The Dispute between BSkyB and Virgin Media - Case Study Example

An immediate consequence of the dispute between BSkyB and Virgin Media (VM) is that VM s have lost access to four Sky TV channels. Explain indetail the effect this may have on the demand for VM services. What measures could VM use to mitigate the consequences of this change The dispute between BSkyB and Virgin Media is with reference to the increase in the subscription charges as per the demand of BSkyB. BSkyB has launched a policy with reference to its deal with Virgin Media, according to which the Virgin Media has to pay even for those particular channels that it is not willing to subscribe. It has been observed that Virgin Media is reluctantly to make heavy investment towards the subscription of these channels, which it consider not much popular among the masses. The Virgin Media has revised its strategies, and has made directly approached the production units, seeking permission for the transmission of the popular programs, therefore the virgin Media is looking towards fostering relations with the Production Unit, and has attempted to invalidate the authority and role of the BSkyB (Ray, 2007). It has been claimed by Virgin Media that BSkyB has increased the prices at massive level, but BSkyB has defended the rise by highlighting the fact that number of channels have also been increased. If Virgin Media's claim that the increased number of channels is not much popular among the masses, and it is only selected programs, not even channels. that are popular among the public, then it is believed that Virgin Media has not ultimate threat of closure, downsizing or financial loss. The deadlock is less likely to affect the growth and transmission services of Virgin Media, but then if BSkyB implements comprehensive strategy of the offer channels, through marketing and public awareness, so as to secure the public attention, it is expected that Virgin Media will be under immense pressure of the masses, and will be left with no other choice but to make a deal with BSkyB. The proper strategy for the Virgin Media should be to approach and survey its customers, and seek their opinion, and should look forward for the remedial measures to end the dead-lock, as per the preferences of the customers. If the survey concludes that masses are more willing to view the BSkyB programs and channels, the Virgin Media has the option to increase its charges per customer for the transmission of those heavy-cost channels (Ray, 2007). The rise is less likely to be condemned by the masses, as bouquet-purchasing is popular among the customers, and it has become a common practice to subscribe for all instead of any preferred or particular channel. Virgin Media has therefore an open option to approach the production units, and transmit such programs by purchasing the legal rights. The Virgin Media is required to behave in a cautious manner, previously ITV Digital fell victim of the increased charges by BSkyB, and had to close its units, therefore Virgin Media should ensure that it further improve and enhance its relationship with customers, so that if BSkyB fails to develop understanding with Virgin Media, the understandable customers of Virgin Media is all Virgin Media can rely on for support, and consistent and long-term affiliation. During the course of discussion, it has been observed that BSkyB is still open for negotiation, and it is positive point for the BSkyB, as it is looking towards the reso9lution of the dispute. It is understandable that Virgin Media can not make any substantial progress with BSkyB unless BSkyB express its intention to reduce or minimize the changers. BSkyB has a strong access to the people, and it has the power to change their mind, by the launch of advertising campaigns. In this respect Virgin Media has limited options, and the execution of those limited options is itself a difficult task, therefore Virgin Media should be in direct consultation with its customers, and if customers are found approving the expected rise of BSkyB, the Virgin Media should announce proportional increase in its charges as well (Ray, 2007). Both BSkyB and Virgin Media are looking for the interest and support of the customers, BSkyB has the option to evaluate and justify the rise through its transmission, where as Virgin Media can only do so through its direct consultation with the customers, who so ever is able to achieve the support of the customers, is likely to win the race. 'According to industry Scuttlebutt, such an advertising campaign is already planned and prepared, which would belie Sky's claim'; therefore it is important for the Virgin Media to revise its strategy, and seek immediate assistance of the customers. The tussle has made different companies including BT Vision and Orange to introduce their specialized version of service, through which particular programs will be only broadcasted, after the approval of the production unit. Therefore, Virgin Media can even switch to this option, as mentioned before, or seek customer's assistance. According to the news, 'BT Vision and Orange have announced their plan to provide and launch IPTV service from the end of 2007 through out UK' (Ray, 2007). BSkyB is not really considered to be popular among the masses for its entertainment channels; instead the channels are mostly preferred for detailed coverage of business, politics, social and sport items. Virgin Media can forward a strategy through which the popularity of BSkyB can diminish, which can be achieved by promoting the services and channels of the rival companies. Following the development of IPTV (delivery of TV program over Broadband internet) and the increasing importance of TV services delivered in 'non-traditional' ways (by cable or over the internet) BSkyB appears to be losing its monopoly power. Discuss the