Wednesday, March 4, 2009

Can MacGyver Finagle Emerging Markets?, an Internet media streaming company backed by CBS (and Viacom), announced last week that they were beginning to serve overseas customers, beating rival service Hulu (backed by NBC and Fox) to the international table. will not offer its entire menu, however. For the time being, only short clips of current shows and full episodes of older series like Beverly Hills 90210 and MacGyver will be available..

Put aside for the moment any discomfort you may feel about exporting these particular shows to the rest of the world, and consider the market entry strategy from a more clinical business perspective. Is this a case of simply designing a service for mature-market consumers and offering it to emerging-market consumers, or is it a clever and inexpensive way to test the waters? If media companies are testing the water, are they being too tentative? According to the Netsize Guide, mobile TV and video revenues have increased steadily each year in all of the emerging-market countries surveyed, and China was ranked 4th in the world with a mobile video market value of $117 million in 2008 (before the broad rollout of 3G). Further, media and broadcasting companies are safe to assume that entry barriers such as limited bandwidth and reliable broadband will decrease as PC and smart-phone ownership spreads and network infrastructure improves, particularly in emerging-market cities. Other barriers, such as international licensing rights and local regulatory environments, can be overcome through partnerships and revenue-sharing agreements.

Media companies and their networking and device-manufacturer partners have an excellent opportunity to deliver compelling, high-demand content to growing sub-segments of emerging-market consumers – PC owners with broadband, and smart-phone owners with 3G connectivity. Localizing services for certain regions is not a particularly difficult technical challenge, nor would it require major product or business-model innovations. And there are plenty of advertisers (e.g., Coke, Western Union, Johnson and Johnson, large local hero brands) with an interest in selling to comparatively wealthy emerging-market consumers. Near-term incremental revenues are attainable for media companies, ISPs, computer and smartphone manufacturers and mobile carriers, as long as they treat these new markets thoughtfully and with business rigor (rather than finesse them MacGyver-style with pen cap and a hairpin).

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