این فصل را با ذکر تمام تیترهایش (تاکید میکنم تمام تیترهایش) به انگلیسی ساده و روان خلاصه کن     Case Studies	15
	

Case studies are a very important education tool in media management. Against this background, this chapter addresses the role and application of media management within the media markets and discusses specic case studies for different media markets. In doing so, this chapter begins with a comprehensive case study of Google Inc.


	Google/Alphabet Case Study

Google is a worldwide Internet software corporation and market leader in the area of online search and text-based online advertising. Headquartered in Mountain View, California, Google became well known through its self-named search engine Google. Nowadays, the search engine is available in 173 languages and has more than 180 domains. According to Google, their search engine covers three times the amount of information provided by other search engines.
Section 15.1.1 highlights Google’s organizational history and development. Section 15.1.2 provides insights into Google’s integrated business model. Section 15.1.3 presents Google’s market environment and its most important competitors. Finally, concluding questions offer a deeper examination of the case
study at hand and respective hints for solutions provide suitable guidance.1


	Google’s Organizational History and Development

In 1998, Lawrence Eduard Page and Sergej Michailowisch Brin founded the corpo- ration Google while attending Stanford University. Initially, they participated in a

1See also for the following chapter Wirtz (2013c) and Wirtz (2019a).

 
Ⓒ The Editor(s) (if applicable) and The Author(s), under exclusive licence to Springer Nature Switzerland AG 2020
B. W. Wirtz,Media Management, Springer Texts in Business and Economics, https://doi.org/10.1007/978-3-030-47913-8_15
 
261
 
262	15 Case Studies

research project about data mining and developed a search engine called BackRub, the precursor of the search engine Google. At this time, BackRub was the only search engine that was capable of analyzing cross-references of a website. Despite receiving recognition from academic society, Page and Brin were not able tond an Internet portal that was willing to use the search engine.
Therefore, Page and Brin founded Google Inc. on September 7, 1998. As seed capital, they resorted to 1.1 million USD collected from family and friends. In addition, they received venture capital funding from Andreas von Bechtolsheim, the co-founder of Sun Microsystems.
On Google’s day of foundation, the corporation also launched the trial version called Google Beta. A few months later, the soon to be prospering organization moved itsve employees into theirrst ofce in Palo Alto, Silicon Valley, close to Stanford University and their present headquarter. Already  in February 1999,
Google had 8 employees and 500,000 search requests per day. In September 1999, Google established a partnership with AOL and Netscape. As the number of search requests per day increased to three million, theynalized the testing phase.
After ofciallynishing the test phase, Google concentrated on broadening its
range of services. In June 2001, the Google search engine gained market leadership
with one billion pages stored by the Google Index. Already by the end of the year 2001, Google recorded more than three billion page views. In the course of expanding their service chain, Google took over Blogger.com in February 2003. Moreover, in the year 2004, Google offered a free email service called Gmail.
As part of its expansion strategy, Google acquired the world’s leading online video portal YouTube for 1.8 billion USD at the end of 2006. One year later, Google
bought the company Double Click for 3.1 billion USD. With this acquisition, Google gained access to Double Click’s competency in graphic design of advertise- ment on websites and to its well-established and well-nanced customer base.
Ever since its foundation, Google has been expanding its operations and service
spectrum continuously. The 4C-Net Business Model typology provides an analytical framework to classify Google’s services. This typology is used for classifying business models on the Internet, comprising the dimensions content (compilation, display, and provision of content on own platforms), commerce (initiation, negotia- tion, and/or settlement of business transactions), context (classication and system-
atization of the information that is available on the Internet), and connection
(creation of information exchange in networks).
Within the area of context, services such as Google Catalogs, Google Image Search, Google Toolbar, Google Book Search, and Google Scholar exist. Likewise, the services Google Mail, Google Talk, and Google Voice are part of the connection
segment. Regarding the commerce segment, Google AdWords, Google Checkout, and Google Product Search constitute an important supplement to Google’s services. Lastly, Google Groups, Google News, Google Maps, and Google Earth represent services in the content area. Overarching this typology, there are services that correspond to more than one section like Picasa or YouTube.
At the end of 2007, the Open Handset Alliance (OHA) was founded, aiming to develop open standards for mobile devices, especially Android, an open-source
 

mobile phone platform. This alliance includes members from various network providers (T-Mobile, Telefonica), software companies (eBay), manufacturers (Samsung, LG), marketing service providers, and companies from the semiconduc- tor industry (Texas Instruments, Broadcom, Nvidia). At the same time, Google expanded its operations in the mobile phone industry and was able to align already existing services with the upcoming mobile segment. Consequently, the Android market offers manifold mobile applications like those from Google but also from many other providers and software developers.
The mobile market became increasingly more important for Google’s strategic positioning. Google’s acquisition of Motorola’s segment called Motorola Mobility for 12.5 billion USD in 2011 highlighted the importance of gaining access to the
mobile market. This acquisition granted Google access to one of the largest portfolios of patents within the mobile sector, especially to capacities to produce smartphones based on Google’s operating system Android. In the third quarter of 2011, Android dominated the market with a market share of 52.3% and with approximately 180 million devices sold. At this point in time, Google had a broad
range of services at its disposal.
Nevertheless, changes took place in Google’s top management. In April 2011, Larry Page replaced Eric Schmidt and took over as Google’s CEO, while Eric Schmidt became executive chairman of the board of directors. Because of a simulta- neous strategic modication, Google started to reduce its spectrum of services in order to focus on those segments most efcient in terms of costs and benets. Hence, Google removed 20 services from their offers including, among others, Google Notebooks and Google Desktop. In this respect, Larry Page stated:“We have to make tough decisions about what to focus on.”
Since Google’s initial public offering in 2004, it has tremendously grown and
developed. Within a few years, Google evolved from a startup company to the
largest Internet service provider worldwide. Nowadays, Google employs around 70,000 employees and is market leader in the areas of online search and text-based advertisement. Due to the high name recognition of its identically named search engine, Google has become an established worldwide brand. This development is
reected in Google’s increasing revenue and prot.
The increasing diversication of its portfolio eventually led Google to found an umbrella company called Alphabet on October 2, 2015. Now, Alphabet serves as a
multisector holding that allows its subsidiaries to act more freely than within one company, which was necessary for Google to stay fast and innovative. In 2018, Google generated a revenue of 113.76 billion USD and achieved a year-on-year increase in revenue of 29%. Figure 15.1 represents the development of Google’s
revenue and net prot since the year 2004.

	Google’s Integrated Business Model

Even though the holding cooperation is called Alphabet, its core brand and most of its Internet-related ventures are keeping the name Google, which is why this case
study also uses this name, as it focuses on those areas of activity. In the context of e-business models, the classication of Google’s services with the help of the 4C-Net Business Model typology offers insight into the formal structure of the corporation. Although the search engine was previously associated with the context model, its broad service spectrum suggests a highly diversied business structure.
Therefore, one may categorize Google’s business model as a hybrid business
model, as its service range embraces all four dimension of the 4C-Net Business Model. In order to depict Google’s hybrid business model, a detailed overview of various business model components will be presented. Especially the market-supply (competitors, market structure, and value offering/product and services) and the
revenue models (revenue streams and differentiation) serve as the foundation for analyzing the business model at hand.
In general, Google strategically aims to provide, organize, and systematize existing information worldwide by means of the Internet. With this, Google formulates a clear mission that is an integral part of its corporate strategy and thus also of the respective strategy model (business model mission, strategic position and development paths, as well as business model value proposition). This way, Google grew to become an integrative Internet player and one of the most important
gatekeepers of access to information throughout the Internet in recent years. In this context, the term“gatekeeper”describes the opportunity for the operator of a search engine to inuence what information usersnd and can actually access (see Fig. 15.2). 
Due to the vast amount of existing information and the recent developments in user behavior, providers increasingly rely on the transparency of the Internet in order to be easily found by all users. Consequently, as one of the largest providers of a search engine, Google drew attention to its growing market power.
Google’s value proposition mainly rests upon its gratuitous compilation, organi- zation, and representation of the immense variety of information on the Internet. Importantly, the value proposition remained the same throughout Google’s organi- zational development and is characterized by a high recognition value and user
friendliness. Google achieves a higher customer retention through their complemen- tary service offerings. Private users can make free use of email, digital photo or image management, and text processing programs, and they will probably do so repeatedly. Moreover, the high coverage Google promises with regard to advertising purposes attracts business users.
From a resource-based view, Google’s manifold competencies and resources are extensive. One major core asset emerges from Google’s highly specialized techno- logical infrastructure that is characterized by its high amount of redundancy, efcient load balancing and a predominantly software-based system. Another core asset is Google’s corporate brand and simultaneous product brand, which have been manifested through the process of creating a generic trademark. This means it became common to use the term“Google”to search the Internet.
One essential competence of the company is its comprehensive contextualizing competence. Notable in this respect is the criteria-specic localization, classication, and systematization of the search engine as well as Google’s extension of its services
when it comes to illustrating context. Particularly after the year 2004, the company expanded its competencies in content- and connection-related areas. This was mainly possible by intensifying business relations and through acquisition activities. Further core competencies of the enterprise are its technological competence, competence at content creation and search, as well as a fully developed competence
at promoting advertising efforts.
The network model of Google is characterized by a far-reaching cooperation network, as well as an extensive business-to-business and business-to-customer network. The free supply of the Google search engine is particularly important. Google AdSense enables both companies and individuals to add a search box to their
own website, giving them a share in prots when other Internet users click on one of the advertisements that appear on the search engine results page.
Without an innovative network of business partners and protable business-to- business cooperation, Google would not be as successful and powerful as it is today. Nevertheless, the company has established an extensive network and tremendous user base in the customer area, which especially proted from a digital word-of-
mouth effect after the foundation of the company. Users that were happy with the
search algorithms personally recommended them to family, friends, and acquaintances.
Google’s creation of goods and services follows a clear and linear structure. The
rst step of creating content is to gather, systematize and classify information in order to save it as results for on-demand inquiries and make them available through
the search engine. This content creation process is particularly based on the supply of information from third parties or oneself. In comparison, the connection supply is characterized by a strong interdependency between user interaction and communi- cation management.
The company receives most of its input from communities, content suppliers, and news agencies. Therefore, the transmission of information and interaction follows a simple process, i.e., Google checks websites and registered content and either adds them to the index and utilizes them or classies them as irrelevant and therefore rejects them.
Another partial model of Google’s business model is the revenue model. The AdSense partner program generates one of the most important revenueows, which unlike the AdWords program places context-dependent advertising on an external
website. Within this system, the owner of the website receives a certain amount of remuneration when a user clicks on the advertisement. Simultaneously, Google attains more trafc from partner websites. The fees or portion of ad revenues Google pays to such advertising partners that run Google ads or services on their websites are called trafc acquisition costs (TAC).
Another fundamental subcomponent of Google’s business model is the market
offer model that consists of context, content, and connection offers. The aspects of
the company that matter most to industrial customers are the wide-ranging offers of well-developed technical functions and the high number of users. The latter is associated with the great recognition value and the high usage of the search engine.
 
