Solutions to increase numbers of k+ subcriber for the vietnam satellite digital television co , ltd = nghiên cứu giải pháp tăng số lượng thuê bao k+ công ty TNHH truyền hình số vệ tinh việt nam

25 CHAPTER 2: REALITY OF BUSINESS ENVIRONMENT AND QUALITY OF PAY-TV SERVICES AT VIETNAM SATELLITE DIGITAL TELEVISION.... Therefore, to find solutions to support the development of VSTV n

KHOA QUẢN TRỊ VÀ KINH DOANH

-

VŨ ANH TUẤN

SOLUTIONS TO INCREASE NUMBERS

OF K+ SUBCRIBER FOR THE VIETNAM SATELLITE DIGITAL TELEVISION Co., Ltd

NGHIÊN CỨU GIẢI PHÁP TĂNG SỐ LƯỢNG THUÊ BAO K+ CÔNG TY TNHH TRUYỀN HÌNH SỐ

VỆ TINH VIỆT NAM

LUẬN VĂN THẠC SĨ QUẢN TRỊ KINH DOANH

Hà Nội - 2017

KHOA QUẢN TRỊ VÀ KINH DOANH

-

VŨ ANH TUẤN

SOLUTIONS TO INCREASE NUMBERS

OF K+ SUBCRIBER FOR THE VIETNAM SATELLITE DIGITAL TELEVISION Co., Ltd

NGHIÊN CỨU GIẢI PHÁP TĂNG SỐ LƯỢNG THUÊ BAO K+ CÔNG TY TNHH TRUYỀN HÌNH SỐ

VỆ TINH VIỆT NAM

Chuyên ngành: Quản trị kinh doanh

Mã số: 60 34 01 02

LUẬN VĂN THẠC SĨ QUẢN TRỊ KINH DOANH

NGƯỜI HƯỚNG DẪN KHOA HỌC: TS HOÀNG ANH TUẤN

Hà Nội - 2017

The author confirms that the research outcome in the thesis is the result of author’s independent work during study and research period and it is not yet published in other’s research and article

The other’s research result and documentation (extraction, table, figure, formula, and other document) used in the thesis are cited properly and the permission (if required) is given

The author is responsible in front of the Thesis Assessment Committee, Hanoi School of Business and Management, and the laws for above-mentioned declaration

Date: August 21, 2017

I woud like to express my great gratitude to my supervisor Hoang Anh Tuanfor her useful comments, remarks and engagement during my process of doing this master thesis Also, I would like to give my sincere thanks tocustomers of Vietnam Satellite Digital Television Co., Ltd, in my survey, who have willingly spent their precious time joining the interview

Sincere thanks are extended to the Faculty of Hanoi School of Buseness and Management - Vietnam National University for equipping me with huge knowledge and skills through various interesting and practical subjects I also would like to thanks my classmates for their friendship and reciprocal encouragement to make our class time to be unforgettable time

Lastly, I would like to give my great thanks to my wife, my kids, and my family who always standby me during the past two years more and encourages me

