digital economy and convergence

Ernesto Orozco, ANTVIn an interview with the engineer Ernesto Orozco Orozco, current member of the National Authority of Colombian television, gave their perception of the changes experienced by the digital ecosystem, new business models and the challenges of the State before implosions living immersed industry a digital environment.

By: Luis Fernando Gutierrez Cano and Jorge Luis Pacheco Orcasitas

Today, the audiovisual industries should be aware and expect major changes in business models in the digital economy.

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How the ecosystem can allow them to service providers in Colombia Digital TV (pay or open) deal with appropriate powers the challenge of the digital economy and the convergence?
Ernesto Orozco:
Promoting competition and competitiveness through a regime appropriate consideration, reducing barriers to entry and exit and definition of the model and size of public television and sustainability.

What are the major changes in digital business models that will come on and what should companies do to adapt quickly and take strategic positions, redefine its proposal and permanently innovate?
Ernesto Orozco:
As expected, disruptive business models have dabbled with no little success in markets providing online video, pay per view, on demand, everywhere, and so, taking advantage of the opportunity presented by the principle of network neutrality; the popularization of broadband; incremental scale dynamics of the digital economy, with high returns and low marginal costs; differentiated value propositions and status information services outside the scope of regulation of the regime of public television services or telecommunications services.

We have a general change in the rules. A permanent change in established business models. Finally, today the competitive advantage is the ability to break paradigms.

This reality demands other managerial skills: innovation: technology, services and business models to achieve competitive advantages; anticipation, information management, today big data, to generate, if possible, new customer needs, its own "blue ocean" and that the service or product is appropriate; generation of "experiences" as a value proposition and emotional bond.

Today, industries must be aware and expect great changes in business models, much lower incomes and the need to adapt quickly, taking strategic positions, redefining its value proposition differentiated and based on true competitive positions; be flexible, adaptive and constantly innovate.

What would be the digital challenge for the state, legislative and regulatory agencies?
Ernesto Orozco: The digital ecosystem is a new vision of public policy of the countries that not only covers primary objective competition but also the sovereignty of the countries in the political, economic and information context. Such public policy must weigh what level of intervention need not slow down investment and innovation in the digital economy, but also recognize the real barriers that exist control against global information market.

Meanwhile, the digital challenge for the state, legislative and regulatory agencies is to produce an ecosystem that minimizes barriers to entry and exit, competition and competitiveness are promoted through a regime appropriate consideration and that the model and size of public television and sustainability is defined.

This ecosystem should enable service providers in Colombia due cope with the skills the challenge of the digital economy, convergence and disruptive business models.

The great advances and technological changes in recent decades brought a new paradigm in economic processes within the digital economy and media convergence. Today, many companies are undercapitalized average, how companies face this critical time amid a constant moving in the digital media environment?
Ernesto Orozco: As I have discussed today life cycles of companies are very short. This causes many businesses see their incomes fall quickly in increasingly competitive industries. Whoever wants to stay and grow must adapt and change its organizational culture to meet the demand for more informed consumers and less sense of loyalty. Today, the consumer is much more aware of the products and services that represent greater value transfer will seek always maximize it.

Another phenomenon present in contemporary media is that there are fewer levels of audiences but also more specific audiences; How should the media face these new habits of media consumers?
Ernesto Orozco: The digital economy, convergence, the massification of internet and the principle of network neutrality have led to a few phenomenon often seen in the history of the world economy, with an effective transfer of value to the consumer that in some cases, has represented to 75% of the value of an industry (for example, the music industry). This was accompanied by a structural change in business models.

Today, we must recognize these effects in ancient and powerful industries such as the press, the phonographic industry, retail, voice, messaging, travel agencies, hotels and more recently, public transport, banking and provision of audiovisual content.

Industries that were taken over 50 or 100 years to consolidate, decline in 10 years or so, thanks to digitalization and reducing the gap to access the information society. Lifecycles of certain industries and business models are becoming shorter: in 1958, the average of a company's S & P500 list was 60 years; Today, it is 20 years.

