Describes the rivalry between two competitors who have attempted to become the dominant force in the emerging British satellite television industry. Can be used to examine issues of competitive positioning, technology adoption, and scenario analysis. Helps students make decisions given competitive challenges and industry uncertainties.
Harvard Business Review (794031-PDF-ENG)
September 01, 1993
Case questions answered:
Who will win this battle between British Satellite Broadcasting versus Sky Television? Discuss with the help of a value chain analysis.
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Case answers for British Satellite Broadcasting versus Sky Television
Who will win this battle between British Satellite Broadcasting versus Sky Television?
The communication satellites in the late 20th century started renting time to broadcast satellite shows. Pay television depended on two new delivery media, cable, and satellites. The cable penetration was as less as 5%. Comes Rupert Murdoch, who purchased 69% rights in Satellite Television PLC (SATV) in June 1983. On December 11, 1986, Independent Broadcasting Authority (IBA) awarded a 15-year franchise to British Satellite Broadcasting (BSB), a consortium that comprised five companies at the time.
With these two scrambling for establishing themselves in satellite broadcast, a collateral damaging war began.
The value chain analysis of these two competitors is given below.
1) Procurement – The supplier of British Satellite Broadcasting was ITT, and it provided a chip for BSBs DMAC receivers. The chip took more than due time in the developing stage and cost £250 pr unit after subsidy from BSB. Thus, the bargaining power of BSB was limited due to one supplier.
Sky Television’s supplier was Amstrad and would supply 100,000 satellite dishes per month for Sky Television, although it would not be the exclusive supplier. It intended to market the receiving equipment for £199, with installation costing another £40. Thus Sky had more suppliers advantage.
The suppliers of BSB consists of the shows and the channels that wanted to get aired on it. The Now, Zig-Zag and Galaxy, and one subscription-based film channel, Screen. The bargaining power of BSB was more than its suppliers owing to its first-mover advantage.
Sky Television had free access to Fox, had 4 channels on Astra satellite, Sky Movies, Sky Channel, Sky News, and a free movie channel. Sky Television was already operating on Satellite via a communication satellite. On the other hand, the necessary technology for BSB was DMAC, whose future was uncertain.
Sky Television had a greater bargaining power than British Satellite Broadcasting.
2) Infrastructure – The satellite of British Satellite Broadcasting had to be bought and launched, and it was a costly affair.
While in the case of Sky, they…