to keep moving from the beginning of my study

TABLE OF CONTENTS

TABLE OF CONTENTS iii

LIST OF TABLES v

LIST OF FIGURES AND CHARTS vi

ABBREVIATION TABLE vii

INTRODUCTION 1

1 Rationale 1

2 Literature review 2

3 Aims of research 5

3.1 Overall 5

3.2 Specific 5

4 Objects of research 5

5 Scope of research 5

6 Research methodology 5

7 Thesis structure 7

CHAPTER I: BASIC THEORY ON PAY-TV INDUSTRY 8

1.1 Pay-TV services 8

1.1.1 Definition of pay-TV service 8

1.1.2 Types of pay-TV services 8

1.1.3 Role of pay-Tv services in Vietnamese spiritual life 9

1.2 Process of building solutions to increase Pay-TV’s subscribers 10

1.2.1 External environment analysis 10

1.2.2 Internal environment analysis 21

1.2.3 SWOT matrix analysis and strategy choice 25

CHAPTER 2: REALITY OF BUSINESS ENVIRONMENT AND QUALITY OF PAY-TV SERVICES AT VIETNAM SATELLITE DIGITAL TELEVISION 27

2.1 Introduction on Vietnam Satellite Digital Television 27

2.1.1 History of foundation and development 27

2.1.2 Results of business activities and K+ Pay-TV services of the company 32

2.2 Analysis of the reality of the business environment of K + television service

business at Vietnam Satellite Digital Television 33

2.2.1 External environment 33

2.2.2 Analysis of industry environment 37

2.2.3 Analysis of internal environment 45

CHAPTER III: SOLUTIONS AND RECOMMENDATIONS 56

3.1 Developing orientation for K+ in Pay-TV industry 56

3.2 Proposing solutions 57

3.2.1 Technical investment and development 59

3.2.2 Content development and copyright of exclusive channels 61

3.2.3 Marketing strategy 66

3.2.4 Human resource 66

3.2.5 Approaching customers in the form of B2B, actively developing in the direction of Blue Ocean 68

3.2.6 Supportive solutions 68

3.3 Recommendations 70

3.3.1 To the government 70

3.3.2 To the Ministry of Information and Communication 70

3.3.3 To K+’s Board of Directors 70

CONCLUSIONS, LIMITATIONS AND IMPLICATIONS 72

REFERENCES 74 APPENDIX

Appendix 1: Survey form

Appendix 2: Data analysis result

LIST OF TABLES

Table 1.1: SWOT Matrix 26

Table 2.1: Main activities of the Company 27

Table 2.2: Results of business activities of the company 32

Table 2.3: Some legal documents affecting the development of pay-TV services 34

Table 2.4: Some current economic norms in Vietnam 35

Table 2.5: Some current competitors of K+ 37

Table 2.6 Evaluation on the contents of K+’s channels 41

Table 2.7: Evaluation on the rates 42

Table 2.8: Evaluation on the quality of signal 43

Table 2.9: Evaluation on the quality of sound and images 44

Table 2.10: General evaluation on customer satisfaction 44

Table 2.11: Human resources of the company 45

Table 2.12: Average salary of office staff of the company 46

Table 2.13: Some rates of service products provided by K+ 47

Table 2.14: Advertising activities of the company 48

LIST OF FIGURES AND CHARTS

Figure 1.1: Model for evaluating customer satisfaction toward the quality of Pay-TV services 20Chart 2.1: Figures of the number of weekly visitors of online videos of Nielsen 39Chart 2.2: Advantages of some technologies 50

ABBREVIATION TABLE Abbreviation Definition

RCEF Regional Comprehensive Economic Partnership

INTRODUCTION

1 Rationale

Accompany with the quickly development of science is the appearance of many entertainment services that meet the abundant entertainment demands of people Along with traditional types of recreational facility such as magazine, newspaper, journal…and now, television service is considered as the first class one

in the world that indispensable to everyone and every family Television services supply the huge amount of information and entertainment that satisfied demand of all people

It is very clear that television service plays an important role in modern society that improves spiritual and emotional life for human worldwide And, nowadays, television service is not only considered as entertainment tool but also specialized one that take part in the social management and supervisory, educational and cultural popularization and others Television shows audience at the same time both truthfully image and lively sound that able to directly impact on audiences all over the country (even worldwide) Together with free tradition channels of government, there are nowadays more and more special high tech and quality services that required paying in use for any options of audiences Numbers of pay channels are quickly increased together with a huge number of subscribers And therefore, there are a lot of suppliers in this service such as: VTC (Vietnam Television Corporation), SCTV (Saigon Cable Television), and FPT Television (FPT group) .and K+ (VSTV- Vietnam Satellite Digital Television) Sông Thu, VTV Cab, MyTV (VNPT), Next TV (Viettel)…

Vietnam Satellite Digital Television Company (VSTV) is one of the top market leading companies in service of paid television in Vietnam VSTV supply many options to audiences with high quality image line (HD and full HD channels), plentiful channels for all age groups, nationwide coverage…In recent years, VSTV has implemented several strategies and solutions to increase the number of customers to enhance the competitiveness, such as: discounts on equipments, 50% discount on monthly subscription fee, monthly data bonus, increase investment in content, quality of service and network However, under the pressure of severely

competition of other new suppliers, the business results of VSTV are not fit to its potential In addition, due to the unhealthy business environment, influence of economic depression the VCTV business results still very ominous, despite the efforts mentioned above To the end of 2015, the VSTV’s accumulated losses of up

to 1,979 billion

As one of the leaders of the company, I would like to contribute my small effort to help our company developing stronger and stronger That is the reason I chose this topic to research and find out the solutions to increase the number of subscribers more stable in the next five years (2016-2021)

Therefore, to find solutions to support the development of VSTV (namely the

development the K + channel), the author selected the topic "Solutions to increase

numbers of K + subscriber for the Vietnam Satellite Digital Television Co., Ltd" to complete the master thesis

2 Literature review

Nowadays, television has become a spiritual food for everyone in the world in general as well as for Vietnamese in particular; most of the households have at least one television in their houses for their entertainment demands

This research will bring viewers all the richest, newest and hottest contents to satisfy the need of TV viewers of all ages For the Pay TV sector in general, this research will create and activate the competition amongst providers, which helps

TV viewers have much more options with many special and attractive contents This research will also be a solution to increase the number of K+ subscribers quickly and stably Moreover, it helps K+ to become a famous and premium channel in Vietnam, providing all the news over the world updated continuously, blockbusters, special series, many original sport shows and some interesting gameshows…K+ channels will be known not only for football but also for many others attractive non-sport contents by viewers

In 2005, Abel Adamu carried out a study of the satisfied of audiences with the Amharic language night shows on television of Ethiopia (most of the television shows in Ethiopia are broadcasted with this language):

- Methodology: to complete this study, Adamu Abel carried out a survey

with group of 300 audiences who usually view this show in three locations: Bahir Dar, Dessie and Gondar

- Framework: questionnaires focus on 11 factors that may have strong effect

to the satisfied of audiences The results shown that, most of audiences were not completely satisfied with Ethiopian television services at quality

of image and sound, content of shows (channels), are not interested Thus, the author suggested some solutions to enhanced the satisfaction of audiences However, this study just concerned with night shows only and the whole sample just focused on audiences who use the free television service

- Conclusion: the solutions in this study are only fit with free television

programs but payable one

Ngigi Sarah Wanjiru (2013) took a research on service quality and performance of paid television services of Zuku Co., Ltd of Kenya:

- Methodology: survey, descriptive statistics, comparision, analysis

- Framework: building model of the relationship between television service

quality and customer satisfaction; proposing solutions to enhance customer satisfaction.The author confirmed a closed link between service quality and performance, in which the reliability and network quality are key factors in evaluating overall service quality of this company However, solutions in this study just focused on improve the customers satisfied with the paid television services but concerned to the way of development services for Zuku Company in the future