The free usage of various online services offered by Google is highly appealing to private customers.
However, the foundation of Google’s business model is still its search engine that offers information via the Internet by means of an intuitive search tool. At this point, Page’s and Brin’s PageRank algorithm evaluates the relevance of the website according to the links it incorporates. The introduction of PageRank revolutionized
those search engines that evaluated websites according to their search terms in texts and meta tags. Today, Google includes over 200 different evaluation criteria for the ranking of websites. With the recent update of the search algorithm called“mobile-
friendly 2,”Google rolled out another ranking signal boost to benet mobile-friendly
sites on mobile search.
In terms of the 4C-Net Business Model typology, the context model with the search engine as its core service builds the foundation of Google’s integrated business model. Due to a continuous and innovative revision and extension with specialized search services for images, news, and geographic information, Google is the most frequently used search engine worldwide. Further services within the
context segment are, for example, Google Catalogs, Google Images, Google Tool- bar, Google Book Search, Google Scholar, Google Reader, Google Blog Search, Google Now, and most recently Google Home.
One of therst services besides the search engine was Google Catalogs that offers users the opportunity to look at different print catalogs online. However, Google
turned down this service in August 2015. Google Images allows to search for distinct pictures online by means of special search criteria like color, format, or the right of use. Google Toolbar is a toolbar for the web browser that allows the user to quickly access the Google search engine and other Google services without changing to the
main page. Figure 15.3 presents Google’s business model.
The applications Google Book Search, Google Scholar, and Google Blog Search
enable to search the Internet for books, academic publications, or blogs. Google Reader, a web-based feed reader, informs users automatically about new contributions to their favorite homepages. However, Google turned down this service in July 2013.
With the takeover of the software producer ITA in 2007, Google expanded its context segment with the analysis ofight information. This feature presents airfares in a comparable way. The user benets from these various context services in terms of time saving and information procurement.
In 2012, Google introduced the service Google Now as an extension of the Google Search App. Google Now is an intelligent personal assistant with voice search and a command feature. In 2016, Google launched its smart speaker Google Home that is able to receive acoustic commands via an integrated microphone and serves the user as personal digital assistant at home. Basically, it transfers the functionalities of the personal assistant Google Now to the home environment and enables the user access to Google services such as Google Play Music, YouTube, or Chromecast via voice commands.
Another major sector of the market supply is the content segment that is characterized by the provision, preparation, and aggregation of multimedia content.
This sector contains services like Google Groups, Google News, Google Maps, Google Earth, Google Sketch Up, Google Text and Tables, iGoogle, Google Mer- chant Center, and YouTube. Google extended or merged many of the older services in order to offer the user a broader range of services. For example, Google Local was integrated into Google Earth and Google Maps.
Therst content service was Google Groups. This online service allows users to establish or to search for different groups of interest and to publish own content.
Here, the connection aspect is also highly important because the service rests upon the Usenet and therefore offers a foundation for interactive communication.
After introducing Google Groups, Google launched a news service called Google News, a platform that automatically creates content in over 35 languages. Google Earth presents a digital globe that uses satellite aerial views and geographical data to create a digital model of the earth. In doings so, it allows users to search for addresses or places and to calculate distances and routes.
Moreover, Google Sketch Up is software to construct a three-dimensional model that allows to create pictures and animations. Google Text and Tables is another online service that offers online access to a word processing and table program. The successor to Google Base, Google Merchant Center, allows retailers to deliver product information to Google in order to integrate it into the Google Product Search.
The most important content service today is the online video channel YouTube. YouTube enables users to watch, upload, and publish videos. To do so, they can make use of different channels or individual YouTube websites, through which they can use or offer other information besides those videos. The number of companies using this channel for marketing purposes is rapidly increasing. YouTube is the most popular platform for this kind of video material.
In 2018, YouTube had over 1.8 billion users worldwide, who altogether uploaded more than 300 hours of video to YouTube every minute (Dogtiev 2019). Recent content offers of Google include Chromecast, a line of digital media players, as well as the virtual reality platform Google Daydream.
The services belonging to the connection business model distinguish themselves by allowing to exchange network-based information. In this segment, Google presents itself with services like Blogger, Google Groups, Google Mail, Google Talk, Google Voice, Google Latitude, Google Plus (Google+), Google Drive, Google Hangouts, and most recently with the video chat app Google Duo.
The social network Google+, for instance, is the consequent attempt to extend Google’s business model in the connection segment. Launched in September 2011, it counted more than 375 million active members in 2016 (Statistic Brain 2016). Google+ incorporates various old and new connection services and always struggled to compete with the largest social network Facebook. However, after several data
incidents, Google+ was shut down in spring 2019.
With regard to the initiation, negotiation, and settlement of business transactions of the commerce business model, the most important services Google offers are AdWords and AdSense. These two services will be presented later on in the context of Google’s revenue model. In the commerce segment, Google has rather few
 
	Google/Alphabet Case Study	271
services to offer. Google’s payment service Google Checkout is primarily used for payment handling in the Android market, whereas its payment service Google Wallet allows users to pay via mobile phone with NFC (near-eld communication). Google has been extending this segment by product search engines, product
presentation, and price comparisons primarily for its services Google Product Search and Google Shopping. Moreover, Google is starting to compete with other classic online retailers, particularly through its service Google Merchant Center. Recently, Google has also acquired FameBit a leading marketing platform that connects brands to creators for branded content creation.
Other services are part of more than one segment at once. For example, the photo community Picasa allows different users to share their photos worldwide and to interact with one another. According to this, Google combines both the content and connection segments in one service.
Since 2008, Google has been following business units outside of the 4C-Net (content, commerce, context, and connection). For this purpose, it has developed information technologies like the mobile operating system Android, as well as own mobile consumer electronic devices, like the Google Nexus series and its next- generation Google Pixel. Recently, Google has also introduced its augmented reality glasses Google Glass and its virtual reality glasses Google Cardboard. Moreover, it has acquired Nest Labs, a producer of smart appliances for home automation, which
now works with the Google Home. Figure 15.4 highlights the development of Google’s business model and service offers.
Another central component of Google’s business model is the revenue model
through which multiple income streams are introduced and analyzed. The most
important revenue streams are advertising revenues generated through integrated advertising solutions and keyword advertising by AdWords. The customer chooses various keywords that describe the product or service advertised, so that these products or services appear in the search results. Furthermore, the client determines the maximum price that one has to pay for every click on the advertisement. Combining the cost per click (CPC) with the quality of the keyword or product provides a basis to assess the advertising and thus the priority with which Google advertises it.
Moreover, the customer denes a monthly budget and is able to change some settings regarding the networks or languages. Besides the basic search page (google.
com), possible advertising networks are Google Search Network and Google Dis- play Network. The Google Search Network contains websites that have licensed Google’s search function as an independent toolbar. The Google Display Network comprises a large number of different websites that disseminate the display adver- tising. Nevertheless, considerably high costs in the form of trafc acquisition costs
(TAC) emerge. Furthermore, Google has expanded keyword advertising also to
other services such as Google Product Search and Google Mail. Besides the classic text display, other forms of multimedia like videos or images are also possible. In addition, location data can be integrated to combine the advertising with services like Google Earth or Google Maps.

