Challenges of digital broadcasting and competitive strategies adopted by television stations in Kenya

Abstract

The media industry has undergone major changes after analogue to digital migration. Digital broadcasting has reduced the entry barrier which has for years been a source of competitive advantage. It has fragmented the audiences and this has posed a great danger to television stations which make revenue solely via advertisements. As a result, competition is cut throat and the television stations had to adopt relevant competitive strategies. The aim of the study was to look at the challenges of digital broadcasting especially its effect on competition and competitive strategies adopted by television stations in Kenya. The study adopted descriptive cross sectional survey design. The target population of study comprised of 8 local television stations owned by the large media organizations in Kenya. Data analysis was done with the help of Statistical Package for Social Sciences (SPSS version 21) and the findings were presented in form of table and figures for easy understanding. The study determined that digital broadcasting brought the challenge of increased competition. Using Porter’s Five forces model, it was determined that it was easy for competitors to enter the television industry and compete effectively, there was a big threat of substitute product, competitive rivalry had increased and it was very easy for buyers and in this case advertisers to drive prices down as well as switch to a competitor. The study established that the local television stations in Kenya used their resources to achieve a competitive advantage. The key resources used are the human resource and financial capability. It was also established that appropriate pricing strategy as well as strategic positioning enabled the television stations to attain a competitive advantage. The recommendations of this study are that disruptive technologies will continue to transform the television industry. Therefore, the televisions have to be proactive in scanning the external environment so as to identify such technologies and take the necessary strategic steps to cushion the firm from adverse effects. Another recommendation is that the television stations will have to expand their revenue stream from pure advertising to set top boxes subscription as well as by moving into the outdoor advertising. Further, profitability can be increased by signing long term contracts with the advertisers accompanied by rewards to enhance customer loyalty. This can increase the switching costs. Television stations should strive for the top positions in terms of the most competitive human resource, cost management and differentiation an aspect perceived to bring forth best performance of the television stations. The key conclusion of this study is that, despite the high competition resulting from digital broadcasting, television stations can still achieve a sustained competitive advantage. The study has two main implications: Firstly, there is need for television stations to do Research and Development and establish how they can take advantage of the disruptive technology and use it as an opportunity rather than a threat. Secondly, it is important to determine other different ways that the television stations can remain competitive apart from use of resources, cost leadership and strategic positioning.