Question

1. Using Porter's competitive forces model analyze the NBA's market situation. How does the use of Akamai help the NBA compete in this market? OR

Answer 1

It's a subjective question. I have put together my thoughts below. Please use this as a backbone and add your thoughts to this, and create your own answer.

Before we get into this question, let's recall the Porter's five forces model. A player in an industry is subjected to five forces as mentioned below:

1. Threat of new entrants
2. Threat of substitutes
3. Bargaining power of customers
4. Bargaining power of suppliers
5. Competitive rivalry

Let's now apply this competitive forces model to NBA's case.

1. Threat of new entrants
   1. The basketball leagues is a popular market place and it's relatively easier for other leagues to snatch the customers. There is enough attraction for the new entrants and entry barriers are not really high.
   2. Tier B Basket ball leagues (that are not so popular currently) can take away the customers and viewership.
   3. National leagues of basketball can enter into the industry and eat into customers and viewers base. Example can be: Major League Baseball.
   4. The threat of entry is not only restricted to the leagues in the game of basketball. Leagues and clubs from some other games and sports can also enter into this market place. Simple examples can be: National Hockey League.
2. Threat of substitutes: There are many substitutes available to the customers of NBA.com
   1. Websites of other major professional sports leagues and clubs of USA. If the quality of the content is better and easily accessible, customers will shift there in due course of time.
   2. Youtube.com: Nearly every content is available there
   3. Other streaming websites where amaterur content is uploaded: They don't force customers into advertisements. Download is faster and quality is great.
3. Bargaining power of customers
   1. The customers enjoy very high bargaining power as they have many substitutes available.
   2. Substitutes range from lost cost item like watching TV, listening to radio to costly options like watching the matches live.
   3. Cost of switching is also relatively lower.
   4. NBA has an advantageous position due to additional content, commentaries, data, statistics, scores of other teams and analysis.
4. Bargaining power of suppliers
   1. Suppliers are many and the base is fragmented
   2. By definition, they will have weaker bargaining power
   3. NBA kind of enjoys a monopoly and hence had been able to charge TV channels a huge fee for its matches.
5. Competitive rivalry
   1. Restricted
   2. NBA has a kind of monopoly
   3. Popularity index of NBA is very high in comparison to that for its competitors
   4. Copyrights with NBA

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How does the use of Akamai help the NBA compete in this market?

Akamai did wonders to the prospects of NBA.com

1. Because of Akamai, customers across the globe can have access to all the virtual contents of NBA and that also pretty fast.
2. Thus NBA can focus on a special niche market
3. Further NBA has got copyrights. This has created significant entry barriers for others.
4. Great speed while loading and streaming
5. Probability of piracy is low as the content is available free
6. Able to provide region specific information
7. Able to provide information on all aspects of NBA
8. Ensures a customer gets what he / she wants

Akamai has indeed played a great role in helping NBA develop a strong place for itself in the industry, fend away competitors and emerge as a leader in the marketplace.