Similar effects can recognize retail industries, voice communications, messaging, travel agencies, hotels and more recently, public transport, banking and provision of audiovisual content.

From my analysis, it has increased consumer exposure to time consumption of audiovisual content, exacerbated by the pervasiveness of mobile devices. As for traditional media, although consumption remains time, has not been able to increase, I caused a minor share of total media consumption.

Despite retain, for now, their traditional audiences, the media and traditional business model are struggling to retain its advertisers, especially those segmented needs.

Traditional media should quickly question their business model and migrate to IP managed services on their networks (satellite, cable and broadcast), in order to provide mobility services, and using the big data as opposed to measuring traditional audiences and rigid that does not allow immediate decisions, both programming and commercial.

They should also be aware that digitization and convergence destroy value for incumbents to drastically reduce their income, but move this value to the consumer.

That is why the broadcast networks, managed and offer Quality of Service (QoS) and Quality of Experience (QoE) and value proposition for broadcast point-to-multipoint as traditional television still has a margin of maneuver to meet the challenges of OTT. However, they must adapt as soon as their business models and expect much lower incomes accustomed, since the speed of these changes can cause digital companies (DTT, cable HD, DTH HD), but tied to analog paradigms, only address small portions of the market.

What are the general characteristics of the new digital economy, from elements such as network economy or the phenomenon of disintermediation or interactivity?
Ernesto Orozco: Digitization and reducing the gap in access to information via the web in different ways have affected almost every industry in the world, thanks to reduced transaction costs between suppliers and consumers.

According to the above, we can approach a definition of digital economy as an economy based on reducing costs associated with the equity transaction, information and human talent, using as a driver the TICS and as support structures and telecommunications services.

The general characteristics of this economy are, among others:

i. Economy is dynamic and incremental,
ii. Economies of scale,
iii. Network effect,
iv. falling marginal costs,
v. High returns of capital,
saw. Short life cycles,
vii. Low requirements of physical assets, and
viii. Generating more value for consumers.

ECLAC, in the book Digital Economy for structural change and equality (2013) and talk that "in a context of economic growth and poverty reduction in much of Latin America, they must address the challenge to articulate and consolidate its digital economy, which requires answering questions on how to identify and seize new opportunities in a phase of technological convergence to advance economic development and equality, "how do you apply this in a country like Colombia?
Ernesto Orozco:
The opportunities are realized taking advantage and exploiting the drivers of the digital economy:

Global Internet penetration than 50% annual global growth of 10% and LATAM level 6%.
Global penetration of social media than 40% annual global growth of 10% and LATAM of 6% level.
Penetration of mobile devices more than 50%, with annual growth of 4%.
Penetration of social media than 30% annual global growth of 19% and LATAM of 7% level.

Additionally, in the very short term, policies should be adopted for the promotion and use of Big Data, Artificial Intelligence, Internet of things and nano things and cloud computing.
 
How could move Colombia toward an institutional framework for the digital economy and ensure integration policy initiatives on broadband, ICT industries and digital inclusion?
Ernesto Orozco: The digital ecosystem is a new vision of public policy of the countries that not only covers primary objective competition but also the sovereignty of the countries in the political, economic and information context. Such public policy must weigh what level of intervention need not slow down investment and innovation in the digital economy, but also recognize the real barriers that exist control against global information market.

Therefore, relevant, and we consider healthy, that the country will discuss about how to include these information services (voice, data and video, etc.) provided from abroad, in Colombia's tax base.

This is not to denature information services, cataloging and public television services or telecommunications, in order to subject them to the same legal and regulatory framework for these services, which would expose States to a monumental effort and, therefore , sterile.

urgently I consider the need to create a digital single market among the countries of Latin America, then Brazil, Spain. Starting by telecommunications and information services, cultural services and all kinds of digitizable service that can provide online. Then extend this MUD to all types of transaction that support the aforementioned driver of the digital economy.

Quoting products and technical services for Latin America

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