Case for junior batch 2009 prof.

Pherwani

Case-an MNC enters market in India with learning’s from

initial failures

MTV-A multinational enters India-after IMR

Background
Mistakes MNCs make in entering a developing country is looking
at the size of the middle class and multiplying by the number of
boxes per person.
Local culture and consumption habits have to be factored into
reckoning. Culture needs even deeper reflection.
MTV
 MTV Networks is division of

VIACOM Inc., Viacom building, Times square, Manhattan,

New York
Bill Roedy is the MTV International chief
Indian subsidiary is headed by Alex kuruvilla [from an air
force family, backpacked for a year in Europe and US, joined
JWT, then Kellogg and on to MTV]
 Viacom operates 72 international channels [Nickelodeon, VH1 etc] in 321 million
homes in EC, L.A., CANADA, USA, AUSTRALIA, ASIA] gets $1bn. from
outside US. Only 10% staff is American.
 MUSIC TELEVISION-export an established global brand driven by creativity
and a handful of big events [Video Music awards, annually] that cross boundaries.
People in the developing world decide what they want to consume [not
necessarily Britney Spears or Big Mac down their throats!]
 ECONOMY OF SCALE-of global media giants dwindles once you decide to
build dozens of local channels & each with local program and staff.

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MTV Indian version is full of humor, lots of street culture and is colorful, self-effacing.
It has helped Cyrus Broacha a homegrown star. Head quarters at Parel, with Grey's
Advertising. & Leo Burnett nearby. Looks like a lift of from NY office.
MTV, china is about family values, nurturing and a lot of love songs
MTV Indonesia is even a call to prayer 5 times a day and local pop culture, with a
sprinkling of western staid stuff.
MTV Brazil-is very sexy and full of joyful L.A. music and fun.
MTV in USA-is about original contemporary music. Appeals to youth and sooths
troubled country’s minds after 9/11/2001, includes family togetherness, fun, and
laughter-all duly sanitized
MTV-Europe-is more open, no holds barred, specially UK version and Italian has very
stylish, elegant content food shows [there is lots of food here]
MTV, JAPAN-is very techie, lots of wireless product.
It’s done better in spreading its brand & program over the globe, than its rivals.

Market entry into India

 It came to India in 1991, before any of its competitors arrived [CNN, or Rupert
Murdoch’s Star TV or Sony-SET
Indian media scene
Freewheeling cable TV industry has too many channels-over 100-chasing too few
advertising money [$0.6 billion market] customer pays $3 per month! So networks are
left with pennies. Cable viewing grows 20% per year, while advertising revenues 10%
per year.
Most families own just one TV, they watch TV together. Competition is from sports,
entertainment, music, and above all films. Top rated is STAR TV-its Sass Bhi Kathy Bahu
thi-generates ratings dwarfing anything else, even the world’s strongest. In India, you
need enormous patience.
India
1, 1 billion people-expanding middle class, economy growth +8% per year when
monsoons are good. Half the people live on few hundred dollars per year plus those on
BMWs and cells, wearing Armani stuff. CNN broke thru the Indian market by their
superb coverage of Iraq war in 1991-that opened the way for all the rest. Star was the
catalyst-it was total sensation. Cable boom followed. Door Darshan took decades to sign
up 8 m viewers, private channels took it to 16m and to 50 million in 5 years, with some
25,000-cable operators, [after massive consolidation from 50,000 earlier].

