Open innovation: An analysis of the business model of digital cable television

Digitisation is an important milestone in the development of cable television (TV). Cable TV system operators have invested abundant manpower and cost in building the digital head-end and network, researched and developed integrated digital set-top box and finally completed the installation of digital set-top boxes for households, before eventually achieving full digitalisation by shutting down all analogue channels. Initially, the digital cable TV industry was expecting additional profits on top of the fixed monthly rental fees, but there are no value-added services that could bring enormous profits to the cable TV operators even after launching it for years. The primary demands of cable TV consumers are still to watch high definition and real time programmes. With the media moving towards digital convergence, consumers are able to gain access to programmes through varied means and mobilised media sources. The cable TV industry is thus facing simultaneous competition from industry rivals, telecom operators, OTT TV as well as online media operators from all over the world. In order to defend its current market share, the cable TV industry has to adopt various strategies to improve its existing business model. This study seeks to analyse the current development of the cable TV industry with reference to open innovation business models. It will identify the factors that are currently lacking and the requirements of practising open innovation in the cable TV system operations. Through considering the technologies and services offered in different areas from both within and outside the industry, it will then be integrated into the business management system, thereby constructing a business model for the digital cable TV system. In view of the rising competition due to globalisation, enterprises have to resort to different means to import external technological resources instead of merely focusing on its internal research and development. In the existing business environment, they have to provide instantaneous information and services through innovative concepts and procedures, so as to strengthen their business recognition.