Stan Company - the Current Position of in the Market, Internal and External Environment of the Company - Case Study Example

Title: Stan Company Report on Streaming Media Name Institution Date of submission Executive summary Stan Company transfers digital streaming media through its website. Customers have to subscribe in order to access TV shows and movies being streamed by the company. Unlike other digital media companies, Stan only provides a customer with streaming services and one cannot download a movie from the company’s site. It was founded in 2013 and the new product ‘streaming media’ was launched in February 2015. Currently, the company has over 100, 000 subscribers with a strong customer base. The close competitor to the company is Netflix which also shifting to digital streaming and downloading (Quickflix, 2015). This report examines the current position of Stan in the market as well as analyzing the internal and external environment of the company. The report also shows the transition of Stan Company from old product to new products and how the new product has been positioned in the market with the help of pricing strategy, product itself, promotion campaigns and place (physical presence of the company-both online and off-line). Company Introduction Stan is Australian based company which provides customers with online platform where they can stream movies and TV shows. It was founded in 2013 but was first launched in February 2015. The first step after launching was to acquire rights and among the rights they acquired are those of Breaking Bad, Better Call Saul which was aired on Foxtel. The acquisition of Breaking Bad rights from Foxtel mad the movie show become the highest rate in terms of privacy in the world. As a strategy for expansion, Stan is planning to acquire rights for Mozart in the jungle (Nielsen, 2012). Back in December 2014, signed an agreement with ABC Commercial which will make the company access a comprehensive catalogue of ABC Television with hundreds of programs. Also during the same month of 2014, the company signed with Viacom Global Networks which enabled the company to hold rights to MTV, Nickelodeon and Comedy Central. The three television shows provided Stan Company with a lot of programs to stream (Stan, 2015). At the beginning of 2015, Stan commissioned the joint venture with ABC and SBS to produce and air drama series. The plan was to come up with a regional production stations which will serve the off-line customers. Other additional productions were to be announced as the company progresses in the market. Stan Company has invested in diverse areas in the industry by considering the following aspects as keys to success: Proper TV and movie selection from the owners for the customers and the theater’s environment. Accumulation of both online and offline revenues to meet the financial objectives of the company. Being careful on the management of the invested funds in order to control costs. Having a create customer experience. Industry background The parent company to Stan is Fairfax Media which is now claiming a scope more than 100,000 customers by the end of April 2015. This implies that the streaming media industry is growing at a fast rate considering now when Stan Company has been introduced to the market. Netflix streaming company is regarded as the leading streaming media company with the estimated more thatn200,000 number of customers. It is evident that the market is getting crowded with the big media companies expanding their market segments around the globe. According to the report by IBISW Industry Analysts, the annual revenue from movie and TV shows streaming distribution stands at AU$1.8 billion. With the PwC (Price water coppers), the net worth of TV subscribers is $2.8 billion annually. Megan, the director at PwC says that the subscription will even increase by 20% in 2016 now when the customers are increasingly using portable gadgets with windows and android as their operating systems. As a result, the market penetration by streaming media will be about 48% since most of the households will be digitalized and this will be equivalent to about half of the Australians. Licensing has been a big challenge in the streaming industry. For example, Stan Company has to obtain rights to different contents before airing. In this case, a company may lose most of the customers since they will not be getting what they are expecting. Should a new company enter the market, first it must assume the ‘culture’ that exists in the industry through integration into the existing platforms such as Apple and Fetch TV. Stan broadcasted two of the original productions early this year (2015) which are Wolf creek and Political drama. The two productions are still in the processes and it will be launched in the coming months of 2015. The growing knowledge in the industry has made Stan produce vides which support iPad 2, iPad Air, iPad Mini, Android and AirPlay. The software supported include Linux, Windows Chrome and Firefox. This varied elements of production will help the during product differentiation. Company’s Core Values Stan Company is driven by three core values: The company creates a place where customers will get exceptional entertainment, The company cares for collective interest of the community (both online and offline) plus all the partners and the stakeholders, and Expose the customers to different version of entertainments including, comedy, action, documentaries, fashion shows among others. Objectives Stan Company is driven by three main objectives: To have healthy sales within the first year of operation and double in the next financial year. To achieve excellent turnover yearly from the invested funds To create and maintain high level customer base in the market by the end of first year of operation Company ownership Stan Company is owned by StreamCo. StreamCo is a partnership of Nine Entertainment Companies (NEC) and Fairfax Media. AU$50 million was contributed by each of the both companies towards the