Since the year 2007, Google has also generated considerable revenue from other income streams than advertising, which we will discuss later on. However, Google’s total revenue is mainly composed of advertising revenues that accounted for 85% of Google’s total revenue in 2018. Figure 15.5 shows the development of Google’s revenue.

Besides the huge amount of advertising revenues, the second revenue stream originates from royalties for the usage of software, as Google offers various software solutions in the form of fee-based versions with extended usability for professionals. Such programs are, for example, SketchUp Pro, Google Earth Plus, and Google Earth Pro. In this extended version, Google Earth Plus offers the integration of GPS and a program to virtually construct buildings.
Moreover, Google sells the server hardware Search Appliance that companies can utilize for their document management and indexation. Google is also active in the mobile market with its smartphones (e.g., Nexus 5X and Nexus 6P) produced by LG and Huawei but only generates comparably low sales revenue in this market.
However, according to Google, nexus devices are not primarily intended to drive revenue but are rather an experimental bearer for Google’s innovation for Android (Fortune 2015).
Google also receives revenue over the Android market, where developers of fee-based applications earn a transaction fee of 30% on the sales price. According to the highly diversied service spectrum, Google’s revenue streams comprise transaction-based and transaction-independent revenues. Figure 15.6 presents these different forms of revenue, showing that Google has various revenue streams that are
differently structured. Nevertheless, one always needs to acknowledge the impor- tance of keyword advertising in this context.


	Google’s Market Environment

As one of the world’s leading Internet organizations with a broad service range, Google competes with numerous players in different markets. The following section identies and presents various markets according to their strategic importance for Google. The most essential market for the company is the search engine market. This is not only the company’s origin and core business but also accounts for about 70%
 (more than 90% including the network) of the revenue streams. A market share of 62.5% makes Google the most frequented search engine in the United States. Figure 15.7 depicts the four largest providers of search engines worldwide.
One should also pay attention to the fact that the search engine market is part of the superordinate advertising market. Due to the effective search engine marketing, not only the communication quality is important but also the coverage respectively the number of site views. In this respect, Facebook emerged as one of the most important competitors, gaining more stake particularly in the areas of social adver- tising and display advertising.
Another crucial market is the mobile Internet market in which Google operates as a provider of advertising services and a content provider. Just like in the classic markets, Google positioned itself with the search engine in the mobile segment so
that location-dependent search and marketing, as well as services like Google Maps and Google Latitude, gained in importance. The market share of Google’s mobile search engine is even higher than that of the classic search engine, accounting for about 93% of the mobile search market in the United States in April 2019 (Statista 2019b). Consequently, Google occupies a strong position in the mobile market
as well.
However, due to different proprietary systems, the mobile market is highly competitive in terms of classic online advertising. Apple’s marketing platform iAd serves as an example. iAd is able to integrate advertising messages seamlessly into applications and thus operates in the same way as Google’s  system AdMob.
 
Moreover, other social networks like Foursquare and Facebook play an important role in the mobile segment and strongly focus on local social advertising offers.
With regard to content provision, Apple launched its platform iTunes in 2003, which has quickly become the market leader in this segment and one of Google’s strongest competitors. Thus, iTunes serves as a model company for Google’s Android marketplace that distributes content for the operating system Android.
Google further expanded its mobile offers with Google Music, a competitive plat- form to iTunes, using One Pass as a suitable operating system.
Because of its high growth rate and market leadership, Androidnds itself with 70.38% market share in mobile devices (mobile phones, smartphones, tablets) clearly ahead of Apple’s iOS with around 28.32% market share (Netmarketshare 2019).
Besides these core markets, Google constantly aims to enter other markets and enhance its position in the Internet market. Google’s advancements in e-commerce are especially signicant. By aggregating product information, Google is increas- ingly gaining importance as an intermediary in online retailing. Thus, competition among actors like Amazon, Google, and so on is rising. With regard to Google’s presence via YouTube in the classic and mobile Internet, Google competes, for
example, with the content aggregator Hulu.



	Case Analyses and Structure of Solutions

Case studies have their origin in the so-called Harvard Case Studies and are nowadays a commonly applied and widely accepted scientic method within in theeld of business administration and respective teaching. One particular charac- teristic of the case study analysis is that there is often no unique solution. Instead, one considers a specic problem and searches for an approximately optimal solution. This characteristic is at the same time the criterion to differentiate the case study
analysis from normal exercises that are characterized by right and wrong solutions (e.g., in theeld of law). This section denes the meaning of a case study and presents a methodological approach for handling and solving case studies.
The case study analysis is a heuristic method and thus a method of self-regulated learning for the respective person that deals with the case study and works out conclusions by means of analyses. Within the scope of this strategy of investigation, one examines a certain phenomenon in the respective and real existing context by using one or multiple objects of study, like individuals, groups, and organizations.
The persons dealing with the case study should not be bound by particular methods or limited to a single solution method. Looking at a case study from multiple perspectives generates different approaches to solving a problem but at the same time requires a broad spectrum of different approaches and solution methods. The case study analysis enables to achieve a variety of different goals of learning and teaching. However, the primary focus of interest refers to the connec- tion of theory and practice. Here, one can distinguish, on the one hand, between
 
approaches that apply theories to practice and, on the other hand, approaches that move from practical thinking and procedures to theories.
Given the comprehensive approach to the research context and the inductive procedure of case study research, this approach generally refers to qualitative research. The following three characteristics of a case study clarify this closeness to qualitative research (Merriam 1998):

•	Context-related: The case study focuses on a group or an individual, a program, a phenomenon, or an event.
•	Descriptive: Thenal product or result of the case study contains a detailed and multilayered consideration of the object investigated.
•	Heuristic: The case study does not test already existing hypotheses but rather generates new insights into the object of study, for instance, conditions, consequences, and causal relationships.

Since one should consider every case study individually, specic cases cannot be generalized. However, if underlying conditions or characteristics of the objects of
study are similar, one can at least partially transfer them. Consequently, the case study approach is particularly suitable when the objective is to look at complex underexplored phenomena in a broad manner and against the background of their dependence on context. The following illustrates a methodological approach for handling and solving case studies.
The procedure for approaching case studies usually comprises six steps that build on each other: (1) analysis of actual situation and SWOT analysis, (2) specication of problem, (3) deduction of strategic courses of action, (4) determination of crucial success factors, (5) decision on strategic alternatives, and (6) deduction of
recommendations. Therst step should aim to analyze the actual situation. A SWOT analysis considers internal characteristics (e.g., strategy, structure, and
resources) of the business but also the external general conditions (e.g., market structure, customer, and supplier potential).
The second step of the solution method of case studies involves specifying the respective problem. Potential issues, for instance, can trace back to the procurement, production, or the corporate strategy. Based on this elaboration of the problem, one
can derive strategic courses of action in a third step, for instance, strategies of diversication, cooperation, and market entry.
The fourth step of the solution method of case studies includes determining or dening crucial success factors, before subsequently deciding on the strategic alternatives in thefth step. In this connection, one examines the courses of action identied, for instance, for specic advantages and disadvantages or their feasibility. The sixth andnal step of this approach involves deducing or giving strategic and/or operational recommendations. Figure 15.8 presents an overview of the solution
method of case studies.
Analysis of Actual Situation and SWOT Analysis
Within the scope of a case study analysis, one can apply the systematics of strategy development to examine the actual situation of a company. An important part of strategy development is analyzing the situation by means of situation analysis (Wirtz 2013a), which comprises analyses of environment, market, competitors, as well as competencies and resources. The competitive analysis and competence-resources analysis merge into an analysis of strengths-weaknesses. This in turn combines with
 
an environment analysis and market analysis to form an analysis of opportunities and risks. The following section explains this procedure.
Within a situation analysis, onerst examines the environment to describe the general conditions under which the respective company acts. In this connection, the
sociopolitical, technical, regulatory, and economic environment plays an important role. After the environment analysis, it is necessary to analyze the industry and market in which the respective company operates particularly the market structure and behavior of the demanding actors.
In the next step, one should perform a competitive analysis that aims to identify relevant actual and potential competitors and to examine their behavior on the market. Subsequently, one needs to consider the resources of the competitors. Along with this competitive analysis, one should also investigate the company’s own competencies and resources. This competence-resources analysis needs to take
place in much more detail than the competitive analysis and distinguishes between core competencies, complementary competencies, and peripheral competencies (Wirtz 2000a).
Core competencies are mandatory resources that the company requires in internalized form to provide products and services. Complementary competencies, by contrast, are necessary resources that can also be provided by cooperation partners. Peripheral competencies refer to resources that are not essential and thus may be acquired from the market.
Based on the competitive analysis and the competence-resources analysis, one can analyze strength and weaknesses. Here, the aim is to identify advantages and disadvantages over the most important competitors and hence to derive the respec- tive scope of action. The results of this strengths-weaknesses analysis together with those of the environment and market analysis jointly form an opportunities-risks analysis. In this connection, one compares the external situation with the internal situation of the respective company in order to identify development trends of the environment and the markets at an early stage and subsequently, to determine whether these future developments pertain to a strength or weakness of the business. On this basis, one can deduce indications of a potential strategic demand for action and use the results to develop the corporate strategy.

