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Industry Report

Industry reports, briefs and video-clips issued by Samsung Economic Research Institute

Changes in the IT Convergence Era

Changes in the IT Convergence Era

LEE Sung-Ho

June 3, 2009

Transcript

Welcome to our video program. I'm Sung-Ho Lee from the Technology and Industry Department.

Network operators have faced intense competition since November 2008 when Korea Telecom started full IPTV service. Now, various convergence media products are available thanks to M&As and alliances between fixed line and wireless operators. Thus far, each media channel has enjoyed its own exclusive territory. Internet broadcasting has been the domain of Internet Portals, media has been under the control of broadcasting companies, and communications has been handled by telecommunication companies. With collapsing barriers between business and various convergence products on the market, however, the IT market faces much fiercer competition. The IT market has been turned into a “red ocean” where companies in one line of business can compete against companies in another line of business. Today, we will talk about changes in the IT market in the age of IT convergence.

As personal lifestyles take on increased importance, highly personalized media will likely become mainstream. Since participation, dynamics and mutual communication are critical in this age, customized information services that satisfy individual consumer tastes will become more prevalent. Broadcasting channels will vary according to consumer need. Services that recommend videos suited to individual user's tastes, for example, can be downloaded.

Advertising will also experience changes to suit users' preference. UK Phorm, for example, has unveiled an “Open Internet Exchange” system which sends advertisements to selected web users based on analysis of their behavioral habits. The distinct characteristic of the IT convergence era is the identification of consumers' purchasing patterns, and the distribution of advertising and content to consumers at any time and anywhere.

What should companies do in this convergence age? First, companies should focus on content. The IPTV service market has already seen heated competition even though profits are yet to be seen. Companies are eager to develop content as good content is an easy way to gain differentiation from competitors. To gain an edge on the competition, companies should secure quality content, while content itself should meet the need for personalization, two-way communication, and real-time accessibility.

Without a doubt, good content is essential to be competitive in the IT convergence industry. What should not be neglected, however, is the way the content is provided. In the past, media channels have had distinct divisions. PCs, TVs, and cell phones have had their own exclusive functions. Videos can be conveyed only by TVs while the Internet could only be accessed through PCs. Today, these two channels have converged into multimedia PCs, Internet TVs, and Smart phones. Now, almost all devices have become a channel of Internet content. In this environment it is important to think about how to effectively provide content through using various channels in the development stage.

Another important consideration is platform strategy. In the IT convergence age, identifying individual tastes has become all the more important. A good example is life convergence platforms. Life convergence platforms are a channel through which consumers' behavioral habits can be easily collected from portal sites and online home shopping sites. In the age of IT convergence, consumers use diversified channels to get information. How to integrate various channels in one platform will become an important issue. For example, a platform integrating TV home shopping and Internet e- commerce will help identify consumers' preference and willingness to purchase through analyzing consumers' habits from e-commerce sites. Products which exhibit high willingness to purchase will be aired on TV home shopping and this will boost more sales.

Thus far, we have looked at success strategies in the age of IT convergence. In the past technology-oriented convergence era, mass-marketing was supplier-oriented. In this new era, convergence is consumer-oriented. As the economic climate slowly improves, consumers will begin to reopen their wallets. Individual-oriented life convergence can be a good way to detect business opportunities which broadcasting and IT companies should not miss.

Thank you for watching. I'm Sung-Ho Lee.

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