8' Intermedia Competition

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8. Inter-media Competition

• 8.1 Cross-elasticity
• 8.2 The theory of the niche

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Competition between Media Industries

• Questions about competition between media
  industries
• How do different kinds of media products compete
  for the same market resources and revenues?
• How do media products compete with other kinds of
  entertainment or simply consumer goods?
• How does the rise of new media affect the
  profitability of old media?

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8.1 Cross-elasticity

• Price elasticity of demand
• change in quantity / change in price
• gt 1
• elastic demand revenue increases when prices
  decreases
• It makes sense to decrease the price
• 1
• unit-elastic revenues unchanged when price
  decreases
• The price should be kept at the level
• lt 1
• inelastic demand revenues decrease when price
  decreases
• It makes sense to increase the price

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Price Elasticity

• Price Q Revenue
• 90 1 90
• 60 2 120
• 40 3 120
• 28 4 112
• 20 5 100
• 15 6 90
• 12 7 84

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Cross-elasticity

• Cross-elasticity in demand
• change in quantity / change in price of
  another product
• E.g., price of Eastweek and demand for Next
  Magazine
• E.g., price of Apple Daily and demand for
  Oriental Daily
• E.g., bus prices and demand for KCR
• E.g., VCD/DVD prices and demand for movie tickets
• Product substitutions
• A measure of the extent to which the two products
  are competing with each other
• If cross-elasticity is significantly greater than
  zero, then the two products are competing with
  each other to a certain extent
• An empirical method to determine the existence of
  competition

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Presentations

• Hollywood Movies and Local Movie industry
• Online vs. print newspapers

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8.2 Theory of the Niche

• The theory of the niche consists of a set of
  concepts and propositions concerning competition
  and coexistence
• A niche refers to, in the most general sense, the
  relationship between a population or an
  individual to its environment
• An industry is usually considered as a population
  located within a community
• Communities consist of populations within a
  specific geographic boundary
• The theory predicts that a new medium will
  compete with established media for consumer
  satisfaction, consumer time, and advertising
  dollars

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Conceptualize Competition

• Ways to conceptualize competition
• Number of channels
• Number of channels plus intensity of competition
• Competitiveness as the absence of a price-setter
• In the theory of the niche, competition
• Refers to the situation in which organizations or
  industries are using the same or similar
  resources
• Exists when ecological similarity exists AND
  resources are limited
• Is indirect in the sense that exploitation of
  resources by a unit lowers the total amount of
  resources available to the others

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Space

• Space as a resource in a natural environment
• Space is a resource for media organizations in
  the minimal sense of land for buildings, printing
  press, etc.
• For media organizations, space defines the
  geographic limits of resources such as audiences,
  patrons, or advertisers
• E.g., bookstores
• E.g., Apple Daily and Oriental Daily in Hong Kong

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Resource Dimensions

• Gratifications obtained
• Gratification opportunity
• Consumer spending
• Time spent by consumers on the media
• Advertising spending
• Media contents

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Gratifications

• Uses and gratifications research
• Social and psychological origins of needs
• Needs generate expectations of mass media or
  other sources
• Expectations lead to differential patterns of
  media exposure
• Media exposure results in need gratification and
  other consequences
• Need gratification generates further needs and
  expectations
• Gratifications as a resource for media companies
• Gratifications occur within domains
• News, entertainment, business and economic news,
  etc.

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Gratification Opportunities

• Characteristics of a medium, rather than
  attributes of individual consumers
• Opportunities for satisfying media-related needs
  depend a good deal on where or when individuals
  or populations are located in time and space
• E.g., traveling on a plane
• E.g., traveling on a bus
• E.g., television in an elevator
• Place-based media

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Time Spent with Media

• Time as a scarce resource population time budget
• Time and leisure
• Increase in leisure time in developed countries
  as societies moved from production-based
  capitalism to consumerist capitalism
• One thing that development in (media)
  technologies does is to free up time for
  individuals
• E.g., SPSS and word processing programs
• E.g., computer downloading time
• E.g., the fast-forward option
• Time is not storable and transportable and can
  easily be wasted

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Media Contents

• Media contents as scarce resources
• Scoops
• Prominent interviewees
• Independently produced contents
• Movie re-runs

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Other Resource Dimensions?

• Do sponsorship and product placement constitute
  new resource dimensions?
• In some countries, government subsidies could be
  a scarce resource that media companies compete
  with each other

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Relationship among Resource Dimensions

• Gratifications sought Opportunities Spending
• Contents
• Gratifications obtained Time spent by audience
• Media research firms
• Advertising spending

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Niche Breadth

• Is a measure of the area of a niche along a
  particular resource dimension
• Specialist populations have relatively narrow
  niches
• Generalist populations have rather broad niches
• Generalist Specialist
• Natural environment Human beings Panda
• Media industries Newspapers Cable TV
• Niche-breadth strategy
• Diversification, multinational operation,
  economies of scope

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Niche Overlap

• Refers to ecological similarity between two
  populations
• Measures the relationship between populations in
  terms of the similarity or difference in their
  resource utilization patterns
• The greater the overlap, the stronger is the
  competition between the two

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Competitive Superiority

• When two species overlap almost completely,
  intense competition would result
• It is possible that only one species will remain
  in the end
• E.g., the demise of evening newspapers in Hong
  Kong
• Competitive exclusion
• Functional alternative

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Limiting Similarity

• Some difference that lowers niche overlap is
  important for populations to co-exist
• E.g., hawks (?) and owls (???)
• Is there limiting similarity between online and
  print newspaper?
• Gratifications obtained do readers want
  different things?
• Gratification opportunity the need of a
  computer, and others?
• Consumer spending paper as a family purchase,
  and others?
• Time spent by consumers any way to
  differentiate?
• Advertising spending any difference?
• Media content any competition at all?

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Differences and Competition

• In media industries, differences can be developed
  to lower niche overlap between media industries
• How old media redefine themselves when a new
  medium arise
• Exclusion vs. competitive displacement
• Changes in resources can also affect the outcome
  of competition

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Limitations of the Theory of the Niche

• How to deal with changes in the nature of a
  population?
• Definition of a population may become more and
  more problematic in the age of technological
  convergence

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Questions?
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Concluding Remarks

• Throughout the century, as new media technologies
  were developed
• The ecology has become more and more complicated
• Generally speaking, there are 3 possibilities
  when an ecological environment is invaded by a
  new species
• Niche overlap and competition may increase with
  the result that organizational mortality may
  occur in some industries, or at the extreme an
  entire industry may perish (i.e., competitive
  exclusion)
• Resources may increase so that competition does
  not increase substantially despite the presence
  of a new competitor
• The new competitor may take over some of the
  resources formerly used by other populations
  (competitive displacement)