- Conclusion: Not paying much attention to the development of television

services in the coming time of the company in the fierce competition among pay television companies in Kenya

In Vietnam, Nguyen, V.N (2015) carried out a study that measure the customer’s satisfaction with the Dong Nai 1 channel:

- Methodology: in this study, the author applies two both of qualitative and

quantitative research methods

- Framework: for the first method (qualitative research) aims to explore the

factors that affect audience’s satisfaction of Dong Nai 1 channel And then, for the quantitative method was applied to measure the actual level of audience’s satisfaction with the Dong Nai 1 channel The results show that, quality of television line (image and sound) and the MC (master of ceremonies) are two key factors that have strong effect on the audience’s satisfaction

- Conclusion: this study just covers a small-free local television channel and

this local program is not high quality television service Hence, this study

is not suitable with paid one

Nguyen, B.T (2014) took a research on development strategy of paid television services of Vietnam national television (VTV) to 2020

- Methodology: the author focused on analyzes the performance results of

VTV’s development strategies by some main indicators as: number of customers (subscribers), market share, profit and customer’s satisfaction

- Framwork: the author didanalyzetools of development strategies such as:

financial, equipment, labor resources, research and development activity (R&D), technical innovation, international cooperation… to find out the strengths and weaknesses of VTV

- Conclusion: the findings and conclusions in this study may be biased due

to the analysis based on secondary data Moreover, due to research scope rather wide, the author did not focus on finding solutions to increase number of subscribers

Thus, after the review of the literature, the author finds that, there are quite a lot of researches on the development strategy for paid television services (also study

on customer satisfaction on TV service) Most researches usually base on wide range (the entire field of free TV or pay TV), so the solutions just are generally oriented without specific solutions At the same time, the lack of research on the increase of the number of subscribers to pay TV services as the foundation for the development of the business In addition, no studies on the improvement of K +

subscribers Therefore, this study will be valuable both in terms of theory and practical

- First: Building a theoretical framework about the paid TV services and

process of building solution to increases the number of customers who use paid TV services

- Second: Propose solutions to increase number of K + subscribers

- Third: Recommendation to support for solutions be high efficiency in

Time of research is the time to do this thesis: 2016

This thesis will focus to analysis on pay-TV market, competitors, business environment

This thesis will user survey result to do analysis

This thesis will be carried out in Hanoi area

This thesis will focus on the main solution: K+ contents development, and some other solution related to HR, technical, marketing and commercial

6 Research methodology

The study reviews theoretical framework and relevant researches of the research topic

Data and time:

+ Secondary data: is collected in the period of 2012-2016 of K+’s paid television service in Hanoi market that includes: Revenue from K+, market

share, number of K+ channels, subscribers, actual strategies that K+ implemented in the period 2012-2016 to develop this service

+ Primary data: is collected through sample survey with customers who use the K+’s paid television service at least 6 months ago, to now (time of survey-interview) This will be implemented in Jan and Feb /2017

The research questions will be addressed by the both qualitative and quantitative method Based on theoretical framework, key indicators (and key measurements) will be detail described In addition, statistical and descriptive analysis methods are used

+ Comparative analyze: this method will be used mainly in analyze the development of K+’s paid television service in period 2012-2016, andIt will have used in comparison with other suppliers in the same period

+ Quantitative method: This method will be used in measure the satisfaction

of customers who use the K+’s paid television service (data from survey), The scale is based research models of Parasuaraman et al (reliability, responsiveness, assurance, empathy, tangibles The authors Hair & CTG (1988) say that to ensure the accuracy of research results, the minimum samples must be from 100 to 150 samples Author Roger (2006) thinks that the minimum samples for the research is from 200 to 250 samples Some others say that for multivariate regression analysis: minimum necessary samples must be calculated by the formula of 50 + 8 m (m is independent variable) (Tabachnick and Fidell, 1996) There are five independent variables

in the thesis and minimum necessary samples are 95 Because the data collection process is simple, the author delivers 300 questionnaires All observed variables in the factors use 5- level Likert scale with bellow choices:

7 Thesis structure

The thesis structure included three main chapters:

CHAPTER 1 BASIC THEORY ON PAY-TV INDUSTRY

CHAPTER 2: REALITY OF BUSINESS ENVIRONMENT AND QUALITY

OF PAY-TV SERVICES AT VIETNAM SATELLITE TELEVISION

CHAPTER 3: SOLUTIONS AND RECOMMENDATIONS

CHAPTER 1: BASIC THEORY ON PAY-TV INDUSTRY

1.1 Pay-TV services

1.1.1 Definition of pay-TV service

There are several definitions of pay-TV service as follows:

Pay-TV is a form of television watching with fees, as a monthly subscription Television is capable of transmitting lots ofchannels to households, social sectors, and providing many other value-added services (Le Doan Huy, 2011)

Pay-TV is a television service where viewers pay service providers a fee to watch the channels of their choice Pay-TV enables viewers to be more proactive in choosing the programs to watch to their preferences Pay-TV has several forms such

as cable television, digital terrestrial television (DTT), satellite television (DTH), Internet TV (Encyclopedia, 2016)

Pay-TV service is an activity that provides the transmission and distribution

of information content in the form of pay-TV and value-added services on the technical infrastructure that provides pay-TV services to paid television subscribers under service contracts or equivalent compulsory agreements; in which,pay-TV programs are domestic and foreign programs which are offered to pay-TV subscribers (Nguyen Hoang Phuc, 2013)

