CHAPTER 6 Multiple Case Studies
6.1 The Cases of Interactive Television Services
CHAPTER 6 MULTIPLE CASE STUDIES
The cases companies we selected involve three field cases and three library cases.
The related industries involve interactive television services, securities brokerage services, and traveling services industry.
6.1 The Cases of Interactive Television Services
The recent revolution in digital processing ushers the broadcasting industry into a new era, the ITV has been regarded as the third generation of broadcasting services and relevant issues have gained tremendous interests from both academics and
practitioners. Here, we first brief the ontological process of ITV, the definition of ITV, taxonomy of interactive television, the comparison of ITV and the Internet, and then describe one library case of Time Warner and one field case of Taiwan Television Enterprise are adopted to show evidences of challenges (as in the Time Warner case) and of the hesitance phenomenon (as in the TTV case) when firms seek some ITV service.
6.1.1 The Ontological Description of ITV
Schwalb (2004) provides the content production food chain of ITV illustrated in Figure 6.1. The ITV food chain starts from the producing/authoring stage, which involves video making and software application. In the integration stage, back-and forth interaction between the creative professionals and those providing the components is necessary and time consuming. Besides, the quality assurance and testing engineers and configuration management professional are two significant role to ensure the content played correctly and enable the various distribution processes.
After the components are integrated, they are stored in archives. Then, the ITV programs are passed through to the distributors or advertisers in the releasing stage.
‧
國立 政 治 大 學
‧
N a tio na
l C h engchi U ni ve rs it y
43
The last stage of ITV food chain is the viewing stage, the related issue involves the interactivity of either local type with no outside communication or remote type with bi-directional virtual interactive channel. In conclusion, the whole ITV content food chain is a complex process and requires collaboration by manifold equipments and technologies operated by many partners.
Moreover, Tsaih, et. al. (2005) provides the ITV value chain for describing the various players in the ITV business environment, which involves different business sectors, for instance, the broadcasters, content production companies, advertising agencies, platform operators, technology companies, and retailers and consumer goods companies, et al. The value chain is illustrated in Figure 6.2.
‧
國立 政 治 大 學
‧
N a tio na
l C h engchi U ni ve rs it y
44
Figure 6.1: The content production food chain of ITV service (Schwalb, 2004)
‧
6.1.2 The definition of Interactive Television
Interactive Television (ITV) refers to anything that lets the television viewer or viewers and the people making the television channel, program or service engage in a dialogue. More specifically, it can be defined as a dialogue that takes the viewers beyond the passive experience of watching and lets them make choices and take actions (Gawlinski, 2003). Another definition is proposed by Broadcast Committee of Advertising Practice (BCAP) of UK, interactivity is functionality rather than a specific type of service, and it can be applied in a wide variety of contexts. Its distinguishing characteristic is the ability of viewers to interact with TV programs by changing the content which appears on the screen or by providing information to the broadcaster through a return path (BCAP, 2004). Hence, interactive television service is a “pull” service initiated by the subscriber to a Multiple Video Program Distributor (MVPD) that are not necessarily related to any specific video programming (Galperin
Advertising Own the contents &
interactivity y Program concepts y Advertisement message y Interactive application
definition
y Content management
y AV content production y Interactive
y Program service y EPG for channels y Teletext service
y Broadcaster content independent service
‧
and Bar, 2002). Hitherto, ITV means that the viewers use the remote control to request information over the show which is broadcasting, and this can evolve various innovative applications.
6.1.3 Taxonomy of interactive television
Although there is still no generally agreed taxonomy for classifying the types of interactivity, in the literature, three basic types of interactive television (ITV) were issued by Morris and Smith-Chaigneau (2005), namely, enhance broadcast, interactive broadcast, and internet TV. The differences among them are listed in Table 5.1
Table 6.1 The basic types of applications that constitute ITV
Types Characteristics I. Enhanced
broadcast
1. Interaction occurs only between the user and receiver.
2. No communication channel to the broadcaster or other service provider.
3. Examples: news reports, electronic program guide.
II. Interactive broadcast
1. Interaction relating to specific applications occurs between the user and the broadcaster or another service provider via a return channel.
2. Interaction takes place over a proprietary communication mechanism.
III. Internet TV
1. Interaction occurs either between the user and the broadcaster of between the user and a server on the Internet.
2. The receiver needs a standardized IP connection.
Source : Morris and Smith-Chaigneau (2005)
‧
On the other hand, Microsoft, the Henley Centre, and other scholars propose different modes of interactive television. Table 5.2 provides the details of taxonomy.
