As new technologies continue to emerge, firms in diverse industries increasingly must respond. Future economic rents and competitive advantage rests on the organizational ability to assimilate new technologies in the right manner. Broadcasters, content and service providers, packaging providers, and many other firms have been affected by the advent of digital technologies in the digital television (DTV) industry. All these firms have considered the adoption of digital technologies. Digital television is a new television service representing the most significant development in television technology since the advent of color television in the 1950s (Kruger, 2005). DTV can provide several benefits: sharper pictures, a wider screen, CD-quality sound, better color rendition, integration with Web technologies, increased programming options, easy integration between broadcasting networks and broadband telecommunication networks (e.g., B-ISDN—Integrated Services Digital Network), and other new services currently being developed. The nationwide deployment of digital television is a complex and multifaceted enterprise though. It has a profound impact on the entire TV system: from the offer typologies to the consumption manners. Therefore, a successful deployment requires the development by content providers of compelling digital programming; the delivery of digital signals to consumers by broadcast television stations, as well as cable and satellite television systems; and the widespread purchase and adoption by consumers of digital television equipment (Kruger, 2005). In sum, the advent of the digital television has caused an actual breakthrough innovation on almost all levels of the value chain. Although the adoption of breakthrough innovations is highly risky to pursue, research has shown that firms always follow them (Charitou & Markides, 2003; Ketchen, Snow, & Hoover, 2004). In the case of the television industry, the adoption also happens because the government and the telecommunication regulatory agencies in many countries have foreseen deadlines for the complete transition from analog to digital technologies in this industry. Despite lingering standardization issues, digital transmission is replacing analog transmission in the three major delivery platforms (terrestrial, cable, and direct broadcast satellite [DBS]) (Galperin & Bar, 2002). Therefore, in the future we expect that all firms in this industry will have adopted these digital technologies. Furthermore, this adoption will vary according to both the firm’s activities and the type of breakthrough innovation. This research will present some theoretical arguments to describe the adoption of the digital technology by two different activities in the digital TV industry: TV channels and content providers. These two different types of firms were chosen because the emergence of the digital TV has meant the adoption of different types of breakthrough innovation for each one of them. The next section defines these different types of breakthrough innovation. The two following sections describe the two cases of the adoption of DTV: by TV channel and by content provider. Finally, the last section presents the conclusion and implications of this research.
This is certainly not the first time that the television industry faces a big innovation. There was the change from black-and-white to color TV signals, and the addition of the cable and satellite TV systems. However, the transition to digital TV is different. It implies a complete re-tooling of the existing video production and distribution infrastructure, from studio cameras to transmission towers (Galperin, 2005). Transition from analog to digital has not only technological effects, but also effects on the economical and cultural level for the television world (Pagani, 2003). Therefore, it represents a broad and distinct type of innovation.
Key Terms in this Chapter
Market-Based Innovation: This type of innovation refers to firms that depart from serving existing and mainstream markets to new ones. It refers to new and different technologies that create a set of fringe, and usually new, customer values (Benner & Tushman, 2003; Christensen & Bower, 1996).
Personal Video Recorder (PVR): It is the same as digital video recorder; a separate device for digital hard disk recording and storage of television programs.
Breakthrough Innovation: Innovations that are unique or state-of-the-art technological advances in a product category that significantly alter the consumption patterns of a market (Wind & Mahajan, 1997). This type of innovation is sometimes known as a radical, disruptive, and discontinuous innovation. However, some authors (e.g., Zhou, Yim, & Tse, 2005) have conceptualized breakthrough innovation in a different way. They have identified that both radical and disruptive are different types of breakthrough innovation.
Digital Content: Digital content or digital programming is the content produced with digital cameras and other digital production equipment. Such equipment is distinct from what is currently used to produce conventional analog programming.
Digital TV (DTV): Digital television (DTV) is the new television service that uses digital modulation and compression to broadcast video, audio, and data signals to television sets. It can be used mainly to carry more channels in the same amount of bandwidth than analog TV and to receive high-definition programming.
Digital Transmission: Digital television is based on the transmission of a digitized signal which is transformed into a binary numerical sequence, that is a succession of 0 and 1. This signal can be transmitted via satellites, cable networks, terrestrial broadcasting channels and other medias as MMDS (Multipoint Microwave Distribution System) or ADSL (Asymmetric Digital Subscriber Line).
Digital Video Recorder (DVR): It is similar to a videocassette recorder (VCR); however, it records digitally onto a hard drive instead of onto videocassette tape. It is sometimes called PVR (see PVR).
Advertisement-Avoidance Technology (AAT): Wilbur (2006) has used this term to define those technologies that allow consumers to avoid advertisement. Some examples of AAT include the remote control, which allows people to change the channel while commercials are broadcasted, and software programs that block “pop-up” and banner ads on the Internet.
Tech-Based Innovation: This type of innovation represents firms that adopt new and advanced technologies (state-of-the-art). It improves customer benefits relative to existing products for customers in existing markets.