Targetedcustomers of Pay-TV:

- Final consumers

- Customers who redistribute products

- Customers whouse value-added services on Pay-TV infrastructure

1.1.2 Types of pay-TV services

+ Basic services

Basic services are traditional and modern pay-TV services which are currently available in the world including the following common services:

- Multiprogram Multipiont Distribution Sytem

- Community access television

- Digital terrestrial television

- DTH satellite television

+ New Generation Transmission Service: include the following services

- On-demand television service

- High definition digital television service

- Internet television (IPTV)

- Mobile television (MobileTV)

+ Value added services: now includes:

- Advertising and co-production services with shared revenue

- Broadband internet services on television network infrastructure

- Gaming service on cable network infrastructure

- On-demand karaoke services

- Television shoping services

- Voting service for programs or candidates

1.1.3 Role of pay-Tv services in Vietnamese spiritual life

Pay-TV is a form of television watching with fees, as a monthly subscription Consequently, television is capable of transmitting lots of channels to households, social sectors, and providing many other value-added services

Pay-TV has become an increasingly developing trend with modern technology since it not only plays the role in transmitting radio and television channels, but also serves the political tasks of the Party and the State and meets the demand for diverse information and entertainment of people

Pay-TV is received through broadcast stations and is transmitted throughout the country across all territories, serving viewers with the highest quality that crosses the geographic distance, especially in remote areas In addition, since pay-

TV uses modern technology, this type of service offers the best sound and picture quality, eliminates unhealthy channels, and suits the developing trend of today’s world

Pay-TV has a lot of high-quality television channels with superior technology that brings customers high quality television, high-quality image and sound, especially the quality of the contentsof domestic and foreign channels.On the one hand, itmaintainsthe cultural character in the integrating stage On the other hand, through foreign channels we canacquire the cultural quintessence of the world

Pay-TV broadcasts some exclusive channels which free-TV does not offer In terms of quality, the contents aremuch better than free TV

Pay-TV is day by day familiar with Vietnamese and number of subcribers is increasing, count to 2014 number of subscribers are almost reach to 8 million:

Source: Ministry of information and communication More over, in the modern age, the demand of people is increasing; free-TVwith outdated technology will not be able to meet the demand for diversified entertainment information of people Therefore,the emergence of pay-TV will play

a role in meeting the need to access and enjoy information and culture in the world

in the best way for all subjects and all economic components in society

1.2 Process of building solutions to increase Pay-TV’s subscribers

1.2.1 External environment analysis

1.2.1.1 Macro environment

Laws and State policies

The strategic solutions to increase the service revenue of Pay-TVenterprises are strongly influenced by themovements in the political environment This environment includes laws, government agencies, and pressure groups that influence and limit the various organizations and individuals in society Enterprises must carefully analyze the new related philosophies and policies of

Stateadministration Antitrust laws and tax laws are policies that can affect the performance and profitability of Pay-TV services

Moreover, on a globalscope, service companies also face a range of political and legal issues such as trade policies and national protection barriers

In addition, special services such as television in general and Pay-TVare also paid attention by our government to protect consumer rights and security Therefore, strict regulations are also a significant impact on the strategies and solutions to increase sales of Pay-TV service providers in Vietnam

Economic factors

Businesses in general and Pay-TVenterprises must pay special attention to the economic factors when proposing strategies and solutions to increase sales Since the demand for using television services of the people will be directly affected

by the income levels or consumption amount of people In addition, this income is affected by factors in the economy such as inflation, interest rates, exchange rates, etc

The high inflation rate will cause the real incomes of people to decrease due

to the CPI increase Since then, people will tighten their spending and reduce their demand for using services

Interest rates: When the bank interest rates increase, people will accumulate

to deposit money into banks to enjoy interests instead of spending Base on result, the demand for using Pay-TV services will also decrease

Thus, when building strategies and solutions to increase the number of

Pay-TV subscribers, enterprises need to analyze and evaluate the economic factors to propose appropriate solutions

Social factors

The society in which people grew up has shaped their basic beliefs, values, and norms Man absorbs, almost unconsciously, a worldview that determines their relationship with oneself, with others, with nature, and with the universe Social factors include norms and values that are accepted and respected by a society Social factors have a very slow impact on businesses in general and Pay-

TVenterprises But if enterprises do not analyze and evaluate these factors, they will find it difficult to realize solutions and strategies suitable to them

Social factors such as people’s personalities in each region, ways of life, beliefs, customs, habits, working habits, cultural characteristics of the workplace are socio-cultural factors that must be respected and noticedso that managers can buildthe solutions to increase the revenue fromPay-TV services

Natural factors

Natural factors such as climate, rivers, etc are factors that people can not intervene or changeto a positive direction to benefit their business These factors have a common affect on all companies and enterprises It can affect the working ability of people Phenomena such as sunlight, rain, storms, etc can cause work delays Companiescan not avoid the effects of these natural factors

Consequently, those who work to build up solutions to boost the sales of Pay-TV services should be sensitive to the threats as well as opportunities associated with these natural environment factors

Technological factors

There are very few sectors that are not affected by technology factors Especially in the field of Pay-TV business, providers that hold high technology will dominate Therefore, solution planners in these businesses need to understand the industry's current technological environment and understand how new technologies can serve human needs They need to work closely with the research anddevelopmentstaff to encourage them to move towards market-oriented research They must be wary of the unwanted consequences of any innovation that could cause damage to the users and a loss of credibility and the resistance of consumers

