (D-MAC) they should have lobbied to put legal restrictions in medium-powered satellites transmitting for UK, consistent with the Government objective to promote investment in MAC standard. Moreover, they should have pursued exclusive agreement with movie studios, as soon as possible, to limit entrants’ ability to have superior programming. On the other hand, exclusivity or partnerships in distribution, were recommended, by tying retailers to sell the dishes, benefiting with the costumers’ higher switching costs and, consequently, higher future market share. Ex-post Sky’s entry announcement, it

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