SOLUTION:

There are two types of Vertical Integration available to X; Forward Integration, Backward Integration
and Both

1. Forward Integration: Forward Integration is the case where a company expands its control to
processes further down its Supply Chain. For Company X, Forward Integration would mean
seizing control of the manufacture of its own Set Top Boxes, Television and Mobile Devices
for customer viewing
2. Backwards Integration: Backward Integration is the case where a company moves its control
further up its Supply Chain. For Company X, Backward Integration would mean taking
control of its content sources and produce its own content for broadcasting.

FORWARD INTEGRATION:

With Forward Integration, Company X would manufacture its own Viewing Devices (TV, Mobile, STBs
or even other new devices)

MERITS DEMERITS
Customisation according to Customer Increased Costs: Investment into
preferences: As Company X controls the Manufacturing of Company X’s viewing devices
manufacture of the devices, it can offer may outweigh the Returns generated
customisation options and thus introduce
variety while targeting customer segments
Creation of Ecosystem: With Company X Investment into Marketing and Advertising for
producing its own Viewing devices, it can growing customer base of the Company X’s
enable them to create an Ecosystem model for viewing devices is needed
increased customer base and revenue
generation
New product line could be launched:
Opportunities for Company X to launch new
product lines

BACKWARD INTEGRATION

With Backward Integration, Company X would create its own content

MERITS
Exclusive Content: Company X can attract larger
customer base by producing and streaming its
own Exclusive Content
Be a supplier for other Broadcasters: Company
X could sell some of its original content to other
Broadcasters and generate revenue
DEMERITS
Conflict with existing Broadcasters: Company
X’s exclusive content may compete with other
Broadcasters and Partners and may affect the
relationship
Significant Investments: Company X will need to
invest significant capital into production and
broadcasting of exclusive content