However, the technology environment is also a big challenge for pay-service companiessince technology is constantly developing.It is not easy for companies to follow this development due to many reasons such as finance, infrastructure, staff levels, etc Therefore, the technological environment factors are both an opportunity and a challenge for the Pay-TV service providers in building the solutions to increase sales

Population factors

Vietnam is a densely-populated developing country that has been transitioning from the rigidities of a centrally-planned economy since 1986 It is a significant market, with 95.4 million people; 24,9 million households and 9,13 million pay TV subscribers.Viewers are young with an average of 28 TV is the dominant media with a daily reach among adults approaching 90%

1.2.1.2 Micro environment

Current competitors

Current competitors are businesses that are currently providing Pay-TV services These companies compete in prices, product quality, technology, and levels of prestige and trust in the market

The large number of competitors is a driving force for businesses to improve and enhance their service quality However, it also reduces the market share of service providers Hence, the pressure from the current competitors requires the Pay-TVservice companies to plan strategies and solutions to increase suitable their sales volume to attract customers and strengthen theirbusiness efficiency Let’s see the Pay TV market in 2016:

Source: Media partner 2016 and K+

There are three kind of competitors: Cable, DTH and IPTV:

- Cable Pay-TV:

o Focus in Hanoi and the North: VTVCab

Offers

Analog offer:

- Normal package: 70 channels, price: 110 KVND/month

- HD package: 240 channels (70 HD channels), price:

- NHK package: 1 channels, price: 800 KVND/month

- K+ package: 4 channels, price 125 KVND/month

Strengths

More than 60 HD channels and Vietnam local channels Co-distribution with K+: K+1, K+NS, K+PC, K+PM Coverage of main northern urban areas of the country; target: 21 cities

Cooperation EVN Telecom and Pinet (Pamanet) for high speed internet (from 09/2011)

Weaknesss

Compulsory to subscribe to analog TV to get SD or HD packages (110 KVND/month)

High HD equipment price

No personal video recorder Digital quality not stable

o Focus in the South and Mekong delta: SCTV

Offers

Analog offer: 61 channels, price 88 KVND/month Digital offer:

- SD package: 125 channels, price: 99 KVND/month

- HD175 channels (50 HD channels), price: 110 KVND/month

Strengths

Largest cable TV network Many southern local channels Cheapest equipment price Value added services: personal video recorder, multiroom, karaoke on demand, SMS

Internet and IPTV: SCTVnet New football rights (Liga, Serie A) and tennis rights (Master 1000)

Spreading in the northern area Weaknesss Compulsory to subscribe to analog TV to get SD or HD packages (109 KVND/mo)

Few channels for children: only 2

o Forcus in Ho Chi Minh City: HCMC

Value added services: cooperation with FPT for service

of VOD for Vietnamese movies Mobile TV, game online, interactive online TV guide, time shift (replay), video conference

Good value-for-money esp.SD free subscription fees

11 HD channels 9SD + 1HD thematic home-edited channels (FBNC: news, HTVC for women, HTVC sport, …)

Weaknesss

Compulsory to subscribe to analog TV to get HD package (99 KVND/mo)

No PVR Not many movie channels: 6 vs 9 on K+

Good brand awareness in rural areas Value added services: VTC stores: shopping online Good value-for-money for HD channels

Cooperation with local TVs de develop DVB-T Weaknesss

HD channels are not all HD native

No PVR Bad quality of signal

Is losing momentum

Much more aggressive towards the commercial network Multiroom

Weaknesss

Launch of multiroom without any control Sport, especially football and cinema offer is limited Not so many international news channels

Low marketing and communication activities

- IPTV:

o MyTV (VNPT)

Offers

- SD Package: 120 SD channels, price 60 KVND/month

- HD Package: 120 SD + 20 HD channels, price 120 KVND/month

- Co-distribution of K+1, K+NS, K+PC, K+PM, price

125 KVND/month

Strengths

HD channels 20 Services: NPVR, Parental lock, sharing photos and other medias contents

programs/movies/series/health/sport Online interactive guide of programs Extensive number of online services: karaoke, games, music…

Time shifting

Weaknesss

No multiroom Internet providers

o OneTV (FPT)

Offers

- Basic Package: 73 SD channels, price 80KVND/month

Weaknesss Low development No multiroom

License issue

o NextTV (Viettel)

Offers

- Flexi: 150 channels, price 88K VND/month

- Family 1: 161 channels, price 110K VND/month

- Family 2: 195 channels, price 140K VND/month

- Family 3: 161 channels (VOD included), price 140K VND/month

Weaknesss No multiroom High subscription fees

Potential competitors

Potential competitors are competitors who may enter the Pay-TV market in the future Since then, the market share of businesses is shared and their profits are reduced The emergence of new competitors will affect the planning of solutions to increase sales of Pay-TV service providers

In addition, with the development of the technology, telecommunications and information technology enterprises will become direct competitors of Pay-TV service companies At the same time, through the transmission system, apart

frommobile network and Internet, customers also have access to many other entertainment services such as online game playing, computerized television viewing, television and movie viewing on cell phones, and so on

As a result, potential competitors will be one of the dangers for the Pay-TV service enterprises Therefore, analyzing potential competitors is essential to assess the risks that they create for businesses Here are the potential competitors:

