Digital Convergence and Horizontal Integration Strategies

Abstract

Digital technology is unique in that it enables convergence of access devices and content as well as convergence of industry participant operations and strategy. This digital convergence creates opportunities, and threats, for developing new business models and unique growth strategies for digital product companies. The purpose of this chapter is to discuss examples where digital product companies have taken advantage of digital convergence through horizontal integration strategies that enable them to create unique mixes of products/services and reach larger markets. Actual horizontal integration strategy examples are discussed for several industries where products are in a digital form. In addition, potential cross-industry integration strategies and online intermediary (cybermediary) strategies are identified along with tactical level strategies for mass customization and use of interactivity tools and social networking. Strategic alternatives for introduction, growth, and maturity lifecycle stages are also discussed. The rationale for these strategies and implications for managers of digital product companies are discussed along with directions for future research.