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Obstacles to Benefits of Media Abundance:
A Resource-Based Approach to Television Facilities and Personnel
Prof. Robert G. Picard
Media Management and Transformation Centre
Jönköping International Business School, Jönköping University, Sweden
Remarks to the International Seminar on the New Economy of Media,
School of Film and TV Arts & Technology of Shanghai University, 12 June 2005
Changes in technology and public policies, and the growth of advertising support, have
led to the proliferation in the types of media available and the number of media outlets
existing worldwide. The expansion of media offerings have generally been delivered with
policy makers and media firms holding out the promise of increased content, more
choice, and a range of social benefits based on improved information flow and provision
of material promoting domestic culture and social life. Perhaps no media has been more
affected by these changes than the television industry (including terrestrial, cable, and
satellite television).
Today I do not wish to debate whether the purported objectives of media abundance are
realistic or the extent to which they are rhetoric, and I recognize that differences in the
political and economic contexts and the extent of pre-existing media systems
significantly influence why and how expansion of media have taken place. What
concerns me is that the growth of media outlets is taking place in many locations without
a corresponding growth in the fundamental resources necessary to sustain it.
The growth of television worldwide is extraordinary. In the United States, the average
cable household receives about 60 channels, with large numbers of households receiving
up to 500. In Europe the number of television channels increased 400 percent in the past
15 years. In China, provincial satellite television is being offered to nationwide
audiences, bringing the total number of television channels available nationally to about
70.
The growth of media has created an oversupply of content because audience consumption
has not increased proportionally (Picard, 2002). The result of this increase in television
channels is not a corresponding increase in view but more selective viewing. Individuals
are also making more choices among media and units of media and are spreading their
consumption further than ever before (Becker and Schoenbach, 1989).
Although there are many places from which content can be delivered to audiences,
significant challenges in providing quality content exist because of limitations in the
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value chain on the production of content. Three major elements of the value chain
relevant to this discussion: the supply chain, the producer’s value chain, and the
distribution chain
Figure 1: Basic elements of the value chain
supply
value
chain
producer’s
value
chain
distribution
value
chain
Media firms are primarily engaged in the production and distribution aspects. They, of
course, access the supply chain when they acquire content and other materials from
another producer. Although there are slight differences among media industries and
firms, the basic value chain involves content: that is, selecting, organizing, packaging,
and processing content; followed by activities preparing it for distribution; and then
distribution and related marketing activities for the product or service (Figure 2).
Figure 2: The Value Chain of Media Firms
producer’s
value
chain
acquired
content
created
content
selecting,
organizing,
packaging,
and
processing
content
distribution
value
chain
production/
manufacturing/
transformation
of content into
distributable
form
distribution
marketing,
advertising,
and
promotion
Source: Picard, 2002
The high growth of media content outlets has created higher demand for media products
in the distribution part of the value chain. However, significant obstacles to producing the
benefits from the enlarging number of media outlets exist in the production portion of the
value chain. The primary challenge involves filling the enormous demand for motion
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pictures, television programming, audio recordings, and print media content necessary for
the new channels.
The ability of media firms to meet this demand is limited because of the unique creative
nature of media content, the skills and knowledge required of personnel, and the
specialization of facilities required for production. As a result it is increasing difficult for
producers to provide adequate domestic content that is interesting and produced at an
appropriate level of quality, forcing reliance on imported content, lessening overall
quality of content, and leading to heavy reliance on repeat uses of the same content. All
these choices make the additional media units and content less valuable and less
interesting to audiences.
The challenges faced by media firms in this environment can be understood and more
effective responses developed if one utilizes resources perspectives. Issues of resource
availability are crucial to the success of all industries and dependence on resources
reduces the independence of organizations and the opportunities available to them
(Pfeffer and Salancik, 1978). Resource limitations and problems coordinating and
managing resources have been shown to be factors in the stagnation and decline of some
media firms (Picard, 1996). Good resource management ensures that resource
dependency that can limit a firm’s activities or growth is avoided and the capabilities of
core resources are constantly upgraded, and well utilized.