- Netflix:

o There are three package: Basic, Standard, Premium

o Price: from 180K – 260K VND/month

o Stock: most of contents are the movie, series and show of American

o Update: high update speed

o Payment: credit cards only

o Limitation: Vietnamese subtitle

- Iflix:

o Price: 45K – 59K VND/month

o Stock: there are many Korean, Chinese series, and movies

o Update: low speed

o Payment: credit card, ATM, electric wallet, mobil cards

o Full Vietnamese subtitle

- Youtube: most of contents is free

Customers

The consumption habit of consumersis one of the factors that needs to be analyzed when building solutions to increase the sales of Pay-TV service providers The familiarity with free-to-use channels and the longtime presence of other providers in the market have big impacts on the company’s subcribers

Moreover, the income levels people is the main determinant of their demand for using the services In addition, the customers of Pay-TV service providers are usually in the segment of customerswith high income Consequently, the analysis and evaluation of customers’ psychology is a necessity to present opportunities and challenges when developing solutions for increasing the sales of Pay-TV services through meetingmximum satisfaction ofcustomers Therefore, evaluating customer

satisfaction toward the quality of Pay-TV services is the research direction that the author will approach when analyzing the customers Some studies on customer satisfaction toward the quality of television services are presented below:

In Abel Adamu's (2005) study, he found the factors affecting television viewers' satisfactionincluding relaxation, companionship, pass time habit, learning about things, educating oneself, and arousal factors, escape factor, credibility factor, overall satisfaction of ETV audiences, and alternative channels

Ngigi Sarah Wanjiru (2013) conducted a customer satisfaction assessment of the quality of Pay-TV services provided by Zuku Limited In the study, the author examined the factors affecting customer satisfaction when using Pay-TV services, including such as tangibility, reliability, empathy, assurance, and response

The research by Thai Thanh Ha and Pham Duc Ky (2007) was published in the "Journal of Television and Information Technology Period 1, February" In this study, the authors pointed out five components that constituted the satisfaction of customers with television services of TV channels in Vietnam including: news programmes; entertainment programmes; Sound and images; Quality of television signal; Prices oftelevision services

After studying the above researches, the author found that the research model

of Thai Thanh Ha and Pham Duc Ky (2007) was quite suitable for the study of the author because Thai Thanh Ha and Pham Duc Nghia (2007) were the only research

in Vietnam which considered and analyzed the impactof prices of television services on customer satisfaction Other research models were on traditional and free television services, so the impact of prices on customer satisfaction had not been evaluated On the other hand, the topic of the author's thesis was conduted with K+ TV channel, a Pay-TV channel,so the prices of services were a necessary factor to study when evaluating customer satisfaction toward the service quality

However, for the model to be consistent with the research topic, the author will have excluded the variable "news programme" from the research model since K+ had not developed a specialized news channel

Thus, based on the above reasons, the model forevaluating customer satisfaction toward the quality of Pay-TV services conduted in the author’s research was adapted and developedwith thefollowing components:

Figure 1.1: Model for evaluating customer satisfaction toward the quality of

Pay-TV services

Source: Proposed by the author

+ Entertainment programs are the ones which help relievestress for the audience after a hard-working day They include films, music, relaxation, and reality programs.Channels with better movies, music programs will attract more audience help increase the number of subscribers using those channels

+ The quality of television signal is also an important factor affecting the audience's access to the program Ifthe transmission signal isunstable, customers will feel uncomfortable when watching the programs As a result, the sales of services will decrease

+ For television services, sound and images are the main interactive factors with the viewers (Shem Well et al, 2002) A good and attractive television program depends a lot on the quality of images and sound that the program offers the viewers The quality of sound and images of television channels is often measured

through the following criteria: Strength and stability of signal quality, clarity and free noise of sound quality, clarity and truth of the images

+ The rates of TV servicesare the fees that customers pay monthly if they want

to use the services This factor is different from traditional TV channels since customers do not have any fees to use the services

This is quite animportant factor in the competition A source of goodswhich

is stable in quantity, types, andprices will have a positive impact and create favorable conditions for companies to propose solutions to increase the number of service subscribers through price as well as product strategies So,enterprises must pay great attention to the selection of suppliers However, this selection depends on many factors related to import and export Sometimes the prices are unstable and there is a shortage of goods and accessories

Substitutional products

All Pay-TV service providers must compete with alternative service industries, and the television services of their competitors are also interchangeable Alternative products can be TV services provided via the internet

Alternative products always limit the potential profitability of an industry in general and of companies in the industry by setting a maximum threshold for the price at which companies in the industry can make a profit The more attractive the price choice of alternative products is, the more likely the sector is profitable Alternative products not only limit profit margins in normal times, but also reduce the prosperity that the industry can achieve in the booming years of growth

1.2.2 Internal environment analysis

Human resources

Human resources are the determining factor for the survival of enterprises in general and pay-TVenterprises Without human resources, companies can not be

founded, operate, and develop Human resources also help businesses orient themselves and directly influence the labor productivity

To plan solutions to increase the sales of pay-TVservices, enterprises must maintain theircurrent human resources, perform human resources structure, and dispose human resources ineach broadcasting channel Only by payingattention tothe level of human resources team undertaking technical work andundertaking television broadcasting technology, the issue of income distribution, incentive policies, the ability to attract human resources can new administratorspromote the ability of every human resourcesin the company It gives administrators timelyincentive policies and encouragements

Human resources are the factor that creates the corporate culture It only takes shape when the norms, rules, and values become the consciousness, attitude, and habits of each person and become specific actions

