Leading the Way is a column written by PricewaterhouseCoopers professional staff. It appears in the Business section of the Bangkok Post twice each month. The column provides specialised advice to corporate decision-makers in Thailand on global and local business trends.
This article appeared in the April 18, 2006 issue of the Bangkok Post.
By Verasa Attanun
Consumers are increasingly calling the shots in a converged, ''always-on'' and ''anywhere'', media world. They use Apple iPods to make their own music playlists. Personal video recorders allow them to customise television lineups. Satellite radios pump commercial-free music into their cars. These consumers pull stock-market updates, text messages, wallpaper, ringtones and short videos into their mobile phones. They come together in online communities, generate their own content, mix it and share it on a growing number of social networks.
No longer a captive, mass media audience, today's media consumer is unique, demanding, and engaged. So what accounts for this change? Quite simply, ''convergence''. What convergence represents is all around you. For example, do you ever download a song to your mobile phone? Do you then use this song as your ringtone, message it to your friends, or log onto a chat site to get the lyrics? If you do any of these things, you are likely benefiting from technological convergence.
Convergence refers to the integration of computers, telephones, recording and broadcast technologies, for faster, more flexible communications.
Ten years ago, analysts and industry insiders were admonishing companies to prepare for convergence or be left behind. Ultimately, other circumstances, such as preparing for Y2K and huge capital investments in enterprise resource planning (ERP) systems that promised more than they delivered, delayed the commercialisation of convergence.
But over the past two years, the traditional lines between the technology, telecom, entertainment and media sectors have become blurred. Content owners, distributors and service providers are changing the way they operate. The battle for market leadership is well under way as companies shift their focus toward customers (the ''digital home'' concept) and enterprises (the ''real-time'' concepts driven by real-time access to information).
Convergence is being driven by a number of factors:
-Declining cost of communication;
-Rising broadband adoption;
-Digitisation of all forms of media: music, video, print, radio, photos, etc;
-Technological improvements, such as: Moore's Law which states that processor performance should double every 12-18 months; storage capacities that double every six to 12 months; and the constant reduction of costs for devices that handle multimedia;
-Adoption of common network and internet protocols and standards.
Parallel to the factors driving convergence are a number of emerging challenges. For example, rapidly changing consumer behaviour is increasing uncertainty within the technological sector, making appropriate analysis of customer data crucially important. Convergence has increased the number of distinct consumer groups that need tailored messages and services.
On top of this, the number of distribution units is also increasing, saturating the market with a vast array of products. As technology converges, there is a simultaneous divergence of services, devices and business models. The challenge is for industry operators to leverage technology to the extent that they can bypass traditional distribution companies, such as cable operators, generate incremental revenues with new business models, and establish a direct relationship with consumers.
To increase services to customers, operators must build partnerships with value chain members to deliver new, converged services. As the number of alliances continues to increase, companies find it even more difficult to implement, manage and monitor the multiple relationships that ensue. New licensing compliance and contract management need to be addressed.
Barriers to convergence include a lack of standards across different technologies, which affects compatibility. Operators need to identify the system, processes and technologies in place to protect the distribution of their partners' content, as well as which devices consumers use. These operators need to maintain product quality that meets internal and external standards. Processes and tools are needed to minimise revenue leakage.
A second barrier is the lack of regulation and privacy issues, which vary from country to country. For example, content owners need content security measures to monitor their existing revenue models that are threatened by piracy, security concerns and changing consumer behaviour. However, intellectual property management systems such as Digital Right Management (DRM) may help prevent piracy.
Finally, the rapid pace of technological change propagated by convergence may actually be detrimental, as the abundance of technological choices is confusing would-be consumers.
But these barriers are likely to have only short term-effects, and the full impact of convergence will play out over the next few years. In the corporate environment, expect current management practices to adapt to technological changes in the workplace. This is only the beginning of the technological revolution that will lead to ''always-on'' and ''anywhere'' connectivity.
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