Why Google Missed the Video Opportunity
Having been hugely successful as a web search engine, Google Inc. decided to expand its portfolio by launching a video sharing engine known as Google Video. However, this move was not as successful as they had hoped. The failure resulted from the strategy that the company implemented. Although the launch of the Internet video service allowed users to type the names of TV shows, the presentations did not appear on the screen.
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Instead, text bits, information on the next episodes of particular TV shows, and images were displayed. Later after the launch, Google started allowing users to upload videos and dropped the idea of TV shows. Those who submitted user-generated content were free to set its price. The company also introduced features such as Flash video and Google Video store, which allowed users to stream audiovisual content online. Despite these efforts, Google Inc. was only able to amass a small percentage of the market share with YouTube dominating the Internet video market. The strategies used by Google failed because they did not offer better options than the existing ones. The idea of TV shows was not popular because people still got the information offered by Google Video from routine web searches.
Google’s Competitive Advantages
Although Google Inc. missed the video opportunity due to the strategies it used, the company had certain competitive advantages when it launched the video service. One of the competitive advantages it had was the amount of capital it had. By the time Google launched the online video service, it was already an established company that was worth billions of dollars. This financial strength gave it a competitive edge over the other companies that were offering online video services. Companies such as YouTube, Met Café, and My Space were startup companies that did not have the amount of capital that Google had.
Another competitive advantage is that Google had an established customer base. Google, through its web search services, had gained the trust of many organizations that advertised through its platform. Unlike its competitors who had to earn the trust of customers as they were relatively new, Google could count on some of its customers to use its online video service to do their advertising and generate revenue.
In addition to an established customer base, Google had an established brand with a good reputation in the market. Its competitors that were new entrants into the industry lacked such advantages as they had to build brand reputations in the market. Google was also already a known technology giant in the Internet industry and, therefore, had other resources such as a skilled workforce and an elaborate technological infrastructure that its competitors lacked. These factors enabled the company to succeed in the web search venture, which could help them succeed with their new online video viewing service.
It is undeniable that Google is one of the leading search engines in the Internet world. Thus, it should have taken the opportunity to make the video processing screen incredible. Online streaming has become an obvious activity amongst the tech-savvy population around the world. Indeed, millions of people stream videos online using their phones, tablets, and computers every minute. Therefore, Google Inc. should have focused on the design and other aspects of the video interface to improve the experience of users. The waiting periods and error states narrowed the opportunity making the company unable to tap a large market as anticipated.
Video Supply Chain Dynamics
Supply chain refers to the processes and organizations that are involved in the transference of goods and services to the consumer. Supply chain dynamics, therefore, entails the network of individuals and organizations involved in the production of content used in the online video market and how players in the industry keep changing or shifting.
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Evolution of the Video Supply Chain
The video supply chain had started before the emergence of popular video search engines like YouTube. Television networks made their television shows and programs available online for their customers to view. Apart from the television networks, there were also news videos, film trailers, and music videos that were made available for online viewing by individuals or news outlets. There were also user-generated contents that could be viewed online.
The user-generated content mainly consisted of home-made clips and clips recorded on webcams. With the entry of major players in the industry such as YouTube and My space, the supply chain underwent rapid changes. Users started producing professional content and making them available for online viewing. Big companies started using internet services to produce videos that advertised their contents.
Organizations such as JOOST, BLIP TV, and HULU also entered the supply chain. The supply has undergone various changes and the currently consists of companies supplying product or service promotional videos, media outlets supplying entertainment and news videos, and individuals uploading amateur videos. The evolution has also resulted in negative results as terrorist organizations have also been using platforms such as YouTube to conduct radicalization and spread messages of hate.
Positioning in the Video Supply Chain
Market positioning involves the efforts of an organization aimed at influencing the image its customers have about its services or products. To strategically position itself in the market and gain a competitive advantage, an organization must conduct a market analysis to know as much as about its target customers as possible. The thorough knowledge of the customer then helps organizations to employ strategies that will ensure it has as many customers as possible.
In the video supply chain, just like any other market, positioning is a huge part of gaining competitive advantage. The factors video suppliers use to position themselves include age, culture, religion, lifestyle, and occupation. Age is an important factor in the video industry as individuals of different ages like to watch different videos. Young people, for example, are targeted for entertainment content like music videos, sports videos, and many other contents that are popular among the youth.
The older generation is known for their liking of news clips. Some players in the video supply chain also produce culturally or religiously relevant videos that are targeted towards capturing audiences from cultures and religions. Other players in the industry also target people with varying lifestyles and supply video contents such as clothing lines or holiday destinations. By occupation, players in the supply chain target different groups of people such as students, teachers and business professionals from various fields and produce video contents that suit them.
Revenue Models for YouTube
Revenue models refer to the framework of activities that an organization pursues to earn revenue. Revenue models depend on an extensive marketing research that helps in the identification of the needs of customers and their purchasing power so that organizations can decide what products or services to offer and what prices to charge for the services and products offered. During its early stages, the revenue models that were available for YouTube included paid content, advertising, and user subscriptions.
Content marketing involves the use of a platform to make customers aware of your goods and services to build a relationship with them. Because of its ability to allow users to search, and share videos, YouTube had paid content as a revenue model. Organizations like television networks could use YouTube to promote their shows to increase viewership. Organizations such as CBS and MTV entered into contracts with YouTube to promote content and divide the revenue generated. Musicians could also use YouTube to reach their fans and establish relationships with them that could help promote their works in music.
Another possible revenue model for YouTube was advertisements. The main difference between advertising and content promotion is that while advertisements are meant to trigger quick sales, content promotion is aimed at building a long-lasting relationship with customers. Advertisements could be run when users watched videos. The advertisements run in the course of playing videos were charged by the number of views. Other website owners or bloggers could also attach a YouTube Video player to their sites and share revenue earned with YouTube.
Paid subscriptions represented another revenue model that was available to YouTube for revenue generation. Users who used YouTube to share their videos could have channel subscriptions from loyal customers who have to pay upon subscription. The revenue derived from such subscriptions is then divided between the user and YouTube.
Strategic Options for YouTube
Strategic options represent a set of business ideas that a firm uses to get gain a competitive advantage in the market in which it operates. One of the strategic options for YouTube was an offensive strategy. An offensive strategy involves a company identifying a weakness of the competitor or a gap that exists in the market and provides a product or service that fills that gap. YouTube was started because of the difficulty to share videos and the inability of the existing technology companies to address the problem.
YouTube sized the opportunity by making available the technology that allowed users to perform three major activities. These included uploading, watching and sharing videos online. Other industry players including MySpace allowed users to watch videos, but sharing of such audiovisual content was difficult. YouTube went on the offensive and addressed that problem.
Another strategic option available for YouTube was a differentiation strategy. A differentiation strategy involves the creation of a unique product or service that makes an organization different from the competitors. When YouTube was launched, there were already players in the Internet videos on MSN and Yahoo! Video. MSN was only allowing users of Microsoft to utilize their online video services while Yahoo! Video did not allow for a video search service.
This, therefore, presented an opportunity for YouTube to provide a video service that was unique from one of the competitors. The differentiation strategy was used as YouTube allowed all types of users to upload and share videos online and provided a video search engine. This presented a one-stop shop for the Internet video services that were only unique on YouTube.