Specication of Problem
After analyzing the actual situation, one has to specify the respective problem of the
case study. This step focuses on identifying all problematic issues of the case study. If, for instance, several problems occur, it is recommended to prioritize them or to form a processing sequence and describe their relationships among each other. When working out the basic problems, one may not make the mistake of identifying symptoms as indicators or consequences of an underlying problem as the actual problem, because otherwise it is not possible to achieve adequate proposals for solution. One needs to summarize the symptoms and investigate the reasons behind in order to reveal the causal main problem. In case there are several central issues, one should consolidate them and bring them in order according to their meaning and importance.
 
Deduction of Strategic Courses of Action
After analyzing the actual situation and specifying the problem, one needs to derive strategic courses of action. Based on the case study-specic problem, onerst develops different alternative solution approaches, the so-called strategic courses of action. The following evaluation of these options takes place under uncertainty
since case studies often do not provide complete information and thus require to make assumptions. Examples of strategic courses of action are strategies of market entry, diversication, growth, cooperation, and internalization. After deriving stra- tegic courses of action, one can determine the key success factors of the business. The following section therefore discusses the procedure of identifying crucial
success factors.

Determination of Crucial Success Factors
Crucial success factors (CSF) are a small number of characteristics that signicantly inuence the success of companies. They differ from business unit to business unit because they are affected by both internal and external conditions. CSF need to have
a certain minimum characteristic in order to enable the desired degree of goal attainment. The procedure of determining CSF and their application not only includes identifying the CSF but also measuring the degree of goal attainment, as well as making an ongoing target-performance comparison. Besides creating a strategic frame of reference, the CSF method also involves analyzing own objectives in order to identify the CSF afterwards.
In the following, one needs to develop measuring criteria and determine so-called critical thresholds as standards. Subsequently, one can identify the control quantities and capture occurring changes. Having determined the CSF, one needs to decide on the different strategic alternatives, which is described in more detail in the following section.

Decision on Strategic Alternatives
Within the scope of deciding on the strategic alternatives identied, one shouldrst analyze and assess the degree of fulllment of the CSF for every strategic course of action. Then, one should examine the congruency between business potentials and market-specic requirements by means of strategict analysis (e.g., SWOT analy- sis). Finally, the criteria of feasibility indicate whether the respective company
possess the resources and skills necessary to realize the respective strategic option. The analysis of the individual aspects leads to a so-called strategic evaluation matrix that allows to select the best strategic alternative. Based on this evaluation and selection, one can deduce recommendations for action, which is explained in the following section.

Deduction of Recommendations
Deriving recommendations involves explicitly verbalizing and presenting the opti- mal strategic course of action selected with regard to the problem identied earlier. It is then necessary to operationalize the strategic decision and transfer it into specic recommendations for action in order to implement the decision. In this connection,
 
onerst needs to demonstrate the concrete measures and necessary consequences of the alternative selected, before adjusting operational action by means of operational measures (who, where, what, when).
The last step involves planning thenancial realization of the strategic option selected. For this purpose, one needs to plan a detailed budget not only to ensure the actualnancing after having analyzed the general feasibility but also to show that the costs are justiable with regard to the expected benet.

	Google Case: Questions and Solutions

Question 1
Discuss Google’s initial situation by means of the SWOT analysis with regard to Google’s currentnancial circumstances. What kind of problem statement can be deduced?

Question 2
Based on this analysis, derive strategic opportunities of action and critical success factors for the management of Google. Name present success factors of Google.

Question 3
Reect upon these potential strategic alternatives and choose the dominant one.
Question 4
Discuss various opportunities for Google to differentiate itself in the context of revenue optimization. Which recommendation for action would you give Google?

This section hints at solutions to the summarizing questions about the Google case study, following a step-by-step procedure. Against the background of Google’s present revenue situation, the SWOT analysis focuses on and presents Google’s current situation.
Based on this analysis, a problem statement can be derived. Then, strategic alternatives and essential success factors are established and critically assessed. Subsequently, several opportunities for revenue differentiation and extension of the service range are discussed and evaluated,nally leading to recommendations for actions for Google. Figure 15.9 offers a schematic overview and describes core
aspects, tasks, and hints for solutions with regard to the Google case study.

Solution to Question 1
Question: Discuss Google’s initial situation by means of the SWOT analysis with regard to Google’s currentnancial circumstances. What kind of problem statement can be deduced?
The SWOT analysis framework contains an internal and external dimension. While the internal dimension comprises the strengths and weakness of a business, the external dimension involves its opportunities and threats. Google’s strengths are
particularly its dominant position in the online and mobile advertising market including a broad advertising network, as well as its strong position as online and mobile content provider. Further strengths are its very broad range of online services and technological leadership.
Among Google’s weaknesses are its missing revenue differentiation and unclear range of services. Moreover, many services have no clear revenue purpose or unexploited revenue potential. Further weaknesses are Google’s varyingly strong positions in different geographic markets and its generally weak position in the
social media market.
Opportunities for Google lie in the introduction of new or the expansion of existing revenue streams for the current service range or in growing markets. In this connection, promising growing markets are particularly mobile business (e.g., Google Nexus, Google Pixel, Google Duo), Internet of things and automation (e.g., Google Home, acquisition of Nest Labs), augmented and virtual reality (e.g., Google
Glass, Google Cardboard), articial intelligence, machine learning, and big data. A further opportunity for Google is the expansion of their market leadership in online
marketing.
 
Threats to Google may be its vulnerable revenue monoculture that may pose a high risk through a decrease in advertising revenue (e.g., customer turnover to Facebook), a recession-driven decline or replacement through other search engine providers (e.g., Bing’s increase in market share). Moreover, Google could experi- ence brand dilution through too many unsuccessful services.
The combined consideration of the individual aspects of the internal and external dimensions results in four different basic strategies: SO strategies (strengths- opportunities combination), ST strategies (strengths-threats combination), WO strategies (weaknesses-opportunities combination), and WT strategies
(weaknesses-threats combination). Figure 15.10 describes the specic elements of the SWOT analysis adapted to the Google case study.
Based on the results of the SWOT analysis, the following problem statement can be derived: despite Google’s market leadership in online business, the company has not yet managed to extend its revenue basis through multiple income streams. The unsystematic and unclear extension of Google’s range of services offered through trial and error has not yielded sustainable revenue options.

Solution to Question 2
Question: Based on this analysis, derive strategic opportunities of action and critical success factors for the management of Google. Name present success factors of Google.
As mentioned earlier, there are four basic strategic opportunities of action according to the SWOT analysis. To begin with, Google can follow SO (strengths- opportunities) strategies, taking advantage of existing opportunities through own strengths. More specically, it may use the existing service range for revenue differentiation or extend activities in growing markets in order to establish new
forms of revenue and extend existing ones.
These particularly include mobile business (e.g., Google Nexus, Google Pixel, Google Duo), Internet of things and automation (e.g., Google Home, acquisition of Nest Labs), augmented and virtual reality (e.g., Google Glass, Google Cardboard), articial intelligence, machine learning, and big data. In addition, Google has also further opportunities through monetizing its broad range of services (especially its
content offers).
Google can also pursue ST (strengths-threats) strategies, using its own strengths to avert existing threats. In this connection, it can encounter risks by enhancing and extending the current service spectrum. Moreover, Google can utilize its dominant position in the search engine market and its technological leadership to outperform competitors. It may also focus on core markets to safeguard sustainable market positions.
Furthermore, Google can follow WO (weaknesses-opportunities) strategies, eliminating own weaknesses to take advantage of opportunities. In this context, Google can encounter its weaknesses by exploiting existing revenue potential by streamlining its range of services and monetizing services with no or low revenue. In addition, Google can extend its market leadership in online marketing through market expansion.
Finally, Google can engage in WT (weaknesses-threats) strategies, eliminating own weaknesses to be able to face threats. For the purposes of eliminating own weaknesses, Google can abandon those services that generate no or low revenue and refocus its market offer model. In addition, Google should not only dene the revenue purpose of all services to extend its revenue basis but also expand its online
marketing activities even in weak markets in order to prevent being driven completely out of the market by competitors. Figure 15.11 summarizes the strategic options for Google based on a SWOT analysis.
Beyond these strategic opportunities for action, Google has the following core competencies at its disposal, which at the same time are critical success factors of Google:

•	An essential success factor of Google is its technologically cutting-edge search algorithm that is continuously enhanced. Thus, Google’s technology competence represents one of its key strengths.
•	For a long time and in contrast to other competitors (e.g., Yahoo), Google’s business model management has focused its core business on its search engine and search engine marketing. Google’s focus competence and business model management competence is another core asset.
•	Google created a huge network that generates a major amount of revenue today. Google’s ability to manage this diverse portfolio is its networking competence.
•	The high diffusion and acceptance of Google’s search engine leads to Google’s
market leadership. With regard to its brand management, this market position allows Google to maintain a unique and differentiated corporate prole. Google has demonstrated its very strong brand management competence.

