Page 3 - SCS May 2018 - Day 1 Suggested Solutions

SUGGESTED SOLUTIONS

CHAPTER FOUR – E3

EXERCISE 1

Political

• Little/no government regulation over content that is broadcast (unlike terrestrial and
satellite broadcasters in the UK – governed by Ofcom)

• Restrictions on streaming to world’s largest country by population China – Chinese
government has controls in place

Economic

• Revenue earned in many currencies – fluctuating exchange rates will impact earnings

• Business model of low fees/high subscriber numbers – gaining and retaining subscribers
critical to financial success
• Need to continually invest in new content requires significant cash resources

• Finance raised by debt (in part) – fluctuating interest rates can increase business risk

• Subscription fee is discretionary expenditure for customer – poor economic circumstances
may lead to increased cancellations

• No extended contract with subscribers causes uncertainty of future revenues

Social

• Trends in consumer demand – “binge-watching” series now considered ‘the norm’ as
opposed to one episode per week

• Demand for watching TV/movies whilst on the move

• Shift away from watching content on TV to other platforms – e.g. mobile phones, tablets

Technological

• Importance of good broadband infrastructure as platform for streaming companies

• Increased mobile coverage via means such as 4G

• Continuing change in technology for content e.g. 3D/HD/4K Ultra HD

• Improvement in compression techniques will improve overall quality of content with
relatively less data

• Interaction with viewers via ratings process means feedback on programmes/movies

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