Time Warner Cable- TWC was one of the famous television cable company across America. It was acquired by the Charter Communications in 2016. The company is specialized in three main categories; TV, Film and network entertainment. The company was known to be second biggest cable company in terms of revenue. First one is Comcast. The company is headquartered in New York city. Charter communications continued its operations as the Time Warner in the former markets. But, later re-branded the operation under Spectrum brand. It is the brand introduced by Charter communications in 2014. The company is now widely famous as Spectrum television cable (Shepherdson, 2016).
The article will talk about the Porter five forces analysis of the Time Warner Cable. This five forces model helps the company in analyzing the external factors that are impacting positively and negatively. It deals with the opportunities and threats that must be identified by the company. There are five forces;
• Bargaining power of buyers
• Bargaining power of suppliers
• Threats of new entrants
• Threats of the substitute products
• Rivalry among existing players
Here is the detailed Porter five forces analysis of Time Warner Cable;
Bargaining Power of Buyers
The bargaining power of buyers is an important force and is moderate for the Time Warner cable. Customers have to choose among different film and tv entertainment companies to spend. They have the broad range of choices. They even can subscribe to different broadcast networks, subscription networks, and films. This have great impact on the ratings which affect the advertising expenditures. This makes the customers preference as an important factor. Whereas major part of the entertainment and film industry are charged at the premium to customers. This clearly indicates that bargaining power of consumers play a role when high quality services are not provided by company. this indicates the drop in the consumers, advertising, and hence market share (Katkin, 2013).
Bargaining Power of Suppliers
Supplier’s bargaining power in the industry is low and hence favourable for Time Warner Cable. The suppliers in this industry are mainly celebrities, fine arts academies, sports agents, IP licensing, creative artists, and performers. These suppliers have control over prices to some extent, but major control is with Time Warner and the other companies. However, the company maintains good relationship with its suppliers, as this is an integral part. They help the company in growing and providing the best entertainment to the customers (Green, 2019).
Threats of New Entrants
Threats of the new entrants have to be seen high in case of Time Warner Cable. This is mainly because of the increasing demand of media streaming websites. However, Time Warner has licensing agreement with the entertainment suppliers like Netflix. As the stakes of the Netflix are growing. Despite of the fact of growth in demand, establishing the business and operations in the media industry is not easy. Huge capitalization is required as a start-up cost. Furthermore, effective supply chain is needed to be established along with high distribution networks. There are numerous technicalities involve in this field. Huge companies are already capturing the market share. It is difficult for the new entrants to compete with them (Katkin, 2013).
Threats from the Substitute Products
Threats from the substitute products are high for the Cable service providers. This is mainly due to the economies of scale achieved by the introduction of different mix of channels. The use of internet has been increased. All the films and television programs are easily accessible on the browsing sites. Internet is one of the main substitutes. Moreover, change in the consumer preference like Theatre is increasing. People prefer to watch the new film or programs in the most qualitative and relaxing way in theatre (Green, 2012).
Rivalry of Existing Players
Time Warner cable is known to be a film, tv and network entertainment. It faces intense competition from rivals like News Corporations, Viacom Inc., Walt Disney etc. These rivals can make up to 81.2% market share, while Time Warner captures only 9.8%. This is mainly due to the competitors’ sizes and the audience they are attracting. Competitors mainly acquire small firms to increase the customer base and reduce the competition level. Moreover, it is necessary to spend more on advertising to attract more customers. However, Time Warner started to make agreements with Apple and Samsung for packaging the products with them. This will help the company to reach to more people and increase its market share (Katkin, 2013).
References
Green, D. 2012. Time Warner Cable Industry/Competitive Analysis. [Online], Available at: https://www.slideshare.net/dgreen3552/time-warner-cable-industrycompetitive-analysis, [Accessed on: 24th December, 2019].
Katkin, M. 2013. External Analysis of Time Warner Inc. in the Entertainment and Film Industry. [Online], Available at: https://michaelkatkin.files.wordpress.com/2013/08/twx-external.pdf [Accessed on: 24th December, 2019].
Shepherdson, D. 2016. Charter Communications completes purchase of Time Warner Cable. [Online], Available at: https://www.reuters.com/article/us-twc-m-a/charter-communications-completes-purchase-of-time-warner-cable-idUSKCN0Y92BR, [Accessed on: 24th December, 2019].