Table 6.2 The different types of ITV Scholar/Organization Types of interactive television Morries and
Smith-Chaigneau (2005)
1. Enhanced broadcast 2. Interactive broadcast 3. Internet TV
Microsoft (producer of MITV) 1. Enhanced television : 2. Internet on television 3. Personal television 4. Connected television The Henley Centre (consumer
research organization in UK)
1. Distribution interactivity 2. Information interactivity 3. Participation interactivity Galperin and Bar (2002) 1. Program-related services
2. Dedicated services
Gawlinski (2003) 1. Electronic programme guide (EPGs) 2. Teletext-style services
3. Walled gardens 4. Internet on television
5. Video-on-demand and near-video-on-demand 6. Personal video recorders
Source : Constructed by the author
‧
6.1.4 Interactive television vs. the Internet
Some practitioners argues that the television and the computer would converge due to the two ongoing trends, one of that is providing Internet-like services on TV, such as interactive TV, another trend is providing TV-like services on computers, for example, to watch TV on the computer. Nevertheless, the nature of the convergence is still debatable, Press (1993) had posited that these two communities had different culture, and the differences are listed as follows.
Table 6.3 The differences between ITV and the Internet
Items Interactive Television The Internet Applications Movies and home shopping Text messaging and
information retrieval Terms Interactive Television The Internet
Users For the users in their homes Begin with university and research workers, and rapidly spread into business and schools
Data Types Video and audio communication
Text and multimedia
Terminal Device Television set, set-top-box, remote control
Computer, voice input
Geographic Scope Regional Global
Media Cable/Telephone/Wireless Cable/Telephone/Wireless
Asses Ethic Centrally produce and broadcast
Free-access, all are publishers
‧
Table 6.3 The differences between ITV and the Internet (Cont.)
Items Interactive Television The Internet Economic
Orientation
Speak of education and communication, potential profit is the prime motivator.
Began in the education and research, charging and commerce
Information Valuation
Base on the sale of copywritten information for royalties
Often values information sharing
Rollout Schedule Trials have begun, it will be many years until a significant number of households and businesses have interactive connectivity.
Already in production
Source: Press (1993)
To date, the interactive television can be used as an umbrella term for a range of applications, including electronic program guide, electronic service guide, enhanced broadcasting, and multi-media on demand, VOD, interactive advertising, interactive games, voting, sports program, and T-commerce. Thereby, interactive television services can be regarded as providing viewers the experiences of interacting with TV show by utilizing the set-top-boxes.
6.1.5 The case of Time Warner in USA
Since the interactive television issue was firstly raised in the early 1970s, both academia and practitioners have endeavored to explore the various innovations either from technology or application perspective. In addition to the technological
‧
breakthroughs, the interactivity has been regarded as tremendous competitive differentiator. The deployment of interactive television opens many exciting opportunities for businesses and users, ranging from television-based electronic commerce to interactive educational programming (Gablin and Bar, 2002). Moreover, Tsaih et al. (2005) envisioned a potential commerce boom based on the interactive television business concept and an evolution on value chains of all industries. All these innovative developments will evolve as broadcasters, software vendors, equipment makers, and users experiment with novel ways to enhance and perhaps transform the television experience altogether (Gablin and Bar, 2002).
According to an analysis of contributors’ geographical location presented in Table 6.4, which reviewed the all the literature related to interactive television in SCIE, SSCI, and A&HCI databases appeared in 1970 to 2009. A total of 552 authors contributed to 228 articles. The largest part of contributors were located in the USA (183, 33.83%), followed by UK (84, 15.53%), the third largest category was located in Japan (35, 6.47%). It shows that USA had an early development of interactive television, which conforms to the history of American cable television. The anecdotal evidence was revealed in the interactive television development timeline of Time Warner Cable (Table 6.5), where recorded that Warner Cable set off to launch the first interactive television programming with its QUBE system in Columbus, Ohio in 1977 and the following development of ITV services. all the archival data were collected from the database such as EBSCO Business Complete, corporate Website and other references from the Internet.