Marketing strategy

+ Product strategy

Product is an important factor It is the constituent element of the marketing strategy businesses Product strategy determines the survival of pay-TV service providers.This is also the determining factor in the success or failure of an enterprise’smarketing strategy Pay-TV service providers must be aware of the life cycle rules of the products they provide to propose suitable solutions, strategies for increasing the sales volume

A good product strategy must satisfy customers’ needs as customersare the one who evaluate the product quality and decide whether that product is able to exist in the market Product strategies for pay-TV companies often focus on building exclusive channels of information, movies, sports, and news around the country (can be sourced from FB), and countries in the world (Europe, Asia, )

At the same time, the product strategy of pay-TV companies should also consider reducing the costsfor producing less attractive and costly programs to reduce the cost of television services Since then,pay-TV will become the strength

of enterprises in increasing the number of subscribers using the service

+ Price strategy

Price strategy is one of the marketing strategies of pay-TV service providers

It is also important in deciding the success or failure of the solutions to increase sales of companies

For pay-TV service providers, pricesare the primary concern of customersapart from other factors such as product quality Therefore, valuation is very important, requiring the valuation department to consider carefully before selling products which are appropriate with customers’ income However, enterprises must also offer a price that can cover the costs, bring satisfaction to customers, and compete with other competitors in the pay-TV market

+ Distribution strategy

In business, customersare the first priority Their needs are increasing; therefore, enterprises must create favorable conditions for customers to access their products quickly and conveniently Consequently, pay-TV providers have to build a proper distribution channel to approach their target customers - thereby engaging, attracting, and encouraging consumers to use their products and find out the advantages and disadvantages in planning solutions to increase service sales

+ Promotional strategy

Promotion is an important and effective tool in the marketing strategy of enterprises providing pay-TV services The purpose of promotion is to allow the supply and demand to meet to help sellers meet the needs of buyers better The current forms of promotion of pay-TV service providers include billboards, posters, newspapers, internet, outdoor activities, organizing events, using media channels to advertise, creating and running promotional information, special broadcasting information, investing funds in blockbuster projects, organizing roadshows, and so

on

Technical investment and development

Developing and investing in technology are important activities that help Pay-

TV service providers increase the number of subscribers using the service.Due to the general limitation of technology adoption in television service business thatenterprises are using bandwidth-consuming technology, so it is difficult to increase the channels and the transmission lines via satellites are affected by

weather and climate Therefore, enterprises which master the technology, invest in the research, development, and application of new technology successfully will be superior to their competitiors, thereby creating the strength in the work of increasing sales

Besides, the investment and development of technology also help Pay-TV enterprises improve their operations by improving the quality of management decisions An efficient technology system will collect coding, archives, and provides information to answer strategic questions As organizations are becoming more complex and dispersed over a wide area, the organization of a rapid and effective information system is an urgent demand to propose propersolutions to improve sales

Research and development activities

Research and development activities help enterprises develop new contents, new products as well as make full use of the television channels they provide This helpsenterprises keep their position in the television industry If the research and development of contents of an enterprise is weak, it can cause that enterprise to lag behind other enterprises

In addition, pay-TV companies are constantly striving to create a monopoly inbroadcasting contents and channels in order tocreate differences from their competitors as well as create good impressions on the audience Therefore, the research and development of exclusive contentsisa vital target of the service providers

Another addition thing that is new trend of subscribers Technology is growing

so fast, and that why we have to do more and more research on subscriber’s behaviors and base on that we will have suitable offer to them Internet, Smartphone are the things to deciding the trend, young people now use smartphone as the main devices to read, to search and update information They also use smartphone to watch their favourite programs anytime, anywhere

Content is most important thing that attractive subscribers, so we need to do a lot of research too, what kind of content that subscriber want to watch, how often they sharing? How about rating of broadcast show?

With the above requirements, the research and development of contents arenecessary activities at Pay-TV companies to improve their forecasting abilities as well as help them control the Pay-TV market most effectively

1.2.3 SWOT matrix analysis and strategy choice

The SWOT matrix is used to list all opportunities, threats, strengths, and weaknesses within an organization in an appropriate order and position Based on the relationship between the factors, analysts will select the suitable strategic solutions through the combination of Strengths - Opportunities (S_O), Strengths - Threats (S_T), Weaknesses - Threats (W_T), Weaknesses - Opportunities (W_O) The SWOT model usually offers four groups of basic strategiesand solutions to increase sales:

S_O: Strengths – Opportunities strategies: Basingon the strengths of the enterprise to exploit external opportunities

S_T: Strengths - Threats strategies: Basing on the strengths of the business to prevent or minimize external threats

W_O: Weaknesses - Opportunities strategies: Reducing internal weaknesses to take advantage of external opportunities

W_T: Weaknesses - Threats strategies: Reduce internal weaknesses to prevent

or minimize external threats

Business administrators never consider all possible solutions beneficial to their enterprises because there are countless feasible measures and countless ways to implement them Therefore, only the most attractive group of solutions is selected

to develop To create a SWOT matrix, the following eight steps are required:

1) Listingall the opportunities ouside the company

2) Listing the significant threats outsidethe company

3) Listing the key strengths inside the company

4) Listing the weaknesses inside the company

5) Combining internal strengths with external opportunities; recording the results of S_O strategies in the appropriate box

6) Combining internal weaknesses with external opportunities, recording the results of W_O strategies in the appropriate box