Solution to Question 3
Question: Reect upon these potential strategic alternatives and choose the domi- nant one.
Given Google’s dominant position in the online business sector (especially in the advertising market) and its strong position in other markets, the SO strategy seems
suitable, as opportunities can be exploited with own strengths. A crucial element of this strategy is revenue differentiation:

•	Utilization of the existing service spectrum for revenue differentiation
•	Extension of the mobile, social media, Internet of Things, and big data segments to establish new revenueows and extend existing ones
•	Monetization of the broad range of service offers

Solution to Question 4Question: Discuss various opportunities for Google to differentiate itself in the context of revenue optimization. Which recommendation for action would you give Google?
Google has a lot of potential for revenue differentiation resulting from various measures that generate revenue. These can be classied according to different revenue categories, comprising direct transaction-based, indirect transaction-based,direct transaction-independent, and indirect transaction-independent revenues. Measures for generating direct transaction-based revenue include software sales, hardware offers for the mobile sector (e.g., smartphones or tablets), as well as extending the hardware offers in the server segment and range of payment service offers.
Software sales have a low revenue potential because many products are based on open source and are therefore difcult to realize with the current structure of service offers. In addition, this carries a high risk due to the reduced coverage and negative impact on the core business (advertising). Consequently, software sales are not suitable for revenue differentiation.
Hardware offers for the mobile sector show a very high revenue potential, but also a high risk of losing important network partners and risks with regard to competition law. Overall, this measure for revenue generation appears as highly suitable for revenue generation and differentiation. Extending hardware offers in the server segment has a low to medium revenue potential due to the highly competitive market and its special distribution structures. This measure only carries a medium risk due to
Google’s high technological competence. Therefore, this measure of revenue gener- ation appears to be moderately suitable for revenue generation and differentiation.
Extending the range of payment service offers has a high revenue potential particularly in the mobile area. Although there is strong competition with providers like PayPal, this measure bears a low risk because Google already has an appropriate infrastructure, making it very highly suitable for revenue generation and differentiation.
Extending the hardware and software offers in theeld of Internet of Things, automation, articial intelligence, and machine learning has a high revenue potential especially with regard to smart home appliances. There is a low risk due to Google’s technological leadership and moderate competition in the market. As a result, this
measure is very highly suitable for revenue generation and differentiation.
In addition, extending hardware offers in theeld of augmented or virtual reality are characterized by a low to medium revenue potential and a medium risk due to the moderately to highly competitive market environment. Therefore, this measure is
only moderately suitable for revenue differentiation.
Moreover, measures for generating indirect transaction-independent revenues include commission fees that Google receives in its role as e-commerce intermediary (e.g., Google Product Search, Google Merchant Center, and Google Shopping). Here, Google has a high revenue potential due to its role as a gatekeeper in online shopping, but at the same time a medium to high risk of engaging in competition with current customers. Overall, this measure appears as highly suitable for revenue differentiation.
Furthermore, measures for generating direct transaction-independent revenues comprise price differentiation for licenses of premium products or for business customers, as well as fee-based licenses and letting of server capacities (cloud computing). Price differentiation for licenses of premium products have a low to
medium revenue potential, as only few services are suitable for this model. Given that it provides an added benet, there is a relatively low risk, not least because it is
 
an approved instrument (see Google Earth Plus). However, in view of the formerly free functions, such price differentiations also carry a high risk of user churn. Altogether, this measure is moderately suitable for revenue differentiation.
Price differentiation for licenses for business customers has a medium revenue potential because the model is quite established but not suitable for all services. Similarly, there is a medium risk as it is an established model in online business, making it overall a moderately suitable measure for revenue differentiation. Fee-based licenses have a high revenue potential due to the high number of users. Yet, there is not only a very high risk of end user churn and a certain risk of brand erosion but also a medium risk in the business sector because here it is already partially established (Google Maps API). Accordingly, this measure is less suitable for revenue differentiation.
The letting of server capacities (cloud computing) has a very high revenue potential for Google, as necessary structures are already established in the emerging market. While this measure is characterized by a medium to high risk in the private customer segment due to competing offers that are free of charge, it only carries a low risk in the business customer segment and thus is very highly suitable for revenue generation and differentiation.
Finally, measures for generating indirect transaction-independent revenues par- ticularly refer to the extension of revenues from data mining and big data analysis (selling user data). Here, Google has a high revenue potential due to its broad portfolio of diverse user data. However, this is also associated with a high risk due to problems of acceptance among users and potential user churn, thus negatively
inuencing Google’s core business. In addition, this also carries legal risks and therefore appears to be only moderately suitable for revenue differentiation. Fig-
ure 15.12 summarizes various measures of revenue generation and evaluates them in terms of their revenue potential and risk. Due to the great differentiation, not all kinds of advertising revenues are considered.

	Market-Specific Case Studies
This section deals with eight market-specic case studies: Newspaper and magazine management (Craigslist), book management (Knopf Doubleday Publishing), movie management (Fox Filmed Entertainment), TV management (Hulu), radio manage-
ment (Last.fm), music management (iTunes), video and computer game manage- ment (Wii), and international management (News Corporation).


	Craigslist Case Study

Craigslist established itself as the worldwide largest free classied advertisement website. Against the background of the culture of predominantly free online advertisements and the strong migration of classied advertisement markets from traditional print media to cheaper, moreexible online portals, Craigslist, as a 
pioneer of this trend, poses a major threat to traditional newspaper publishers. Craigslist is a central online marketplace on which city-relevant classied advertisements can be viewed and placed.2
In addition, it is possible to exchange opinions about different topics in forums. Craigslist does not supply offers on a national level but rather concentrates on local offers.
Originally, Craigslist was created from an email distributor of the IT specialist, Craig Newmark in 1995. With the help of the distribution list, Newmark originally intended to tell friends and co-workers about interesting events in San Francisco. Quickly an Internet forum developed from this which also offered other categories
besides events. In 2000, after Newmark hired therst co-workers and established the Internet forum as a company, the portal expanded to further cities. Today the offer of
the portal is available for more than 700 cities, all over the world.
Craigslist isnanced by revenues from job offers as well as real estate advertisements, which, however, are only paid in a few cities, such as Chicago, Boston, or San Francisco. The costs of these classied advertisements, however, are far below the usual market prices and vary between 25 USD and 75 USD. In
comparison, one must pay at least 500 USD for a job advertisement on the online platform Monster.
In addition, Craigslist offers unlimited text for the respective advertisements. The annual turnover is not released by the company; however, it is estimated to 381 mil- lion USD (Business Wire 2016). What began rather as a private commitment developed over the years into one of the most visited Internet sites in the United States. In the Alexa ranking, Craigslist is ranked 19th among the most visited websites in America and 112th internationally (Alexa 2019).
According to its own claims, the company registered 50 billion visits per month in 2018. With more than 60 million users per month solely from the United States, as well as 100 million new classied advertisements being placed each month,
Craigslist can be called the most popular classied advertisement portal worldwide
(Craigslist 2018).
As one of the most successful Internet companies and largest online classied advertisement market in the world, Craigslist is often also called a newspaper advertisement killer. Contrary to the advertisement in newspapers, which is
connected to costs, the user can advertise free of charge on the Craigslist platform, and the circle of potential customers is many times larger.
A further important advantage of online classied advertisements is that they offer a higher transparency and comparability of the offers, due to individual search andnder functions. Therefore, the newspaper publishing houses perceive online classied advertisements as a substantial threat to one of their most important sources of turnover. The dynamics of this development are shown in Fig. 15.13.
The newspaper publishing houses already have toght a large migration of the revenues in column markets today. This migration is even strengthened by the online

classied advertisement competition. The branch service Classied Intelligence Report showed in a study that Craigslist causes losses to the newspaper publishing houses of 50–65 million USD per annum in the periphery of San Francisco. These losses contributed to the collapse of the column markets in the San Francisco
Bay Area.
The success of the free competition makes clear that, in order to survive, the weakened newspaper publishing house market must commit itself to new business models in the future. Figure 15.14 shows an overview of the strategic adjustment of Craigslist.