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Consumer market credit cards driven buying spree of mobile phones, scooters,
motorcycles, CD players, and of course color TVs. It is a robust democracy, and a
freedom of expression [unlike tight government controls in China as far as media is
concerned]. Market is enormous, Press is boisterous, freewheeling, music is vibrant, and
film industry is thriving on loads of music formats. All this spells one word-GROWTH.
Bombay is the entertainment capital of India-chaotic, noisy, smelly, present and future
live side by side. You can almost see money being made. Most families own one TV, some
own more than one. And Poona is almost its satellite town, with similar media
consumption habits with its teeming youthful population. It has 5 FM channels and all
respectable print media exists here. So all communication formats have to share the
advertising revenues.
How did it enter India?
 They uniquely figured out how to build business in India-operating in an
unfamiliar territory-it didn’t start with blasting Rap, Heavy Metal or Rock at
Indian youth, nor –the Osborne’s-they had to tailor their operations to fit the
market-its not just programming-its about refashioning products made in US to
local tastes [Kuruvilla has done it before while at Kellogg’s-Indian breakfast is
normally hot, fresh, savory, & cheap-common man eats a mixture of above-while
concept of cold milk with crispy cornflakes was non-existent-people here boil
milk & hot milk makes corn flakes soggy-Kellogg’s solved it by having wheat &
rice flakes hot cereals with strawberry & honey flavors tailored for local palates-
its about product adaptation.
 TV market is smaller than in US, much tougher, less mature, and more
competitive. Cable in India is cash business-& nasty, lots of underworld, under
reporting of actual subscribers-no, clear way to head count-rampant piracy-cable
cutting-rivals even resort to setting fire to control rooms.
 Entry strategy- a low risk one-MTV 1st licensed it to Star, who sold ads, dealt
with cable Walla’s & shared revenue with MTV-it backfired! News Corp bought
Star in 1993, MTV decided to go it alone-Murdoch pinched its staffers and
started [V] channel with a logo similar to MTV-an ugly divorce-it brought blocks
of time from DD in fringe hours to maintain a presence in India. Market being
small it presented English speaking VJs and western music content-no changes-
that took them nowhere till 1996, when they opened an office in Bombay &
launched their own 24 hour channel-with VJs speaking Hinglish-relaying global
pop music +predominance of Bollywood content form Hindi movies-a cultural
force that unites India-the only sustainable way is to drive down deep into the
culture-this drove back [V] and MTV became India’s top rated music channel-
launched a nation-wide VJ hunt-winner late Ms. Nafisa Joseph, a former miss
India- it tapped into young people’s passion for cricket, fashion and music-
devised MTV BAKRA-similar to “Candid Camera”-with host Cyrus Broacha
playing gags on unsuspecting people-even on celebrities, at their request-their
content is fully tailored to India’s youth [he interviewed Bill gates when he
wanted to communicate to Young Indians-tricked Rahul Dravid into believing
that he was getting a marriage proposal during a film shoot for a Pepsi Ad.

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 Being # 1 isn’t big enough in this fragmented market-it had to compete with
regional language channels-it may buy into that market too. It needs to
command premium prices for advertisements. A prime time 30-second slot sells
for $ 175-250 [Star gets $ 20,000 for its-kyon ki Sas Bhi.-.whose turning point
came with Kaun banega karorepati –based on the even currently running hit
show-“who wants to be a millionaire”].& Sony has found a winner in jassi
jaisa.. Popularity of Sony & Star is difficult to cut into. Channel surfing and
zapping option is limited when whole families sit together to watch a TV show.
Media buyers like Mindshare don’t need MTV to reach them-MTV is a niche
channel! Mass players can deliver eyeballs.
 MTV invited advertisers in June 2004 to help develop new programs-launched
Roadies inspired by US Road Rules that follows 4 boys and 3 girls on motor
cycles across India [2-wheelers selling like crazy in India] - launched AXE with
Levers with the theme of “long lasting freshness” staged the world’s longest
lasting dance party [55hours] in a New Delhi suburb and duly certified by
Guinness Book Of World Records. Lycra sponsored a MTV style awards show to
launch its brand in India. A Web watch expressly for Microsoft for its MSN online
network was launched.
 MTV is now into older audiences [15-34 years] for a new program designed- to
hold them longer. Media consumption model in India is snacking & they intend
to migrate to more appointment viewing every week-imports don’t do the job-
THE MTV Grind was too risqué, the Osborne flopped-most popular genre is
soap operas- a new kitni mast hai zindagi-a 30-episode youth-oriented serial is
coming from Balaji Telefilms-India’s leading TV studio- a departure for a
company producing and owns its own shows. It auditioned throughout India in
100 cities. 7000 people showed up for a casting call at Delhi. Hoping to build
anticipation for the new soap and MTV will produce a six-part reality show series
about the search for the stars of KITNI.
 Driving ad revenues is the challenge-it is trying to collect subscriber fees for the
network, joining Sony-backed ONE ALLIANCE-the ability to collect goes up
significantly, when you go as a bouquet of channels. Sony gets paid only for 5m
out of its 38-40m subscribers @ RS.55/ or $1,25 per head! Which must be divided
amongst its 10 channels.-cable operators refuse to pay or undercount their base-
programmers don’t want to turn off their signals lest they lose viewer and hurt
their ability to sell ads.-5 years ago not a penny was forthcoming?
 MTV is selling branded fragrances, stylish apparel, CDs,
And pay by a co-branded credit card with CITI Group, a big partnership with Tata
Indicom for co-branded mobile phones, plus exports to UK, Middle East Caribbean
to reach Indian Diaspora. A star VJ earns $70,000 has made the channel profitable,
on a small base revenues are $25m per year [a blip in $27bn. revenues of Viacom
Inc.] MTV’s 5 largest markets are Britain, Germany, Italy, Japan, and Brazil. Rest of
Asia has been a tough market to crack. MTV India isn’t looking at today but a
potential future 25m homes in India, who watch MTV-there’s room to grow into
100m TV homes and more to come of India’s 1,100 m population and under 25years’
group is 50%. Future looks bright. Cable operators keep on signing new and new