evolution in the market and identify the likely benefits this may bring to consumers. The rapid increase in the subscription of TV services through cable or over internet is much because the provided services are much cheaper and economical. The services offered through internet have been further incorporated with special facilities, which allow the customer to watch and avail the T.V services at his convenience (Ralph, 1994). The schedules of the programs are varying, and the customers have the choice to choose the programs according to their suitability and like ness. BSkyB is likely to face tougher challenges in years ahead, if the company keeps an increase in its service charges, and does not change and improve the quality of the programs it offers, which can be achieved by introducing variety and diversity in terms of quantity and quality of the television shows. In one of the surveys conducted in 2006, the viewers expressed their dislike ness to observe and watch their favorite programs through internet, much because of their adherence to the traditional methodology. Also, it has been observed that transmission through internet is entirely dependent upon the speed and connectivity features of the broad bands, and varies accordingly, the customers are reluctant to pay more towards the installation charges of broad band, which is comparatively higher as compare to the subscription through Virgin Media, and is more disruptive. But on the other side, there were considerable number of people who suggested that Internet applications are much flexible in terms of watching, it is not the channel but the customers to decide the timings that suits him or her the most, and select the programs according to his or her preferences, and mostly the programs are free of any commercial breaks, or interruption, unless there is major flaw in the broad band connection. In one of the situation the Sky owned the major contents and right of coverage for different football events, and related programs, and also signed the broadcasting deal different popular programs including Nip/Tuck, Grey's Anatomy and Simpsons (Chris, 2007). But it was later observed that even cable operators and internet services offer the transmission of these programs, as more economical rates, and as per the timings which were convenient for the subscribers. In this regard, BSkyB has no other alternative, of course the corporation is unable to switch its timings as per the convenience of the customers, and this action is justified, but the only factor that goes against the BSkyB is money. BSkyB should have adopted a realistic approach before increasing the charges, if the charges are reasonable, and do not account for the other channels of the Sky Network, the monopoly of the corporation will sustain. During the entire course, it is heartening to observe that BSkyB has not taken any counter measures to defuse the tension, it remain much firm about its policies, and its justification with reference to the price hike on the basis of increase in the channels is totally unfair and not acceptable. The majority of the customers are much strange to what the BSkyB really offers them beside some selected programs, this has really compelled the viewers to switch to non-traditional ways, although the viewers do share certain complains about the services (Chris, 2007). Ultimately the consumer is not going to allow other make him or her suffer any financial loss for the sake of unwanted entertainment, of course viewers are more likely to accept the non-traditional ways. It has been observed that many recording companies have issued official CDs and DVDs of the popular series, and such options have made it easier for the viewers to pick and watch according to his or her convenience. Secondly the concept of rented video outlets, have also provided the customers with an opportunity to watch their preferred shows on low rates. Cable operators have acquired tremendous progress within short period of time, and the operators are popular for the economical cum quality services, and in many of the cases the cable operators are looking forward towards signing deals so that the operators can provide on-demand service, and this move has adversely affected the popularity of the BSkyB. Definitely it is the consumer which will be the beneficiary of the move (William, 2005). It is important to understand that whether it is the broadcasting corporation or the cable operator, both of the parties are looking towards the subscription of the consumers, and desire long-term affiliation with them, and therefore be its increase in the prices, increase in the number of channels, what so ever the purpose and initiative may be, if the consumers do not share positive opinion about the launch, it is a major failure. The consumer power always reigns, and in many of the cases has compelled the organizations to withdraw and amend their policies, according to the convenience of the consumer. Therefore, it BSkyB has loss this opportunity, it is surely provided the cable operators with better opportunity to increase their local market share. In the end, it is the consumer who will achieve improved quality of services, because that is the only parameter which will decide the inclination of the consumer towards the service providers. REFERENCES 1. Bill Ray. Sky goes dark for virgin Media. The Register Publications. February 28, 2007. 2. Bill Ray. Sky takes ball and goes home. The Register Publications. March 1, 2007. 3. Chris Tryhorn. Sky profits at risk in Virgin row. Guardian Unlimited Publications. February 26, 2007. 4. Ralph Negrine. Politics and the Mass Media in Britain. 1994. pp. 154. Routledge Publishers. 5. William Leiss. Social Communication in Advertising: consumption in the mediated marketplace. Cambridge Publishers. 2005. pp. 393 Read More