	Knopf Doubleday Publishing Case Study

The traditional publishing company Doubleday was acquired by the Bertelsmann AG in 1986 and integrated into the proprietary company Random House in 1998. With a turnover of around 3.78 billion USD in 2017, Random House is the largest Anglophone publishing group in the world (Bertelsmann SE & Co. KGaA 2018). In the year 2009, Doubleday was part of the merger with the Knopf Publishing Group. The resulting publishing company Knopf Doubleday Publishing mainly focuses on
thection market and has a number of star authors under contract, for example, Dan Brown and John Grisham.3
In this context, the publishing program includes both hardcover and paperback publications in order to cover various market and consumer segments. With a time- staggered release strategy, the maximum exploitation of the consumer’s surplus can be guaranteed.
For quality-conscious customers, high-quality hardcover publications are offered, while price-conscious customers can wait for the later release of less expensive editions. In addition to print editions, ebooks are also being marketed for different platforms. Ebooks are of increasing relevance for Knopf Doubleday Publishing. For
example, the ebook edition of Dan Brown’s“The Lost Symbol”sold better on Amazon than the printed version on its release date in the United States.
Another source of income is the allocation of TV, movie, and performance licenses. In this way, the content of bestsellers can undergo cross-media marketing. In the recent past, considerable revenue was especially generated by the content of the“Da Vinci Code”series by Dan Brown and the“Millennium Trilogy”by Stieg Larsson. The core competencies of Knopf Doubleday especially include the long-
term contractual signing of authors, retail and audience communication, as well as a

sound knowledge of market understanding. In this context, the communication activities are particularly important, as will be demonstrated in the following two examples.
Knopf Doubleday Publishing throws events with the authors and uses personalized copies of their books to attract and bind readers. This form of customer communication strengthens the impression of authors as a family brand and can be used as an instrument to inuence trade partners. Book tour dates are chosen in selected bookstores that can hence generate a high number of customers due to the author’s star status.
To connect with the audience, Knopf Doubleday Publishing carries out Web 2.0
activities that are directly related to the publishing program. The stimulation of customer interactions with the content of the publisher is not only meant to bind customers but also to generate attention in the social networks.
The Doubleday brand is used as a targeted instrument to win over and to bind authors. Therewith, the procurement components of the business model in relation to successful content are sustainably strengthened. Furthermore, the image and degree of familiarity of the signed author serve as differentiating features and as a brand in the recipient market. This double-sided branding policy is key to the success of Knopf Doubleday Publishing in the book industry. Figure 15.15 illustrates the strategic alignment of Knopf Doubleday Publishing.
 
	Fox Filmed Entertainment: The Blockbuster“Avatar” Case Study

The most important companies in the movie industry worldwide, both for production and distribution, are traditionally the US-American major studios. The largest US-American major studios in past years, according to revenue and market share, are 20th Century Fox, Warner Bros. Pictures, Paramount Pictures, Walt Disney Pictures, and Universal Studios. The following section will use the example of 20th Century Fox to better illustrate the strategic approaches of these major studios.4
The movie“Avatar,”produced by 20th Century Fox, was not only the most successful movie in studio history but also the most successful movie of all time.
Therefore, the main goals of movie management and the success factors of modern blockbuster productions will be illustrated by the example of“Avatar.”
The US-American company 20th Century Fox was founded in 1943 through the
merger of the Fox Movie Corporation and Twentieth Century Pictures in Los Angeles, California. This is also where the company’s headquarters are still located today. Followingnancial difculties in the early 1960s, 20th Century Fox achieved a comeback in the 1960s and 1970s with popular hits (e.g.,“The Sound of Music,” “Planet of the Apes”) and highly protable productions (specically“Star Wars”).
In 1985, Australian media mogul Rupert Murdoch took over, restructured the
company, and incorporated it into the Movieed Entertainment division of his media company, News Corporation. In 1994, the subsidiary, Fox Searchlight Pictures, was founded for the production/co-production and distribution of international and independent movies (Hoover’s Inc. 2013).
The core brand 20th Century Fox still focuses exclusively on the creation of its
own and other US-American productions. The production and marketing of movies with mass appeal (blockbusters) constitutes the central pillar of the business strategy and the most important revenue source. Therefore, 20th Century Fox follows a
blockbuster strategy. However, from the perspective of the superior Fox Filmed Entertainment, it is more of a“tent pole strategy,”as blockbusters with high expected returns contribute to thenancing of movies made by Fox Searchlight Pictures.
The production of cost-intensive blockbusters puts high demands on a studio’s strategic project planning. Extensive market research on both the preferences of the relevant target group as well as on planned competing productions is extremely
important. Moreover, the availability of modern technological possibilities is also crucial in the production of a blockbuster. In the past years, 20th Century Fox has proven a high level of competence in the production, distribution, and marketing of blockbusters such as“The Wolverine,” “Independence Day: Resurgence,” “War for
the Planet of the Apes,”and“Kingsman: The Golden Circle.”
In turn, the company is currently one of the major US-American movie studios.
Its revenue has reached 1.3 billion USD, with a market share of around 12%


4See also for the following chapter Wirtz (2011b) and Wirtz (2019b).
 
(Tartaglione 2018). One of the movies with the highest box-ofce earnings is the movie“Avatar.”From the time of its world premiere on December 17 and 18, 2009, up to March 31, 2010, the blockbuster“Avatar”brought in over 2.7 billion USD at the box ofce. Based on this,“Avatar”is the most successful movie of all time. However, this box-ofcegure was generated not only by the number of attendance (people who watched the movie in movie theaters) but also through increased movie
ticket prices for 3D screenings.
Within the framework of an extensive movie project like“Avatar,”numerous management tasks need to be carried out in addition to detailed strategic planning. These include the procurement of technical know-how and creative staff, as well as
complex undertakings in movie production and marketing.“Avatar”set new benchmarks especially in these two subsegments of movie management which will be explored in the following section. Furthermore, the section will also quickly
sketch utilization possibilities and additional types of revenue generation in the context of the movie, as well as analyze the relevance for the entire movie industry. The movie“Avatar”is complex at all levels of the production process. With an investment of around 237 million USD (industry experts have made claims over
300 million USD) strictly in production costs, the blockbuster also counts as one of the most expensive movies of all time (Reuters 2010). The preproduction phase goes back to 1995, the year in which the director, James Cameron, created therst draft of
the screenplay. Preparations were intensied in 2006, following the completion of
thenal screenplay and the availability of the necessary technological means.
The actual production and postproduction phases cannot be clearly differentiated in the case of“Avatar”(as is the case with most new blockbusters making extensive use of special effects). Because“Avatar”is a hybrid of real movie and computer animation, the special effects no longer play a secondary role but are rather equal to
the classic movie productions featuring actors.
The most important unique feature of the blockbuster“Avatar”is the digital 3D technology used. In order for the movie to materialize, technical innovations in both camera capability and animation were necessary. The stereoscopic camera system specically developed for“Avatar”enabled the three-dimensional movieing of real
scenes. Through motion-capture processes, characters could be rendered with
photorealistic animation. Animated scenes could also be adapted with realistic camera movements through a virtual camera system. However, the classic postpro- duction activities such as cutting/editing and the inclusion of the movie credits remained the same.
With around 150 million USD,“Avatar”is the movie with the largest marketing expenditure in the movie history. Strategies carried out within the communication
policy played a major role, as no blockbuster had ever been advertised as intensively before. In addition to TV commercials, trailers, and printed ads, the advertising campaign also included a strong focus on the Internet. Besides the extensive homepage that compromised many interactive elements,“Avatar”also had its own YouTube channel with a wide selection of video footage (see Fig. 15.16).
Moreover, intensively used community platforms such as Facebook were espe- cially used to target specic groups. These interactive online communication options

support and simplify the transfer of information through word-of-mouth. The suc- cess of such online communication activities is reected by the exceptional success of the movie at the box ofce. With around 77 million USD,“Avatar”achieved merely the average box-ofce revenue for a blockbuster on the opening weekend. However, the usual collapse after the opening weekend did not occur and the number
of viewers remained consistently high over a long period of time, reaching its highest box-ofce revenue 9 weeks after its opening weekend.
In addition to production and marketing, Fox Filmed Entertainment also tends to
distribution, as is common for a major studio. The company follows the usual windowing strategy for a blockbuster movie. The distribution channels (movie theater, DVD, pay TV, TV) were all used according to the general time delay. In April 2010, the“Avatar”DVD/Blu-ray discs were released and were just as much as successful as the screenings.
The revenue model of Fox Filmed Entertainment focuses, to a large extent, on the utilization of rights of the movies produced. In the case of“Avatar,”a cross-media utilization strategy was followed. In addition to the main utilizations via movie theaters and DVD/Blu-ray (in the future also TV), rights for merchandising and a computer game were also sold, among others. Because the computer game was
published 2 weeks prior to the release of the movie, revenue could be generated not
only through the sale of rights to the publisher Ubisoft but also through the advertising effects for the main product, namely, the movie itself.
Existing utilization options for“Avatar”were further expanded through numer- ous product variations. Such product variation can be mainly achieved through
movie versioning. As usual, DVD and Blu-ray discs were released featuring differ- ent versions. However, in the case of“Avatar,”even the movie theater version was varied. Both 3D and 2D versions were offered to movie theaters in order to cater to theaters lacking 3D projection technologies.
As a result of the major success of the movie“Avatar,”it now counts as the main reference for digital three-dimensional blockbusters. Figure 15.17 shows an over-
view of the strategic orientation of Fox Filmed Entertainment, the production company of the movie Avatar.
Both the advertising and the information sources independent from the produc- tion company, such as awards, movie reviews, and particularly word-of-mouth, contributed to the communication success of“Avatar.”It can be concluded that the creation, production, and marketing of future blockbusters in a similar genre will
use Avatar for orientation. Two sequels are already being planned. Avatar 2 is scheduled to appear in December 2020.
 