formation of the Stan Company. This huge contribution created a strong capital base for the company which is very important particularly during the initial stages of Company’s life cycle. Situation analysis SWOT Analysis Strengths 1. Good entry timing The parent company that is Fairfax entered the industry of streaming media the time when there were few competitors. This strength may not directly influence Stan Company, however, the parent company has created a strong brand name in the market for several years now and Stan can benefit directly from it. The company was the first to air HD movies and TV shows which offered the customers quality pictures on the online platform compared to other competitors at the that time. Clinching 100, 000 customers with a span of one year mean that Stan Company had a successful business model. The business model created by the two partners (Fairfax and Nine entertainment co) has helped Stan Company to achieve a huge market share within a small period of operation in the market (Entertainment, 2015). 2. Have good network connection with several partners Since the establishment in 2013, Stan has enjoyed a great deal of support from more than 10 partners both locally and internationally. Among these partners include both the parent companies, ABC television, MTV and Nickelodeon. These are among the partners who are recognized in the market and have good reputation as well. Stan also made partnership with electronic industry. All the partners have helped Stan sell its name to various market segments. Netflix also have partnered with majority of the electronic industry in the market. But credit goes to Stan Company since they offer legitimate streaming online with low possibilities of website breakdown (ACMA, 2013). 3. Stan has the best website What a customer needs is all presented on Stan’s website. Above all, the website is designed with an alogarithm which records aspects such as customer ratings. This will help the company in monitoring the changing needs of the consumers. Customers can give their feedback through the sections of review and ratings (Research ACMA, 2014). 4. Customer satisfaction Stan company are committed to providing quality videos and having many updated movies in the catalogue. With the offline environment, the stores are easily accessible and give guarantee of shows and movies. Sometimes other competitors in the market may not communicate of the releasing of the next episode of a series for instance, this makes the customer upset. Stan regularly updates the customer on the upcoming movies and TV shows (Paul, 2011). Weaknesses Like Netflix and other streaming media companies, Stan has difficulty in finding and providing regularly new movies to the customers. Perhaps this may cause customer satisfaction especially when a loyal customer finds out that a TV show has been released but can’t find it in Stan store. Stan often waits until the quantity required for purchase is released in order to buy them in bulk at a reduced cost. As a result, the customer may get dissatisfied for the long waiting time and may walk away. The customer has to wait for some time and this looks to be a disadvantage of the Stan business model. When it comes to such a case, a customer may look for the TV show or movie on the Netflix or other competitors in the market. Opportunities Stan has the ability to expand any time. Increase in the usage of technology by the consumers especially by use of their gadgets makes it easier for the company to reach the customer. The new product ‘streaming content’ is one of the digital media platform customers are currently using. One can find the TV show or movie online at any time he/she needs. Threats A big threat to Stan is Netflix who is a close and strong competitor in the market. Some companies like Apple can harm Stan since it is not suited to compete with hardware companies. As a result, they partner with hardware companies because these companies are complementary to the consumers. Marketing mix Price With Stan, streamCo’s streaming is estimated to be $10 per month with 30 day free trial. A close competitor, Netflix has two price plans. One, with the cost $8.99 per month with low quality pictures and $11.99 with standard definition. In this case, Stan offer a fixed and competitive price plan for its streaming videos. Product The new product for Stan Company is media streaming. The product quality to the customers is of HD (high definition) and the TV shows provided are those that are highly rated. The brand image with recognizable brand names has made the company attract more customers towards the new product introduced (Boateng, 2013). Promotion Like other competitors, Stan is also using social media platform and referrals in promoting their new products and new TV shows as well. Direct contacting is also done especially when it comes to loyal customers (Boateng, 2013). Place Stan is represented both in online and offline stores. A customer can access the catalogue through company’s website and request or watch a movie of his/her choice (Stan, 2015). Industry analysis Stan operations in the market especially with the new product-‘streaming’ is too closely to video downloading service. Therefore, the market may not be separated as such. The following is the industry analysis of Stan: Entrants of new participants Most of the video downloading companies are benefiting from the advance in technology. As a result, the potential entrants like Stan face huge sunk costs especially in acquiring licenses and rights. Stan for example, it invested up to $40 million in launching the streaming service in February 2015. The launched include acquiring licensing and rights from various partners in the industry (Padayachee, 2006). Market rivalry Currently, there are few market leaders one of which is Netflix in the same market. The only rivalry Stan is experiencing is price completion. For example, Netflix offer two price plans while Stan Company only offers only one price plan for the new product. Supplier power Stan Company and other competitors in the same market buy their shows almost from the same supplier. Those suppliers with exclusively big name TV shows and movies often have limited substitutes thus ‘cannibalizing its products.’ In this case, the suppliers may withhold licensing and rights to Stan and in the processes strengthening their supplier power (Rayburn, 2007). Availability of substitutes and complements The main substitutes for streaming and TV shows are movie download sites, online rentals and theatres. Stan does not provide any gratification of downloading when the customer needs. Also, it is costly to stream TV shows and movies provided by Stan. For example, a customer may stream a show for 30 minutes and he/she realizes that it is kind of boring. With Stan, switching to another show incur no extra cost unlike on movie downloading sites. Stan Company considers technology as the main complement used to stream movies and TV shows. According to Stan Company, a steady bandwidth of up to 3 megabits/second is needed for streaming quality HD videos. Market research shows that 47% of customers from United States use broadband services which provide them with ability to stream TV shows online. Investing in technology in this case will see Stan company attracting more customers in the global market. Also, with the emergence of S-Video capability, one can connect its gadget with the television which is a stylish and simple solution to the average Stan customer (Stan, 2015). Customer power Market research shows that the consumer power in streaming market is low. This is because the decision of one customer to buy a product will not affect the entire market. Also, the dissatisfaction of the consumer will not affect a significant number of customers. Generally, customers do not have a great bargaining power over the price in the industry but the prices themselves are guided by the substitutes and customer preferences (Rayburn, 2007). Market positioning and strategies The current market base for Stan is distributing TV shows and movies online through digital streaming. Should they continue to embrace marketing campaign, the company has the potential to grow customer base. Stan has to regularly obtain customer data and personalize customers’ library through leveraging the database to fit customer preference. Capitalizing on building the customer base will be very important in positioning of the business. Currently, the S-Video streaming is majorly used by the customers and this is continuing to gain popularity in the market. Stan should therefore have various price plans in order to give customers alternatives within company’s price plans. The other important move the company should do is to have a personalized library for customers. This will help the company continue be knowledgeable in the market which will help in growing customer base. The importance of Stan’s position in streaming media serves to show that it is very important to create a good customer base immediately after entering the market and get updated with the advance technology. According to Holt (92014) technology is what determines the needs of the customers in the digital platform especially now when the digital market is dominated by the tech-savvy customers. When it comes to off-line environment, good location of the product should be done. The company has to embrace advertising campaigns and referrals to the off-line catalogues and stores. Recommendations for old product strategy Since the old product is not easy to differentiate, Stan has to focus on the services offered to the customers as a way of unleashing the new product in the market. Maintaining prices at a low competitive level also will help the old product form diminishing in the market. There will be no much effect on the revenues when the prices are maintained at a low competitive level since entry barriers like licensing and rights will prevent new entrants in the market thus preventing intense competition in the market. References ACMA,. (2013). Communications report 2011–12 series Report 1—Online video content services in Australia Latest developments in the supply and use of professionally produced online video services. Sydney. Bejou, D. (2005). The future of relationship marketing. New York: Best Business Books. Boateng, S. (2013). Application of the 4Ps in Emerging Markets. SSRN Journal. doi:10.2139/ssrn.2393121 Entertainment, P. (2015). Entertainment Industry Market Research (including film, video, TV, radio & publishing)- Instant Access to Trends, Statistics, Data, Analysis and Companies. Plunkett Research, Ltd.. Retrieved 11 April 2015, from https://www.plunkettresearch.com/industries/entertainment-media-publishing-market-research/ Holt, J. (2014). Connected viewing: Selling, streaming, & sharing media in the digital era. London: Routledge. Laudon, K., & Traver, C. (2014). E-commerce. London: Routledge. Laudon, K., & Traver, C. (2011). E-commerce: Business, technology, society (Ninth ed.). Cornell Universit: Prentice Hall. Nielsen, K. (2012). The Australian ONLINE CONSUMER LANDSCAPE. Sydney. Padayachee, K. (2006). An application of porter's five forces model to determine the attractiveness of a third party distributor of life and investment products. Durban: University of KwaZulu-Natal. Paul, S. (2011). Digital video distribution in broadband, television, mobile and converged networks. Chichester, West Sussex, U.K.: Wiley. Quickflix, N. (2015). Netflix vs Presto vs Stan vs Quickflix. TechRadar. Retrieved 11 April 2015, from http://www.techradar.com/news/television/netflix-vs-presto-vs-stan-vs-quickflix-1283055 Rayburn, D. (2007). Streaming and digital media. Amsterdam: Focal Press. Rayburn, D. (2007). Streaming and digital media: Understanding the business and technology. Amsterdam: Focal Press. Research ACMA,. (2014). Communications report series. Melbourne: Melbourne Central Tower. Stan,. (2015). Stan - Watch TV Shows and Movies. Retrieved 11 April 2015, from https://www.stan.com.au/ Read More