Disruptive Innovations in the Entertainment Industry

Topics: Disruptive technology, Research, Innovation Pages: 186 (54990 words) Published: August 15, 2013



Petrus Jacobus Pieterse

Thesis presented in partial fulfilment of the requirements for the degree Master of Science in Engineering Management at the University of Stellenbosch

Supervisor: Dr. André van der Merwe Faculty of Engineering Department of Industrial Engineering

March 2012

Stellenbosch University http://scholar.sun.ac.za

By submitting this thesis electronically, I declare that the entirety of the work contained therein is my own, original work, that I am the owner of the copyright thereof (unless to the extent explicitly otherwise stated) and that I have not previously in its entirety or in part submitted it for obtaining any qualification.


Copyright © 201 Stellenbosch University All rights reserved


Stellenbosch University http://scholar.sun.ac.za

―The goal of university research is the creation, dissemination, and preservation of knowledge.‖ – Steven E. Hyman, Provost of Harvard University 2001–2011 The Department of Trade and Industry recently identified the media and entertainment industry as a strategic sector in South Africa because of its growing contribution to economic development through both local and foreign investments, export opportunities and job creation potential, as well as the significant spill-over possibilities in industries like tourism and retail usually associated with emergent industries. However, deficient research and development has been identified as one of the notable constraints to ensuring sustainability and competitiveness of local cultural industries, in which annual expenditure currently amounts to R100 billion. This emergent nature of South Africa’s cultural industries, their strategic importance as part of South Africa’s growth path as dictated by the government and the current dearth of academic literature concerning entertainment technology innovations instigated a threetiered research objective: First, to determine whether this industry is a legitimate subject for engineering management study by examining its technology-foundation; second, to examine the impact which technological change has historically had on the industry, building on theories by Meza (2007) and Burgelman and Grove (2007); and thirdly, to provide an analysis of the global trend of contention and convergence between content creators and technology companies. Integrating these objectives into one deliverable, the ultimate aim of this study is to establish a synthesised knowledge base on the media and entertainment industry for the Department of Industrial Engineering with specific emphasis on the intersection between technological innovation and business model innovation. A hybrid multiple-case study research approach is utilised to answer eight research questions which contribute to this research goal. Four notable insights gained from answering these are (1) entertainment companies have historically reacted to technological change in a very particular manner, reducible to a four-phase process: invention, ascension, contention and sensation – referring to the observation that incumbent organisations’ response to disruptive innovations is usually one of trepidation, a reaction which leads to legal battles and subsequent contention between technology and media content companies yet simultaneously providing opportunity for inter- and intra-industry convergence and for new business models to be developed; (2) cross-boundary disruptors are those organisations which have the capability of influencing not only inter-industry organisations but also how business is conducted in entirely-different industries; (3) industry effects account for more than 60% of profit variance in the Entertainment and Lodging economic sector, justifying a study of entertainment companies from an industry perspective; and (4) because of digitalisation,...
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