Crossing Borders
Growing online usage by ethnic groups makes them an important target for bundled services
by George Winslow -- Multichannel News, 12/30/2007 7:00:00 PM
In recent years, rapidly growing ethnic groups, particularly Hispanics, have become a central battle ground between cable and satellite. But increasingly companies are seeing their rapid embrace of new technology as an opportunity to sell a wide array of other services, creating bundling opportunities for operators and more advertising dollars for programmers
“We should be called the over-indexers, not Hispanics,” said Mauro Panzera, Comcast senior director of multicultural marketing. “Who is buying the most HDTVs? The most cell phones? Who is online for large amounts of time? Who over-indexes on social community sites like My Space and Face Book?”
The answer, Hispanics, also illustrates how the largest ethnic groups are embracing video delivery on a variety of platforms.
Comcast, for example, has been aggressively adding on-demand content to its ethnic packages and seeing rapid growth in the U.S. of its video-on-demand offerings. Comcast’s Hispanic VOD offering, which has about 140 hours of content, now gets over 1.5 million orders a month, Panzer said. Movies, sports and kids fare are the most popular on-demand Spanish-language programming.
Comcast has also launched two subscription VOD products for Asians: “Bollywood Hits on Demand” in September 2006 and a Filipino-targeted offering in the summer of 2007.
“Subscribers to Bollywood Hits on Demand have the highest number of VOD orders per set-top, with over 60 million VOD orders,” Panzera said.
Peter Blacker, senior vice president of digital media at Telemundo notes that Telemundo is now getting 9 million video streams a month, up from 5 million at this year’s upfront, thanks to an aggressive program to expand the amount of video content they make available online.
A major study of media use by Hispanics that was commissioned by Telemundo and Yahoo! also found that they were heavy users of video across all platforms.
While Hispanics tend to have lower PC penetration rates in their homes and some access the Web through friends or Internet cafes, their Conexión Cultural study found that 80% of all Hispanics access the Internet via a broadband connection, and that younger Hispanics aged 18 to 24 spend 4.8 hours a day online versus 4.3 hours watching TV.
In addition, Hispanics had higher penetration rates for cell phones, digital video recorders, digital cameras, video game consoles and large screen TV than the general population, Blacker said.
“We found that there was a lot of interest in continuing the television experience online and that has been critical to our decision to expand our online presence,” Blacker said. “We found that about half of the Mexican-Americans who speak Spanish wanted to view television shows online.”
“Hispanics over-index in a number of advanced media” added David Sternberg, executive vice president of emerging networks at Fox Cable Networks and general manager of the Fox Soccer Channel and Fox Sports en Español. “That makes them a very enticing demo for networks and operators selling cable, mobile, wireless or broadband Internet services,”
That is one reason why operators will continue to expand their lineup of ethnic channels in 2008.
Another is switched digital video, said Luis Torres-Bohl, president of Castalia Communications, which distributes a number of Hispanic networks in the U.S. and has launched a Spanish-language Web portal tied to its Mexicanal channel.
“Switched digital has already had an impact,” he said. “All the major operators are looking at it, and 2008 it will be even more widespread.”
Those bulked up packages will also make it easier for operators to sell other products,” Torres-Bohl said. “Since Cablevision launched switched video and dramatically expanded its ethnic programming, it has been very successful selling those new subscribers over packages,” he added.
Comcast is seeing similar results. Comcast first rolled out Hispanic-targeted triple-play packages in the fall of 2006. A year later, Panzera notes that “in some markets about 10% of our triple-play customers are Hispanics.”
Asians are even more avid consumers of newer media. “They have high educational levels and high incomes levels and that tends to translate into the fact that they have historically been early adopters of technology,” said Teresa Wiedel, AZN Television executive director of marketing and communications.
Wiedel noted that AZN’s unique visitors to its Web site rose by 70% in 2007 and users of their media player are embracing longer-form content. The average connect time for their media player is 23.5 minutes.
That growth reflects the fact that Asians have particularly higher penetration rates for Internet usage. Howard Horowitz, president of Horowitz Associates, said that about 85% of all English-fluent urban dwelling Asians have an Internet connection, versus 62% of urban dwellers. About three-quarters (77%) of all English-speaking Asians in urban areas also have a high-speed connection versus 50% of urban residents and 39% of those Asians have an HDTV set.
But this group has lower levels of cable — 54% for English-fluent Asians versus 61% for all urban residents — and the take-up for digital cable for English-fluent Asians (29%) also slightly lags behind the rate for total urban penetration (30%), indicating that operators need to do a much better job of targeting Asians with better programs and packages, Horowitz said.
The same can be said for African-Americans and Hispanics. David Tice, vice president of client services for Knowledge Networks/SRI notes that penetration rates for cable TV among both groups continued to decline in 2007, while satellite TV has been gaining market share.
But he stresses that Hispanics and African-Americans are seeing rapid growth in their take-up of HDTV and broadband, with broadband penetration rates for Hispanics jumping from 8% to 28% between 2002 and 2007. “Hispanics and African-Americans have really been driving growth for the last two years,” Tice said.
Ethnic groups are also seeing rapid growth in their spending power, making them even more important for advertisers and programmers. The Selig Center for Economic Growth estimates that Hispanics buying power hit $860 billion in 2007 — about the same size as the Mexican economy — and should top $1.2 trillion by 2012, a 46.3% rise.
African-Americans’ buying power is projected to hit $1.1 trillion in 2012, up 34% from 845 billion in 2007 and Asians, who have the highest income level of any racial group, spent $459 billion in 2007, a figure that is projected to increase by 45.9% to $670 billion in 2012.
Those numbers and the changes in the way Spanish-language networks are rated by Nielsen will continue to produce rapid growth in the advertising on Spanish language networks, argued Sternberg. Nielsen Media Research now has one panel to cover English-language and Spanish-language networks. In the past, there were separate panels.
“It will help close the gap between what we get and what our audience share says we should get,” Sternberg said.
The unification of ratings for English and Spanish-language networks raises a large issue of measurement for cross-platform video use, researchers note.
As consumers access more content on different platforms, companies would like to come up with a more unified system to track that behavior.
Nielsen is working in that direction and in the fall began offering what it calls a fusion of its TV panel and the panels that track usage on the Internet, said Nielsen Co. chief technology officer Bob Luff.
There are also ongoing efforts to expand measurement of other media, including on-demand usage, mobile media and media outside the home.
And Nielsen is setting up a system that would track what viewers of specific ads actually purchased. “That would really close the loop,” Luff said. “If we know what people watched and then what they bought, advertisers would have a clear idea of their ROI [return on investment].”
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