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 subscribers. Ad is growing double-digit DTH business has been launched. MTV is
adding additional channels and M&A of others too.
To take advantage of its scale and creativity it is going back to centralization-by
selling ads to MNCs by global & regional teams- a one –stop shop for the world.
Motorola made a 3-year contract for $75m to buy commercials on MTV, EC, L.A,
Asia, new programmers have come out with a dozen new concepts for global
consumption. A new MTV show ek do teen is under production + launch of VH1
channel in India, plus expanding MTV into Pakistan & Bangladesh. Aim is to drive
MTV ratings to the next level.
MTV, the perpetual adolescent

Twenty-five iconic years and yet MTV decided to let its 25th anniversary quietly roll by, without much of a
hullabaloo. Not because the revolutionary hip music channel had turned modest with age but because it
would rather not alienate its target audience of tweens and teenagers by coming across as an old fogey!
MTV music group chief Van Toffler admitted as much by saying that theirs wasn’t a “reflective
organization.” He elaborated by admitting that “most of the channel’s viewers weren’t even alive when it
launched, and for them, a reminder of its age might be a turnoff.”

When it was launched in 1981, MTV was beamed into a mere two million homes in the US. 25 years later,
400 million youngsters in over 167 countries, and in 22 languages view it. Way back in the ‘80s, MTV,
along with CNN revolutionized cable TV, breaking the monopoly of the ruling behemoths NBC, ABC and
CBS. Along the way it also completely turned around the way the music industry did its business by
establishing the ground rule that pop stars were as much about visual appeal as vocal chords.

MTV’s influence on music has been nothing less than colossal. According to Dr. Susan Ohmer, Assistant
Professor of American Studies, pop stars started thinking of music in visual terms while bands focused on
creating an image for the group. Singers began spending more time at the gym and more money on plastic
surgeons and those who would taste success were those who learnt early on that how they looked was as
important,if not more than how they sang.

When Michael Jackson’s ‘Thriller’ was premiered for the first time on MTV, it did not just launch his
career as the most successful pop star ever, but it also introduced a whole new genre in the music industry –
the blockbuster music video. Dr. Ohmer says that the music video “had a huge impact on popular culture...”
It not only made the masses aware of their favorite star, but also of choreographers, cinematographers and
others related to the making of the video.

Some phenomenal new talent got their first break on MTV through the music videos aired on the channel.
Director Spike Jonze for instance was literally “birthed” by MTV. His videos -- Weezer's Buddy Holly, the

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 Beastie Boys' Sabotage, the Breeders' Cannonball, and Fat boy Slim's Weapon of Choice -- were
weird and contemporary and a great hit with the MTV generation. Jonze would go on to make
‘Being John Malkovich’ and ‘Adaptation’. John Landis who went on to direct ‘An American
Werewolf in London ‘and’ Beverly Hills Cop III directed “Thriller”. An industry insider says
MTV was a “great way for future great filmmakers to cut their teeth.” For example Michel
Gondry, who created the White Stripes’ ‘Fell in Love with a Girl’, directed ‘Eternal Sunshine of
the Spotless Mind.’
When it was launched in 1981, MTV had no role models to follow. It had no clue about what
would ultimately click with its audience, but an uncanny gut instinct ensured it had its finger on
the pulse of the youth. Michael Jackson, Madonna and Prince became regulars on MTV with their
videos being aired in every 40-minute slot. In fact, as a US newsweekly says, had it not been for MTV,
Madonna might not have achieved the iconic status she has acquired over the past two decades. “Despite a
rather limited vocal range, she managed in a succession of three-minute music videos to cast herself as one
of the most enduring sexual icons of the last century”, said the newsweekly. MTV helped Madonna shove
her way into our collective consciousness.

MTV, the perpetual adolescent

MTV’s success with its target audience has been nothing short of phenomenal. Which other channel could
dream of having its viewers labeled as a distinct social entity by their choice of TV channel! The MTV
Generation became a term used to describe teenagers and young adults who were overwhelmingly
influenced by fashion trends, music and the slang language being shown on MTV music videos. In fact,
MTV dramatized the generation gap between Twixters (late teens, early 20s) and their parents, holding out
the forbidden fruit of defiance, sex (“Papa don’t preach”) and rebellion before a transfixed, captive gullible
audience. In his book ‘TV A-Go-Go’, Jake Rusten recalls music video director Russ Foster saying “I didn’t
have cable in the mid-1980s, but I knew when Madonna had a new video out. Ever few months the Latin
girls in my neighborhood would suddenly get a whole new look, and that meant Madonna was back on
MTV”.
An ex-MTV generation reminisces, “I remember seeing so many artists for the first time. I remember the
"Lucky Star" (Madonna) video and saying, ‘I like the way this girl dances.’ And then I saw "Runaway"
(Bon Jovi) and said, ‘Man, I like the way this guy WALKS!’ I was only 17 but it's interesting that the ones
that made the biggest impression on me are the ones who have had the most staying power. “ Kalisah’s post
on blogs.usatoday.com.

