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ITV could either join forces with the UK's other public broadcasters or operate on its own to create a viable rival to Netflix for UK consumers - Edexcel - A-Level Business - Question 1 - 2022 - Paper 3
Question 1
ITV could either join forces with the UK's other public broadcasters or operate on its own to create a viable rival to Netflix for UK consumers. Using the data in E... show full transcript
Worked Solution & Example Answer:ITV could either join forces with the UK's other public broadcasters or operate on its own to create a viable rival to Netflix for UK consumers - Edexcel - A-Level Business - Question 1 - 2022 - Paper 3
Step 1
Evaluate joining forces with other public broadcasters
Answer
Joining forces with other public broadcasters, such as the BBC, Channel 4, and Channel 5, could provide ITV with significant benefits. This collaboration may increase the collective resource pool, providing stronger content offerings and shared technological advancements.
By pooling resources, these broadcasters could leverage economies of scale, reducing costs associated with content creation and delivery. This approach not only strengthens their competitive position against Netflix, but also aligns with their shared public service objectives.
However, challenges might arise from differing corporate objectives, leading to conflicts in strategy. The failure of the previously proposed Joint Venture, Kangaroo, as blocked by the Competition and Markets Authority, highlights the potential hurdles in such collaborations.
Step 2
Evaluate operating independently
Answer
Operating independently allows ITV to maintain control over its strategic decisions and content without having to negotiate with other entities. This autonomy can foster more innovative and agile responses to market changes. ITV can tap into specific niches or genres that appeal directly to their audience without the constraints of a partnership.
Despite these advantages, working alone may limit ITV's ability to compete with Netflix's vast library and extensive resources. With the OTT market being fiercely competitive, ITV could face challenges in sustaining subscriber growth, especially if revenue projections from streaming (such as the projected 7.4% increase) do not materialize as hoped. Furthermore, the need to invest heavily in content could strain ITV’s financial resources over time.
Step 3
Recommendation
Answer
Based on the analysis of both options, it is recommended that ITV should consider joining forces with other public broadcasters. The collaborative approach would provide a consolidated platform that enhances content offerings while sharing technological costs, thereby making ITV more competitive against Netflix.
In the current environment, where Netflix has established itself strongly in the UK market, a united front may provide the needed strength to negotiate better terms with consumers and advertising partners, as well as increase market share more effectively than fighting alone.