	Hulu Case Study

Classical media enterprises are involved in the high-growth Internet TV through the online video portal Hulu. Within the scope of this development, particularly the demand for multimedia contents has risen steadily. In 2010, the Internet replaced television for therst time as a main source of information within the below 30 age group (Marketingcharts 2010). In the same year, 84% of all US Internet users already
viewed videos, especially through the big video portals of Google (YouTube), Yahoo!, or Microsoft.5
News Corporation (FOX) and NBC Universal (today a joint venture of Comcast and GE) announced Hulu for therst time in March 2007. The name can be derived from two Mandarin terms with the meanings“holder of precious things”and “interactive recording,”both terms, which should represent the core competencies of the company. Jason Kilar, a former Amazon executive, became CEO of Hulu in
June 2007.
After a closed (not public) beta test, the platform became accessible to the public a year later in March 2008. A costly marketing campaign on classical television followed the launch of the platform. The Disney group acquired shares in Hulu and joined the Hulu cooperation as the third major partner (in particular with the Network ABC) in April 2009 and thus further advanced the content basis of the service considerably.
Today Hulu is one of the biggest video content providers on the Internet. The platform distinguishes itself in particular through a wide portfolio. Contents of nearly all important participants in the US television market, for example, FOX, NBC Universal, ABC, Lionsgate, MGM, National Geographic, Paramount, A&E Television Networks, PBS, or the Warner Bros. Television Group are to be found on
the platform Hulu (Hulu 2011b). Hulu is usable via PC and TV, as well as on mobile end devices like smartphones or tablet PCs. Technically, the streaming toolash is being used.
The business model of Hulu is clearly aimed at the provision and aggregation of content (above all classical TV content) on the Internet (Wirtz and Lihotzky 2003). Hence, Hulu in particular is suited as an example of the reaction of the TV sector to the latest market developments and changes in the recipients’behavior. In addition, Hulu impressively illustrates the convergence in the media sector. Classical TV,
which distinguishes itself above all by professionally produced contents, at this point melts together with the interactive and individualizable Internet. For the users the added value arises from being able to retrieve high-quality content according to their own demands.
Hence, the available content is to be seen as a key asset of the platform. At the beginning of the platform, Hulu owned 50 content providers. In September 2008, around half a year after the launch, this number had already grown to 100 content providers. Today more than 500 suppliers provide contents through Hulu (Hulu

2014). Hulu provides contents through numerous other platforms, e.g., AOL, iMDB, MSN, Facebook, or Yahoo!.
At the beginning, the basic service of Hulu was free of charge and required no registration on the part of the user. Hence, the platform generated revenue primarily (up to the launch of Hulu Plus in November, 2010 even exclusively) in the advertis- ing market, intensively using the interactivity of the Internet.
Since the year 2016 no free service has been available. There is currently a choice of three service options. The advertising-based basic offer (Hulu) costs 5.99 USD per month, with therst month being free. For 11.99 USD per month, you get at Hulu (No Ads) almost the entire offer without advertising, except for a few exclusive
shows that contain advertising. The biggest offer is Hulu+ Live TV. In addition to the titles available in the library, you get access to more than 60 channels live and on-demand. This offer can be booked for 44.99 USD per month (Hulu 2019).
Figure 15.18 depicts the success of the revenue model of Hulu. Today Hulu is the by far leading video site in the United States, measured in customer experience score (CX score) on a scale of 0“negative”to 100“positive.”Participants had to answer question after they completed tasks using each subscription video on-demand.

Hulu is currently only available in the United States (or for users with an US IP address). Although the company pursues a global strategy, the internationalization is difcult on account of numerous country-specic rules and market entry barriers (Hulu 2011b).
However, Hulu has been one of the most successful e-businesses in the past years, which can be proven with awards such as“homepage of the year”of the Associated Press in 2008 or the third place in the Fast Company’s“most innovative companies” ranking of 2009 (Hulu 2011a). Figure 15.19 shows an overview of the strategic
alignment of the video-platform Hulu.


	Last.fm Case Study

Last.fm is a personalized online radio station which, based on the music tastes of the respective users, generates their favorite music, new music, contact to other music fans, and concert information for the user. On the one hand, the service is understood as a radio and, on the other hand, as a social network of music acionados which is being continuously expanded. Last.fm already belongs to one of the largest and most
successful Web 2.0 communities in the European region.6
Last.fm was founded in 2002 as an Internet radio station and music community site, merged in 2005 with the Internet-based network service Audioscrobbler, and

6See also for the following chapter Wirtz (2011b) and Wirtz (2019b).
 
was sold on May 30, 2007, for 280 million USD to the American enterprise CBS Corporation (Havenstein 2007).
The internationality is reected in the worldwide availability, because the services of Last.fm can be accessed in 12 languages, including English, French, Spanish, Italian, and German. Last.fm isnanced through website-based advertisements, paid music downloads, and contributions from subscribers.
According to Last.fm, it is the world’s largest music community on the web and offers its users an almost unlimited selection of music titles, primarily through cooperation with the Internet services Spotify and YouTube.
The increased demand for Internet radio with social software can be traced back to the changes in user preferences. Internet radio and the music portals strive to replace the mass audience-oriented and limited playlists of conventional radio stations with their program and thus emphasize individualized services tuned to the individual user. In this process, the user or listener is understood as the program
director. On the basis of each individual user’s listening habits, a respective music prole is created with special software. From this perspective, the software learns from the users which playlistts to which type of listener.
Last.fm can therefore be understood as a radio that offers every listener a music
offer tailored to their needs. The personalization can be further developed by the user through setting up a user prole in which special preferences can be rened. The software gets to know the user quite personally,guratively speaking, and can thus elaborate on the user’s wishes more precisely.
Moreover, the function of“musical neighbors”is integrated into the user prole.
Musical neighbors are understood as persons with a similar taste in music. Thus, an interaction process can be accessed at the users’discretion that goes above and beyond the mere personalized Internet radio and generates a social network.
Last.fm continually works on expanding its services. In this process, the provider emphasizes the participation or inclusion of its users. Already since 2003, Last.fm had access to open APIs (application programming interfaces), which allow any provider to write their own programs and integrate their respective service into their offer.
As an expansion of its services, Last.fm is emphasizing mobile applications and game consoles for the future. In the meantime, subscribers can transfer their personal music prole to almost all web platforms and end devices and thus use it anywhere. In summary, Last.fm represents an interesting alternative to mainstream radio. By responding individually to the user’s needs, Last.fm can be understood as a radio in
personalized form.
In April 2014, Last.fm completely shuts down its own radio streaming service for its subscribers and has ever since concentrated primarily on the compilation and provision of customer-specic music and audio media (Trenholm 2014). Through cooperations with providers such as YouTube and Spotify, Last.fm now serves the
growing market of on-demand services with its business model. An overview of the strategic orientation of Last.fm is shown in Fig. 15.20. iTunes Case Study

The free computer program iTunes from Apple is one of the most popular programs for the playback, organization, and purchase of music, movies, and video games. Especially the integrated iTunes store, in which an audiovisual assortment of downloads is available, mostly subject to charge but to some extent free of charge, is one of the largest online media shops worldwide.7
In its original form, iTunes primarily served to facilitate the import, maintenance, and playback of music. The iTunes software was gradually expanded into an extensive online store. Apple is also one of the pioneers in copyright management
for the iTunes platform and has demonstrated its technical expertise by realizing an easy-to-handle transfer of mediales to the portable player.


7See also for the following chapter Wirtz (2011b) and Wirtz (2019b).
 