‧
Table 6.4: The analysis of contributors’ geographical location
Country Count Percentage
Source: Chen, et al. (2009)
‧
Table 6.5: The timeline of ITV development in Time Warner
Year Activities
1977 Launch the 1st ITV programming : QUBE 1993 Plan to launch interactive video shopping mall.
1994 Postpone the probable launce of ITV service 1996 Plan to launch FSN
1997 Shut down the FSN
1998 The first cable company going digital.
2000 Deal with American Online for ITV and high-speed Web access.
2001 Deal with Gemstar interactive program guide.
Build up Interactive Service Architecture Unification plan
2004 Joint venture with Comcast to create OCAP middleware implementation 2005 Plan to introduce a new navigation system
2006 Adopt the Internet portal-style advertising strategy 2008 Cooperate with Panasonic in tru2wayTM
An agreement with BIAP in set-top-based software
2009 Agreement with Samsung for tru2way-enable set-top boxes.
Source: Constructed by the author
In 1977, interactive television (ITV) was launched by Warner Cable with its QUBE system in Columbia, Ohio. Prospecting its value in providing interactive ratings, home security, TV shopping, remote education, and so on, a series of pilot tests was conducted in big cities such as Houston, Milwaukee, Dallas, Cincinnati, St.
Louis, and Pittsburgh. Although the pilots were successful, the high cost of building such a closed-circuit television system presented the challenges of searching for
‧
low-cost technology, a profitable business model, and high customer acceptance. By 1982, Warner Cable was running a $99 million loss, and by 1983, the total loss was
$418 million. Moreover, after Warner bought out American Express in the early 1980s, the organization was reformed such that the original development team left and the earlier alignment between technology and business was phased out. At that time, Warner Amex had two million subscribers, roughly 1/10 of the entire cable subscriber market. The question of whether IT-enabled interactive service innovation for such a broad customer base is profitable is a pressing issue. Due to these unsolved challenges, Warner Amex decided not to move forward with this interactive television program and sold the relevant IT assets to Viacom (http://www.britannica.com/EBchecked/topic/765198/Time-Warner-Inc). Time War- ner did not attend to interactive television again until 1987, a group of engineers in
Time Warner Cable tried an experimental design of two-way cable TV system (Farhi and Corcoran, 1994). With riding the wave of fiber optic network and digital computer technology, Time Warner Cable decided to invest $5 billion over five years for the Full Service Network (FSN) in 1994, an interactive video service offering shopping, games, sports, news, and movies. Time magazine described it as “the world’s most sophisticated–and expensive–interactive TV system…, it is the holy grail of interactive television” (Elmer-Dewitt, 1994). The partial rollout of the system began in December 1994, eight months later than the expected rollout date due to technological hurdles. Furthermore, in 1995 and 1996, the development team conducted several different applications on different platforms to explore how advertisers could use the FSN. However, an experiment showed that users only ordered two movies a month over the network. By retrospecting the historic evidences, some technical glitches were identified at that time, the system complexities were the main issue, for instances, the real-time compression, updated assets and the memory
‧
limitation of set-top-box (Blank, 1995). One technical manager described the situation,
“That’s where the tricky programming comes in. We have to get the images up quickly and try to anticipate what people are going to use next.” Eventually, the high cost of the set-top box, low usage rates, and low revenues resulted in its failure. To the end, Time Warner announced the FSN phase-out in mid-1997 by shortly mentioning that the FSN played a key role in “providing the technical and marketing data”. (http://en.wikipedia.org/wiki/Full_Service_Network) Then, even Time Magazine shown the contempt by denoting FSN as “the most expensive pizza delivery system ever invented” (Baumoh and Greenwald, 1997).
The lesson shown by the case of the FSN guided the major cable MVPDs back to the fundamental technical development of ITV and led a subsequent rollout of digital cable, high-definition video-on-demand (VOD), and ITV guides. Time Warner was the first to move to digital, doing so in 1998, followed by Comcast in 2000. Time Warner and Comcast licensed the Gemstar-TV guide in 2001. They also formed a joint venture in 2004 for implementing the OpenCable application Platform (OCAP), a middleware platform that enables ‘plug-and-play’ set-top-free digital TV.
These companies have been attempting to overcome the challenges of consolidating IT assets and obtaining a reasonable potential value. The previous unfavorable experiences ascertain that to form a strategy involved with the business-IT alignment is the most critical issue, this can help the executive management decide the breadth and depth of IT expenditure invested. In the Time Warner case, the top management should scrutinize the ITV project systematically.
