If you consider the pre-pandemic era, a number of media houses in India were in expansion mode. All media were flourishing with little trade-off. The digital medium was gaining momentum and market share year-over-year on account of the number of new OTT players, multi-lingual digital initiatives, and more.
Electronic media was in a ready state of launching new channels, and the Indian print medium was also growing despite the fact that in most of the countries print is facing a tough time. Media reports for 2020 projected double-digit growth for the media industry in India.
COVID-19 has impacted every industry, and media is no exception.
The media industry is facing multi-dimensional challenges. On the one hand, time spent and engagement on media consumption is increasing. On the other hand, advertisers reduced their media investments. The Indian media industry is hugely dependent on advertising revenue, and the reduction in advertising has posed a challenge of running the business at the forefront of the media industry.
According to the Pitch Madison Mid-Year Review Report (August 2020), during the first half of 2020, the Indian advertising industry registered loss of growth at 39%. This highlights that the industry will come back with a vengeance during the second half of 2020 by growing at the rate of 6% to 13% in comparison to the second half of 2019.
However, the overall growth for the year 2020 will be negative — in the range of 14% to 18%. Thus, almost all media houses are encountering the roughest time of their lifetimes.
Every dark period comes with new challenges and opportunities. One of the possible solutions in today’s situation lies in the adoption of the Blue Ocean Strategy, established by professor W. Chan Kim and Renee A. Mauborgne. The theory states that the business universe is comprised of two varieties of markets: red oceans and blue oceans.
The red oceans characterise a market space where numerous players existing in the marketplace explore and contest to exploit the prevailing demands. Here, industry boundaries and the rules of the competition are well-defined and companies try to outperform competitors to clutch a better share of the prevailing demand.
Over time, the market becomes overcrowded and concerted competition makes the water bloody. All marketing strategies are conceptualised to occupy red oceans.
By contrast, blue ocean or market constructing strategies are about how to create and capture unknown market spaces where demand is created rather than fought over. Blue oceans emerge when a player reworks the existing boundaries of the industry with a new value innovation approach focussed on making the competition irrelevant. To comprehend the blue ocean perspective, corporations should plan a strategic approach beyond traditional trade limitations to develop new market space.
How do you plan value innovations? This is the process in which a firm’s activities are constructively analysed by cost, its business approach, and its proposition to potential buyers or investors. The key values are to rebuild industry boundaries, rearrange the strategic sequence, spread beyond prevailing demands, and shape implementation into a redefined strategy.
In this process, companies need to make their offerings cost invitational, incorporating new product offerings that don’t exist in the current marketplace that help lift buyer value. Over time, the economic cost will reduce further and create value innovation.
The Four Actions Framework to create value innovation focuses on four elements: eliminate, reduce, raise, create. There may be various permutations and combinations from organisation to organisation and market to market, depending upon the life cycle stage.
The process also includes the Six Path Framework, which includes evaluation of alternative industries, strategic groups within industries, the chain of buyers, complementary product and service offerings, functional or emotional appeal, and long-term strategic innovations.
Most of us agree that media organisations in India are currently operating in the red ocean, where each media house is competing to increase their advertising revenue share. The advertisers benefit and media companies operate on day-to-day shrinking profit margins. Due to the COVID-19 impact, advertisers reduced their advertising budgets and media houses are finding it difficult to handle this pandemic situation.
In this situation, each media house should see and evaluate how to come out of this highly cluttered red ocean. They need to work out new value and cost propositions to create value innovation and venture into the blue ocean.
There is no standard formula as each media house needs to evaluate its current strategies on the basis of Four Actions Framework (eliminate, reduce, raise, and create) to work out customised strategic innovation. However, some possible options include mult-imedia packages, rationalisation of adverting options, strategic alliances, online events, digital and OTT offerings, premium digital content with subscription options, product offerings connected to social causes, and more.
The Indian media industry needs to leap frog with strategic innovation to address the deep impact of the COVID-19 pandemic.
When readers look for authentic and credible content, can we infer that this pandemic is giving new wings to reliable and trustworthy media houses that are investing in true journalism to counter fake and sensational news?
Who will be the pioneer in adopting a blue ocean strategy with the Four Actions Framework and create value innovation?