IDEA FORUM: the impact of subscription-based video on demand on traditional distributors’ value chains and business models

ABSTRACT

This paper introduces the new Idea Forum at the Journal of Media Economics and provides an overview of the challenges in the movie industry caused by the market entry of subscription-based video on demand (SVOD) providers such as Netflix and Amazon (Prime). Specifically, we focus on the fundamental shift in traditional distributors’ value chains and business models that are threatened by the market entry of global SVOD services. We focus on the need for distributors of filmed entertainment to reinvent their operations in order to stay relevant by leveraging their unique, hard-to-imitate resources. Following the Resource Based View (RBV) of the firm framework, we identify four key sources of competitive advantage associated with traditional distributors, namely their ability to (1) accurately assess product quality and forecast performance, (2) exploit B2C markets through sequential distribution system that combines both physical and digital distribution channels, (3) strategically use their push power, and (4) effectively monetize content via elaborate relationship networks with both production studios and exhibitors. We use competitive market analysis to explain how the distributors’ current competitive environment affects these four resources in response to SVOD. Related to each of the four key resources, we discuss key managerial opportunities for distributors aiming to regain and sustain competitive advantage.

Disclosure statement

The authors declare that they have no conflict of interest.

Additional information

Funding

This research was funded by the Deutsche Forschungsgemeinschaft (DFG, German Research Foundation) – FOR 1452. The paper benefitted from discussions at the 2018 and 2019 Mallen Conferences.

Notes on contributors

Michel Clement

Michel Clement is Professor of Marketing and Media Management at the University of Hamburg (Institute for Marketing & Research Center for Media and Communication), Moorweidenstr. 18, 20148 Hamburg, Germany

Cord Otten

Cord Otten is Doctoral Researcher for Marketing and Pricing at the University of Hamburg (Institute for Marketing, Research Center for Media and Communication), Moorweidenstr. 18, 20148 Hamburg, Germany

Rouven Seifert

Rouven Seifert is Doctoral Researcher for Marketing and Media Management at the University of Hamburg (Institute for Marketing, Research Center for Media and Communication), Moorweidenstr. 18, 20148 Hamburg, Germany

Ole Kleinen

Ole Kleinen is Doctoral Researcher for Marketing and Media Management at the University of Hamburg (Institute for Marketing, Research Center for Media and Communication), Moorweidenstr. 18, 20148 Hamburg, Germany

Mark B. Houston

Mark B. Houston is Professor and Eunice & James L. West Chair in Marketing at the Texas Christian University (Marketing Department, Neeley School of Business), TCU Box 298530, Fort Worth, TX 76129, United States

Ekaterina V. Karniouchina

Ekaterina V. Karniouchina is Associate Professor of Business and Glenn & Ellen Voyles Chair in Business Education at Mills College (Lorry I. Lokey School of Business and Public Policy), 5000 MacArthur Blvd., Oakland, CA 94613,  United States

Christoph Heller

Christoph Heller is manager at Wild Bunch Germany GmbH, Berlin, Knesebeckstr. 59 – 61 10719 Berlin, Germany