Apple accomplished an integration of value proposition innovation and value creation innovation with its music software iTunes. Apple created a new value proposition with iTunes by allowing users to legally download a wide range of music. Especially in combination with the hardware offered by Apple (iPod, iPhone, iPad), this means a unique value proposition. In addition, Apple changed the value chain in the music market by establishing the Internet as a direct distribution channel
for digital music. Today, Apple iTunes is one of the world’s largest and best-selling music platforms.
With the introduction of the iPhone, the iTunes store was expanded to include apps and the App Store. Apple’s App Store offers the option of downloading application programs (apps) to mobile devices for free or for a small fee.
The application software is marketed directly to the customer in the context of mobile distribution, with Apple acting as an intermediary between the end customer and the software manufacturer. The App Store can be accessed either stationary via a PC using the iTunes software or mobile via the iPhone/iPad.
If the stationary version is used and an app is purchased, a bidirectional synchro- nization process is automatically started within the framework of mobile distribu- tion, transferring the purchased software to the mobile device without further user interaction.
The combination of iPhone/iPad and direct app download enables targeted mobile marketing and ensures considerable success. The system was quickly copied by Apple’s competitors Google (Play Store) and Microsoft (Microsoft Store). With its App Store and iTunes as an integrated offer in the mobile business area, Apple has created a strategic alignment that binds customers in the long term and enables high
returns.
Moreover, with the iPhone, Apple has succeeded in launching a technologically advanced smartphone series that still leads the market in terms of ease of use, mobile browsing, as well as the display of photos, videos, and streams.
A further competitive advantage is created by the App Store platform, which serves third-party providers as a marketplace and enables them to offer additional functionalities as downloads. In this context, the price for the respective app is set by the third-party providers and Apple receives a 30% commission on every unit sold. Customers can rate the apps they have purchased and thus contribute to the corresponding rankings. The community elements increase customer loyalty and trust in the platform.
The iTunes Match function contributed signicantly to the success of iTunes. This program compares the personal music collection with the songs from the iTunes Store and downloads all found songs in optimal quality to Apple’s iCloud. Up to ten devices can access a cloud and make the music collection available everywhere via
the Internet.
While the music purchased from the iTunes Store can be downloaded to the iCloud in unlimited quantities, it is also possible to transfer up to 100,000 own songs to the iCloud via iTunes Match. At the same time, the iCloud serves as a convenient backup for the user’s own music collection and offers the user the option of accessing his or her own music collection online at any time.

However, the large music conglomerates, which to date mostly distributed music through the traditional form of CD sales, suffered enormous drops in past sales, due to the development of Internet downloads. The IFPI Global Music Report 2016 proclaims that the revenue generated from Internet downloads exceeded that of CD sales (IFPI 2016).
As a result of its success, Apple had a leading position in the music segment with iTunes in the segment of Internet downloads, but its numerous competitors such as Amazon, Google Play, Spotify, and Samsung’s“Music Hub”have caught up.
Hence, Apple is being forced to face this competition and counter it by innovative
ideas in order to defend its leading position in online distribution in the audiovisual sector. An overview of the strategic orientation of iTunes is shown in Fig. 15.21.


	Xbox One X Case Study

The development path of the console games market is cyclically dominated by so-called console generations, which correspond to an ideal model of the product life cycle. Within the eighth generation, the three major game console manufacturers
 
Nintendo, Sony, and Microsoft are competing for customers with their respective new products Nintendo Switch, PlayStation 4 Pro, and Xbox One X.8
While the Nintendo Switch, released on November 3, 2017, achieved signi- cantly higher salesgures than the WiiU, the new and improved Sony PlayStation 4 Pro (November 10, 2016) and Microsoft Xbox One X (November 7, 2017) are also
expected to contribute to a highly competitive console gaming market.
The salesgures for the corresponding predecessor model for Sony and Microsoft were around 85 million units each (VG Chartz 2018a). Like the Wii and the WiiU, the Nintendo Switch mainly address families (casual gaming), while the
new consoles from Sony and Microsoft are designed for more ambitious gamers with high expectations with regard to graphics and game quality.
The pure gaming experience is the main interest of this target group especially with regard to the PlayStation 4 Pro. The Xbox One X from Microsoft also promises high quality gaming and offers additional services. The Xbox One X is regarded as an entertainment center for the living room, which for therst time enables the display of 4K among all consoles.
Microsoft describes the new console as the most powerful console in the world (Xbox 2018). For example, gamers can receive high-denition movies and music by quickly connecting the console to the Internet. In addition, it is even possible to receive movies and TV programs during gaming. Moreover, the Xbox One X enables the use of the Internet telephony service provider Skype via the TV screen
during gaming. The so-called OneGuide ensures personalized instant access to entertainment apps and preferred TV programs.
Another feature of the Xbox One X is the cloud connection, through which the console and its settings as well as the games develop depending on the gaming performance and the personal preferences of the user. The basis of many of these console specics is the most reliable online service in the console sector.
The console’s excellent connectivity to the Internet and the ability to purchase
Xbox Live Gold membership allows gamers to be part of the“largest gaming community in the outstanding multiplayer network”(Microsoft 2018a). Members can compete online against other players that are selected based on their skills,
reputation, and language skills by means of advanced algorithms (SmartMatch).
The integrated Xbox Live community makes it easy for gamers to exchange information among each other. Overall, Microsoft uses very efcient hardware and high-quality electronic components for the Xbox One X, which is, however, corre- spondingly expensive. The entry price for the Microsoft Xbox One X is 499 USD,
while the competitor platforms Sony PlayStation 4 Pro with 399 USD and the Nintendo Switch with 299 USD are considerably cheaper.
However, the respective price can increase through appropriate accessories such as headsets, more ergonomic controllers with additional functions, or special loud- speaker systems. The standard version of the Microsoft Xbox One X includes the

games console itself, a game pad, an HDMI cable, two batteries, a power cord, and a brief instruction (Microsoft 2018b).
The equipment delivered with the earlier Xbox One version initially included the Kinect system, which enabled gamers to interactively participate in the game and control the game software by means of body movements and speech. This Microsoft system does not require a controller and represents a further development of the motion control of the Wii originally introduced by Nintendo.
Due to the low usage by players and game developers, Microsoft stopped the development and production of Kinect at the end of 2017. In addition, the Xbox One X no longer has any connection options for Kinect, and also the adapter provided for it is no longer available in stores.
Together with their corresponding basic versions, the PlayStation 4 and Play Station 4 Pro have sold 81.06 million copies since their launch. Microsoft’s Xbox One/Xbox One X has sold around 38.15 million copies to date (VG Chartz 2018b). Figure 15.22 shows an overview of the Xbox One X’s strategic orientation.


	21st Century Fox Case Study

21st Century Fox, headquartered in New York, is one of the world’s largest media conglomerates. The international company employs around 21,500 people and is listed on the New York and London stock exchanges as well as on the Australian stock exchange. The company’s origins lie in the News Corporation, a media
 
conglomerate that split into 21st Century Fox and News Corp. in 2013. The origins of the founder and CEO Rupert Murdoch lie in the newspaper industry, on which he has built a globally active billion-dollar empire by expanding the business areas and applying a targeted internationalization strategy. Since its demerger from News Corporation, 21st Century Fox has focused primarily on the media areas of movie and television.9
In 2017, 21st Century Fox had a turnover of 28.5 billion USD (21st Century Fox 2017). The company also ranks 109th on the FORTUNE 500 list (Fortune 2018). 21st Century Fox competes in two major industries: the media industry that includes movie and video and accounts for the bulk of the business and the leisure industry that includes entertainment and telecommunications services, especially cable and satellite services. The branches of industry can be subdivided into four industrial segments: cable network programming, movieed entertainment, television, and others/corporate. Figure 15.23 gives an overview of the companies of 21st Century Fox in each industry segment.
The origin of 21st Century Fox, the News Corporation, began with Rupert Murdoch the chairman and founder of the News Corporation, who inherited the estate from his father in 1952, including the Australian daily newspapers News and Sunday News.
After Murdoch reorganized the beleaguered daily newspapers with a concept of boulevard offers focusing on sex, crime, and human interest topics as well as aggressive marketing measures and price reductions, he successfully repeated his partially modied strategy in other media areas as well.
After founding more newspapers in Australia, Murdoch bought the Adelaide TV
channel, Channel 9, and expanded its business to other continents. Pursuing a successive international concentration strategy (waterfall strategy) as a market presence strategy, Murdoch took over the print titles News of the World and Sun in the late 1960s and early 1970s in Great Britain, which at the time were rather moderately successful.
After acquiring the largest US magazine publisher Triangle Publications in the 1980s, Murdoch took over major magazines such as the New York Post and expanded the presence in the TV market through the acquisitions of the 20th Century Fox movie studios in 1985 and the Metromedia television chain 1 year later, now known as Fox TV.
The company strengthened its market presence in the TV market in particular by expanding the Metromedia television chain as the fourth national US network Fox TV and by establishing the Fox News Channel in 1996, a 24-hour news channel on cable television. 
A major strategic shift from the print sector to electronic media took place in the early 1990s. In 1990, Murdoch acquired the previously unsuccessful satellite channels Sky TV and British Satellite Broadcasting, which he merged into BSkyB.



9See also for the following chapter Wirtz (2019b).