Without the appropriate development for the enabling IT, the technical bias eventually result in the failure of the project.
6.1.6 The case of Taiwan Television Enterprise
‧
Taiwan Television Enterprise, Ltd. is the first television broadcast station in Taiwan, which was founded in 1962. We conduct several interviews with the chairman, the CEO, the CIO and several staffs related to the interactive television project. In the interview with the chairman and CEO of TTV, he confirms that TTV has developed IT for proposed IISI with the help of government funding and has designed an on-the-job training program for upgrading the employees’ technical and managerial skills in the use of IT. While pursuing business opportunities, he recognizes interactive services as a commercial exploitation of an IISI and not as a cutting-edge technology acquisition, as the technology department has attempted to modify and incorporate the interactive technology currently available on the Internet for use in the IISI. Whereas no specific challenges were observed during the phase of acquiring the enabling IT, the chairman appreciates the potential value of IT assets – the outcome of the first stage of our proposed framework – and states that “The most valuable resource in our company is the employees, especially in the technology department.”
However, these IT assets have not successfully translated into a commercial service, due to some foreseeable barriers in the managerial, organizational, social/environmental, and inter-organizational dimensions. For instance, the chairman finds that it is hard to convince the board that the proposed IISI will generate a feasible economic return in a short period of time, and there is lack of commitment of top management to build infrastructure, such as offering appropriate training programs and marketing the innovation across the company. The chairman also stressed the difficulty of setting up a supportive culture that values IISI. Such a supportive culture would help ease changes posed by internal content production.
Other necessary organizational investments should include the establishment of a strong team for producing the interactive content/service, the establishment of an
‧
efficient process for providing the interactive service, and the creation of a strong information systems team and facilities for viewership analysis.
In addition to the above internal issues, some external issues also make the CEO concerned about the diffusion of IISI. For instance, the chairman stresses that the uncertainty of viewers’ acceptance hinders the commercial exploitation of an interactive service. According to the chairman, persuading viewers to accept interactive content and services is a social challenge that cannot be resolved by a single firm alone, but rather by society at large, governments, other firms, and other key market actors.
Additionally, public-interest associations and the government strictly regulate TV programming. Thus, persuading the government to enact regulations and laws that encourage interactive service innovation is a complex social challenge. For instance, the chairman is concerned about the government’s regulation of the pricing structure for the interactive service, as viewers may be resistant to changes from free usage fees for terrestrial TV programs and low usage fees for cable TV programs.
The chairman is further concerned about the emerging market for interactive service as a result of the establishment of strategic networks among the computer, television, and telecommunication industries. For example, interactive programs require significant service enhancements by participating firms in the strategic network and thus require additional commitments and expertise from other firms.
Consequently, the chairman indicates that in order to make interactive services a reality, all involved firms must be willing to share their specialized knowledge and expertise. In addition, governance for interactive service partners must be established through legal contracts or through self-enforcing agreements. Self-enforcing agreements require “formal” safeguards, such as financial and investment guarantees, and “informal” safeguards, such as goodwill, trust, and reputation. However, such
‧
inter-organizational collaboration is a significant challenge for any MVPD.
In sum, in order to take IISI into account, the chairman of TTV acknowledges all pertinent challenges faced throughout the organization and across the entire strategic network, as well as those presented by the government. However, these acknowledgments turn out to be internal and external barriers that lead to the TTV’s hesitance in setting up or diffusing IISI. The associated challenges discussed above are listed below.
Table 6.6 Challenges to the commercial exploitation of ITV service
Dimension Major challenge
Viewer acceptance of the ITV service
Laws and regulations that create a fair, stable market environment
Interactive infrastructure
Technology standards for the ITV service Social
Educational programs for raising interactivity literacy
Collaborative work environments for the ITV service Inter-organizational
Good governance
Supportive culture that values the ITV service
Strong development teams for innovatively applying the ITV service
Efficient process for providing the ITV service Organizational
Strong teams and good IS for the data analysis of viewer-ship opinions
‧
Table 6.6 Challenges to the commercial exploitation of ITV service (Cont.)
Dimension Major challenge
Board’s approval
Strong senior management support for the ITV service Incentives for the ITV service
Teamwork environments for the ITV service Managerial
Training programs to enhance the skills for the ITV service Source: constructed by the author