After a decade of an endless stream of strung together music videos, MTV decided to branch out. In 1992 it
launched ‘The Real World” and with it music videos slowly started getting sidelined, until it ended up
being run only on its graveyard shift, from 4 am to 9 am. Music that had been the mainstay of MTV,
became almost incidental to its popularity with the youth. Completely unscripted, “The Real World” said it
was “the true story of seven strangers, picked to live in a house, work together and have their lives taped, to
find out what happens when people stop being polite and start getting real.” The show became a rage in the
US and is currently in its 17 th season. When one of the members of the reality show revealed he was gay
and died of AIDS, the impact it had on millions of viewers was nothing short of a mini social revolution.
Brian Graden, then a young gay man and now an MTV programming executive says, “I had never seen
someone like myself reflected back to me...it really changed things for a whole generation of gay people”.
The show did more to promote tolerance towards homosexuals than hundreds of public service
announcements.

Some feel MTV’s days of glory are now behind it. There is too much clutter in the airwaves, for the viewer
to remain committed to a single channel. Gone are those path-breaking milestones that created pop history;
of a “Thriller” being aired or a Madonna bursting out of a wedding cake, dressed in a wedding gown and
writhing on the floor, simulating sex, while singing “Like a Virgin”; that moment turned Madonna into a
superstar and put the Video Music Awards firmly into the entertainment industry’s map. And when on
April 19, 1994, a 17 year old asked President Bill Clinton on MTV Live, “Mr. President, the world’s dying
to know. Is it boxer or briefs?” MTV cheekiness and irreverence had finally entered mainstream America.

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MTV, the perpetual adolescent

MTV is now setting its eyes on user-generated music videos, as the next big thing on the entertainment
landscape. It is launching a TV channel that will feature user generated video clips and messages,
becoming the first media giant to adapt the social networking craze to traditional broadcasting. Reuters says
that consumers will be able to choose which music videos are played on the channel, upload their own
clips, send on-screen messages using mobile phones and communicate with each other with self-created
avatars -graphical representations of participants - resembling Japanese animation. "MTV is challenging
the status quo in TV programming and transferring control directly to its audience," said Angel Gambino,
Vice president of commercial strategy and digital media for MTV Networks UK & Ireland. MTV is
confident of its success, because they are “more inside the heads of our audience than anybody else”.

It has also ventured into the Internet by tying up with Microsoft Corp to launch a music download service,
“Urge”. Contradicting those who feel the channel’s days are limited, executives claim it has the world in its
grasp, for the “Internet is no longer about text. It’s about video”. And MTV produces and owns more
videos than any other entertainment giant. It is trying to lure Netizens who might disdain watching TV, by
launching a new interactive channel called “Flux”. Flux will let users blog from cell phones and add home
made videos to the mix.

MTV might have launched itself with the slogan, “You’ll never look at music the same way again!” and
graduated to the iconic “I want my MTV” slogan than reverberated across all households in the mid-‘80s,
but to sustain itself in the next decade, it will have to win over a completely new MTV generation, who are
happier surfing the Net, than flipping channels on TV. Until this generation swears by “MTV Enjoy”! the
channel cannot rest on its laurels

OPEN BOOK EXAMINATION MARKS 60

[YOU ARE ALLOWED TO BRING MTV CASE, PLUS
ANALYSIS]

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International marketing - assignment- [Prof. Pherwani]

MTV the global media giant operating in over 70 countries

made a market entry into a developing country like India
having unique characteristics. It has a very fragmented medley
of media where advertising revenues are thinly spread over
print media, FM radio and over 100 TV channels-besides the
usual billboards, POS material, direct mailers. On top of this
India is, culturally a very diverse country.

Please study the factual data and carry out the following:
1. Give a resume summary of the case
2. Explain the market entry mode chosen by MTV
3. From the basic research data, what inferences can you draw?
4. Make a current market plan and recommend your strategy for
the next 4 years, identifying the revenue drivers.

Marks will be assigned on quality rather than volume of

managerial comments.