This presentation explores obstacles to media firms producing the benefits of abundance
because of resource limitations. It employs the resource-based perspective, a strategic
approach to understanding internal factors within companies or industries that promote or
impede growth or development (Foss, 1998). It recognizes that special unique resources
are critical to success and that use and development internal factors related to capabilities,
competencies help determine competitiveness of the firm or industry (Wernerfelt, 1984;
Prahalad & Hamel, 1990; and Barney, 1991).
From this perspective two resources are critical if benefits are to be obtained from the
expansion of choices available through television, cable, and satellite services: First,
resources of facilities and equipment with which to produce additional content; and
Second, trained personnel to create content that makes the new channels attractive and
effective.
Production Resource Capacity Obstacles
Production of goods and services requires availability of essential facilities in which the
labor can take place and in which requisite equipment is available. Many parts of the
world today face a central challenge in providing sufficient audio-visual content because
of limitations of production capacity due to the lack of production facilities such as
studios, sound stages, and editing suites necessary to support levels of production
required by the increased demand for content.
Production of a single film may require creating sets and occupying soundstages for
several months and the demands of producing a single television show may require
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blocking a soundstage for many days. If a show is produced daily, even an hour long
program it may require occupying a study for a half day or having a studio dedicated only
to that program (Zettl, 1999; Cury, 2001). As a result, the number of programs that a
studio can accommodate for production is highly limited.
This problem was starkly illustrated in the European Union where the combination of a
limited numbers of film production facilities and the fact that most television production
facilities were operated by public service broadcasters who enjoyed monopoly statuses
(Noam, 1992). When commercial competition was introduced and expanded the number
of channels available, the lack of facilities in which domestic television competitors
could produce programming limited their abilities to produce domestic content.
The lack of capacity reached a crisis in many nations after the European Union
“Television without Frontiers” directive (European Commission, 1989) required that 50
percent of programming broadcast be of European origin and that at least 10 percent be
created by producer independent of the broadcasters. A number of nations set this
independent production quota higher, most notable the United Kingdom which enacted a
25 percent quota.
The impossibility of meeting such requirements without changes in industry’s production
resources was soon recognized by the European Commission. To help increase facilities
and production to meet the goals, the Commission established a series of action plans
over the based decade and a half to help improve production capacity, financing, and
distribution of audio-visual products (European Commission, Media Programs).
The central contributions of production studios are one of the reasons that the U.S. has
been so successful in the audio-visual industry. Studio facilities are recognized as sources
of competitive advantage for major film and television production companies and are
seen as critical assets. These unique property-based resources (Miller and Shamsie, 1996)
provide production advantages for the companies that own or control studios and media
content production facilities because make it possible for them to effectively utilize the
facilities themselves and then make any excess capacity available to other producers.
They also become centers and clusters around which the broad variety of support services
and firms necessary for production locate, increasing both production capabilities and the
economic contributions of the audio-visual industry.
Increases in demand due to rapidly increasing need for original broadcast programs—
especially domestic programs, for production of audio-visual advertising, for creation of
audio-visual materials for promotional purposes by companies, non-governmental
organizations, and government agencies also place pressure on limited production
facilities and underscore the needs additional facilities and services.
Capacity of Personnel
The second crucial component of the contemporary media and entertainment
environment is creative and artistic personnel that can create the information and
entertainment content needed by the expanding offerings of media. This creative
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capacity, however, is not easily found or created, but is a central success factor in media
industries.
In reality, every nation suffers from a limited pool of talented writers, musicians, actors,
and directors. If highly talented and creative individuals are only one in a million, even
large nation—such as the Untied States with nearly 300 million population—will have
difficulty finding sufficient talent and will have to look outside its boarders to locate the
best available talent. In small nations—such as Sweden with 9 million population—it is
impossible to locate media personnel of sufficient quality to serve all domestic media
needs.
