Bsb vs Sky
Introduction :
By October 1990, two new entrants suffered a combined investment of £1.25 billion and a weekly £10 million loss and are waiting desperately the Christmas season to fall in better hands. Rather than behave rationally and focus on profit maximization and a long run going concern for the entire industry, the two companies engaged in a bloody war, that let the industry suffer one of the major loss ever and led to the merger of the two companies .
This case outlines one of the most ferocious competitions of the satellite TV, and announces a series of battles under other skies in the same industry.
The situation described in the case is much to be close to a “War Game” that ends up with a takeover of one on the other .
Today’s view on that situation could be biased due to the result of such game, but we will try to be as fair as possible with BSB management to justify their intention in that time.
The task would not be easy due to the drastic changes in that industry during the 90’s. The two companies bet all their funds and based all their future wealth on two different alternatives. Nevertheless, these two alternatives were analogue based technologies that have been replaced rapidly in 1996 by the most cheap and higher quality digital satellite broadcasting with its standard known as DVB . The latter technology allows scrambling of the signals, stereo sounds and wide screen support. A lot of scrambling system has appeared during this period. The most secure one remains the Videoguard NDS system developed by an Israeli firm for BSkyB.
Description of the situation :
We are faced with an extremely competitive market with two players. The situation could be summarized in the hereunder points:
- High cost entrance
- High Operational Costs
- Existence of substitutes (BBC, ITV and Channel 4 terrestrial TV and VCR for movie channels)
- High antagonism between the players
- Government intervention to regulate the industry (applicant
By October 1990, two new entrants suffered a combined investment of £1.25 billion and a weekly £10 million loss and are waiting desperately the Christmas season to fall in better hands. Rather than behave rationally and focus on profit maximization and a long run going concern for the entire industry, the two companies engaged in a bloody war, that let the industry suffer one of the major loss ever and led to the merger of the two companies .
This case outlines one of the most ferocious competitions of the satellite TV, and announces a series of battles under other skies in the same industry.
The situation described in the case is much to be close to a “War Game” that ends up with a takeover of one on the other .
Today’s view on that situation could be biased due to the result of such game, but we will try to be as fair as possible with BSB management to justify their intention in that time.
The task would not be easy due to the drastic changes in that industry during the 90’s. The two companies bet all their funds and based all their future wealth on two different alternatives. Nevertheless, these two alternatives were analogue based technologies that have been replaced rapidly in 1996 by the most cheap and higher quality digital satellite broadcasting with its standard known as DVB . The latter technology allows scrambling of the signals, stereo sounds and wide screen support. A lot of scrambling system has appeared during this period. The most secure one remains the Videoguard NDS system developed by an Israeli firm for BSkyB.
Description of the situation :
We are faced with an extremely competitive market with two players. The situation could be summarized in the hereunder points:
- High cost entrance
- High Operational Costs
- Existence of substitutes (BBC, ITV and Channel 4 terrestrial TV and VCR for movie channels)
- High antagonism between the players
- Government intervention to regulate the industry (applicant