7) Combining internal strengths with external threats, recording the results of S_T strategies in the appropriate box

8) Combining internal weaknesses with external threats, recording the results

of W_T strategies in the appropriate box

Table 1.1: SWOT Matrix

SWOT Matrix

Opportunities (O)

Listing the opportunities inorders ofimportance O1:

CHAPTER 2: REALITY OF BUSINESS ENVIRONMENT AND QUALITY

OF PAY-TV SERVICES AT VIETNAM SATELLITE DIGITAL

TELEVISION 2.1 Introduction on Vietnam Satellite Digital Television

2.1.1 History of foundation and development

Vietnam Satellite Television (VSTV), established on 25 May, 2009, is a joint venture between Vietnam Television (VTV) and Canal +/Canal Overseas of France Until the end of 2016, the company has been operating for nearly 8 years Below is some important information about the company:

+ Tax code: 0103932332

+ Address: 15th Floor, Tower A Handi Resco Building, 521 Kim Ma Street, Ngoc Khanh Ward, Ba Dinh District, Hanoi

+ Legal representative: Le Chi Cong Position: General Director

+ Date of license: 25th May, 2009

+ Date of operation: 25thMay, 2009

+ Telephone number: 046272 6600

 Company's businessindustries:

Table 2.1: Main activities of the Company

No Industry name Code

1 Producing picture films, video films,and

television programs

J5911

3 Satellite telecommunications activities J61300 (Main)

5 Other professional, scientific, and technological

Source: Vietnam Satellite Digital Television Company (2016)

 Main television channels of K+

Currently K+ isproducing and broadcasting four major premium channels including K+1, K+NS, K+PC, K+PM:

K+1:is first television channel of K+ introduceded in March, 2010 This is a

comprehensive entertainment channel that broadcasts dramas, American blockbusters, Vietnamese cinema picture films, reality shows, and family programs Since 2016, with the re-arranging of broadcasting contents, K+1 has reduced the length of the sports programs and only broadcasted the best matches of the English Premier League (EPL) and La Liga

K+NS (Pace of Life): is the second K+channel and introduced in August,

2010 This channel has a relatively similar content orientation to K+1 but with additional family and fashion programs, reality shows, movies, series not broadcasted by K+ As this channel mainly serves women, K+NS has been broadcasting least sport contentsof K+ channels

K+PC (Style): is the third television channel of K+introduced on 22th

January, 2011 At first, the channel aimed atproviding mixed entertainment programs with many hit TV dramas However, since 2016, K+PC has been repositioned as a sports channel, broadcasting European football, tennis, volleyball matches;racing, golf, and sports magazines This is a channel with 100% of the duration for sports on K+

K+PM (For men): is the fourth channel of K+ introduced on 1st August, 2013

At first, this channel was oriented as the first television channel in Vietnam for men However, since 2016, K+PM has also been repositioned as a sports channel, broadcasting European football, tennis, volleyball matches;racing, golf, and sports magazines This is also a channel with 100% of the duration for sports on K+

 Exclusive contents broadcasted by K+

First of all, that is all the contents broadcasted on K+ channels are licensed and legally:

English Premier League EPL: exclusive early match 18h30 (19h30) and exciting matchs 21h (22h) on Saturday and 22h (23h) on Sunday, 2 games midweek and special round till the end of 2018-2019 season

Spanish League Cup La Liga: Exclusive to 2017-2018 season

ATP World Tour Series 2016-2018

Some golf tournaments, racing, volleyball, boxing, etc

Some Vietnamese cinema films produced by K+

K+ has been engaged in a partnership with RTL CBS Asia Entertainment Network, a joint venture of two of the world's famous entertainment media companies RTL Group of Luxembourg and CBS Studios International of the United States With this cooperation, the series of favourite TV dramas in the world, big and famous gameshows of the US, the UK, Australia, etc have been broadcasted and and will continue to be broadcasted originally and exclusively in Vietnam on K+ channels

In addition, on 11 May, 2015, K+ announced the cooperation with major film studios such as BHD (Vietnam) and CJ (Korea) to participate in producing and broadcasting Vietnamese cinema films This is the first time a Pay-TV service provider has invested in making movies for television The films which are invested

by K+ will be exclusively broascasted on K+ channels after being shown in cinemas At the same time, K+ also purchases some Vietnamese films from cinemas such as Galaxy, Skyline, and Chanh Phuong to broadcast The latest Vietnamese cinema films are broadcasted at 8 p.m on the last Friday of the month on K+ 1 and K+ 1 HD

In addition to providing digital satellite TV services, K+ also co-distribution K+ channels on VTVcab, Hanoicab (HCATV), MyTV, FPT, Viettel, and HTVC

 Organizational structure

The organizational structure of the company is divided into separate departments Each department will be in charge of a particular section as can be seen in the following diagram:

Source: collected by the author

The company's functions are to provide high quality digital TV services in Vietnam, broadcast programmes especial for sports and films inlcued both movies and series, provide Pay-TV channels and servies on customers’ request, and satisfy the audiovisual needs of customers With these functions, each department of the company is assigned the tasks as follows:

(1) General Director

Being a legal entity representative; not directly managing business, but being responsible for checking all business activities and report to the Board of Directors (2) Deputy General Director

Managing the business activities of the company on behalf of the General Director; being responsible for all business operations

Directly managing the work areas: business plan, finance and investment, labor organization, training, customer care, administration, office, direction, management, general activities at management areas and showrooms, relations with government agencies, partners, and so on