Horizons newsletter – Week 13 // 2017
Horizons is a bi-monthly Dasym Research initiative to show you how the Dasym themes have been in the news. We publish the Horizons on our website and as an email newsletter. If you wish to receive the email, please contact Investor Relations.
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Video unbound
The distinction between online video and offline linear TV continues to blur, with consumers viewing videos from various sources on any device. This year Nielsen introduced Total Content Ratings that measure video content viewership across platforms and devices. YouTube reached the record number of one billion hours viewed and announced a YouTube TV bundle for $35 per month. Netflix, meanwhile is pushing its service into consumer homes through a growing number of partnerships with Pay-TV providers. And Comcast, one of the largest U.S. cable and media companies, uses its in-house developed X1 software to show videos from TV and online channels side-by-side in one interface: on cable boxes and on phones, tablets or computers. All these show that the industry is moving away from a strict division between online and offline video. The next step should be to create an interface that allows consumers to navigate their content choices and with the boundaries between on- and offline blurring, that interface might become reality sooner rather than later.
Sunset or Sunshine in Korea?
South Korea is going through a tough time. Following a long impeachment process, President Park Geun-Hye was recently removed from power. Furthermore, China has responded harshly to South Korea’s deployment of the U.S. THAAD defensive missile system, which has put pressure on Korean tourism and K-pop exports. Finally, the country’s flagship company Samsung is also involved in the government’s corruption scandal. The current problems might, however, herald better times. Over the last decade South Korea has been ruled by conservative and hardline governments. A possible shift to more progressive parties could improve the country’s regional relations: in the 1990s, leftist leaders sought closer relations with China and approached North Korea through positive incentives with its so-called “sunshine” policy. A similar approach could ease tensions in the future. Furthermore, the high-level corruption scandals might also have a silver lining. The Korean economy is dominated by business conglomerates called chaebols, similar to the Japanese keiretsus. In Japan, reform of the conglomerates has been tried and mostly faltered. If it succeeds in Korea, this would solidify its edge over Japan as Asia’s most advanced economy.
Producing Platforms
Platforms are basically market places, like a Persian bazaar, that create value by facilitating exchanges between demand and supply. In contrast to ‘normal’ business models, platforms don’t own the means of production but only create the means of connection. Nonetheless, platforms (like Google or Uber) have disrupted markets and undermined the traditional players’ market position: in 2015, every one of the 10 websites by traffic was a platform, and 58% of all ‘unicorn’ startups were platforms. In markets with a wide variety of suppliers, platforms create value by reducing transaction costs and increasing transparency. But in markets with a reasonable level of concentration at the supply side, companies can establish their own platforms, rendering third-party platforms obsolete. For instance, LVMH, home of many luxury brands, is planning to launch an ecommerce website for its products, called Le Bon Marché. It will feature all of its brands (e.g. Louis Vuitton) but also those of its competitors, in order to increase the scale of the platform. In this way, LVMH benefits from the platform’s network effects and internalizes a part of the value chain.
