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Top1. Introduction
Cloud computing is the delivery of computing as a service rather than as a product. It is increasingly becoming an understatement to state that cloud computing technologies are changing the ways in which we use computers and networks. Cloud computing includes applications that are offered as services over the Internet as well as the hardware and system software in the data centres that provide these services (Carr, 2008; Armbrust et al., 2009). One of the most significant changes promises to be the extension of content delivery networks (Srinivasan et al., 2011). However, cloud computing itself does not generate content. Most content, especially video content, is controlled by the highly vertically integrated cable TV business. Meanwhile, traditional cable operators are encountering significant challenges from competitive distribution platforms, including video that is delivered via satellite, the Internet and even mobile networks (Hazlett, 2005, 2011). Therefore, both cloud computing and cable TV seek complementary parties with which to support their sustainable growth. Thus, a convergence between cloud computing and cable TV, especially the combination of networks based on cloud computing techniques and content offered by cable sectors, is forming. Apple, Google, Microsoft, Amazon and even Intel have all launched their own video business strategies recently that the complementarities between cloud computing technologies and traditional cable services are highlighted (Schechner & Clark, 2012).
As an innovative cooperation format, the convergence between cloud computing and cable TV will create value both for related enterprises (Jacobides, Knudsen & Augier, 2006) and for consumers (Möller, 2006). The main concerns are reflected in the creation of value in the new environment of cloud computing. In studies of the key aspects of controlling the value chain and maintaining competitive advantages, Porter’s extended value chain is a basic, widely recognised framework, especially in the research fields of network industries (Porter, 1985; Porter & Millar 1985). For example, Sabat (2002) and Slot (2007) studied value creation in the mobile wireless and digital television industries. In addition, some studies focus on the value chain following the convergence of two industries; for example, mobile TV was chosen as a special case by Jarvenpaa and Loebbecke (2010), and the mobile-television network convergence has been discussed following the consequent value chain. Some scholars, such as Mohammed, Altmann and Hwang (2010), applied the value chain model to the business model of cloud computing. Breitman et al. (2010) analysed the effect of next-generation networks on traditional TV viewing patterns and theorised regarding the possible influence of cloud computing on the TV industry. However, the investigations in these studies were not sufficiently comprehensive. Therefore, a study of the convergence between cloud computing and cable TV based on the value chain model is necessary.
On a practical dimension, some tentative attempts have been made to integrate cloud computing with cable TV. The upgrading of next-generation networks will promote some future practices. Because related business models are continually emerging, it is not easy to discuss specific applications. The basic aim of this paper is to comprehensively explore the nature and potential of the newest and fastest-growing business. We will begin with the fundamental issues and challenges of traditional cable TV and then focus on the opportunities and possibilities related to the overlap between cable TV and cloud computing. This study takes the further step of examining the relationship between this convergence and the related value chain. The challenge in this paper is to explore beyond traditional cable activities to the relatively new and unexplored area of cloud computing. In particular, we aim to provide an understanding of how value is created and added in this new paradigm.