In cases where there is a rapid increase in need for creative and trained personnel,
educational institutions and professional training schemes are rarely able to provide the
pool of necessary labor in the short to mid-term.
Because training opportunities are limited, even creative and talented individuals with the
desire to enter the field find it difficult to get training opportunities that will prepare them
in the techniques and practices of set design and construction, production technology,
cinematography, lighting, script writing, directing, acting, editing, producing and
financing productions, and managing audio-visual firms.
If economic or linguistic considerations made it difficult for a nation to provide domestic
personnel of sufficient quality or restrict the availability in broader regional or global
labor markets, media production must take place with whatever labor is available, but the
skills levels and creativity of those who must be employed will be lower and affect the
types and quality of audio-visual productions.
These factors make preparation and development of personnel for media industry needs
central to the future of the industry. The rapid changes in markets in recent years has not
allowed media firms, educational institutions, education policymakers to adequately plan
and implement training to prepare sufficient numbers of skilled and knowledgeable
personnel in many nations. This is especially problematic because the availability of
appropriate human resources is critical in labor intensive industries (Bhalla, 1974), of
which media are a part.
A critical need in media is the production of information and entertainment in domestic
language(s) and of content reflecting a local culture, identity, and lifestyle—or at least
content that does not conflict badly with it. Such content is thus more attractive and
successful with audiences. If personnel to directly create sufficient content are not
available, then efforts need to be made to localize and customize existing content to fit
domestic needs of imports or in creating exports of one’s own. Research has shown that
European multimedia producers have not effectively engaged in localization and
customization and are behind U.S. producers, according to recent research (European
Commission, 2000). Effective localization and linguistic customization on a global scale
requires considerable attention to potential networking and strategic partnerships because
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few firms are able to handle internally the numerous and complex issues created by the
hundreds of different markets that exist globally.
These activities, however, require personnel with special creative and managerial skills
and nations, industries, and companies must develop personnel development and content
export and importation strategies appropriate for their unique situations, as illustrated by
the variety of strategies employed by firms that are globalizing of television activities
(Pathania-Jain, 2001; Shrikhande, 2001),
Discussion
If expansion of choice through increased channels and broadcast hours is to achieve its
stated goals of providing more choice and social benefits, efforts need to be directed to
developing necessary resources to support the levels of production needed to provide the
additional materials.
Significant efforts need to be made to locate develop personnel necessary to achieve
those goals. Talent and creative, technical, and managerial skills are knowledge-based
resources that give a media firm capabilities that are not easily imitable (Miller and
Shamsie, 1996). When trained and creative personnel are limited, firms that are able to
attract those personnel gain significant advantages in audio-visual markets and make it
difficult for firms without the best personnel to compete effectively. If the aims of
policymakers are to provide effective competition and choices among an increased
number of audio-visual outlets, significant attention and investments must be channeled
to developing the labor pool with which to make it happen.
The need to increase the supply of production facilities and services is also critical and it
is clear that advantage is gained when other firms in similar industries located near each
other, allowing enhanced development of capabilities across firms, and these practices
often create advantages for specific nations and regions (Porter, 1998).
Efforts to gather and develop property- and knowledge-based resources in media as part
of economic development efforts have resulted from this approach (Backlund and
Sandberg, 2002).
It must be noted that the challenges of developing facility and personnel resources vary
significantly. Facilities are relatively easy to develop but people are harder and take more
time. Finding living, breather individuals interested in the media is not the problem, but
finding persons with creative, artistic temperaments and developing the skills for quality
audio-visual production taken significant effort.
If the expansion of media offerings is to achieve its purposes, public and private
investments and coordinated activities among communication policy makers, educators,
and media firms will be necessary. Failure to do so will mean nations waste the
opportunities created by the policies and investments that have created media abundance.
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