Diverse Communities Emerge As Key Battlegrounds
In some important respects, ethnic groups are leading the charge into digital media. The most obvious example is Asian-Americans. This group has the highest penetration for newer technologies, with 57% having broadband access. But African-Americans and Hispanics are also embracing digital media with penetration rates for HDTVs, digital video recorders, and digital cable that are comparable or higher than the general market.
The demographic and economic clout of these groups continues to grow. According to Horowitz Associates, in 2006, non-Hispanic whites made up about 42% of the population of urban markets. The remaining 58% consisted of Hispanics (26%), African-Americans (23%), Asian-Americans (7%) and other groups (2%).
Those numbers illustrate why ethnic communities are increasingly becoming a key battleground for multichannel services, with cable operators beefing up their ethnic programming library to better compete with satellite and telcos
Comcast was the the first major operator to target Hispanics with low-cost programming packages. The company has continued to augment its channel lineup and its video-on-demand offerings over the last year, adding new networks, expanding its VOD content to 125 hours and launching discounted triple-play bundles this fall, Comcast senior director of multicultural marketing Mauro Panzera said.
“Since we increased the Spanish-language VOD offering from 100 hours to 125 hours, the average Spanish-language VOD orders have increased from 120,000 to around 150,000 [per month],” he said.
Growing immigration is also boosting demand for non-English language programming beyond Hispanic audiences. Panzera noted that Comcast recently launched a subscription VOD package of Bollywood movies, and started offering a wide variety of fare from Europe and Asia in select markets. For example, Russian, Portuguese and South Asian channels are now available in Boston, while Polish channels are offered on the Comcast system in Chicago, Panzera said.
But targeting ethnic audiences poses a number of difficult challenges for operators and programmers, given the diverse cultural backgrounds, language use and immigration status. There are also important differences within ethnic groups when it comes to digital media usage.
Unlike Asian-Americans, Hispanics and African-Americans tend to lower penetration for PC, broadband Internet and some other technologies. But those numbers mask important differences within each group.
African-Americans, for example, have high penetration levels for HDTV and DVRs, ratios that are very close to whites. Moreover, they have higher penetration rates for digital cable, according to the Knowledge Network’s annual The Home Technology Monitor.
“Operators who don’t focus on urban ethnic groups are missing out on a major customer base for their newer services,” said Howard Horowitz, president of Horowitz Associates, the Larchmont, N.Y.-based company that tracks urban ethnic audiences.
Comcast’s Panzera added that many Hispanics live in multigenerational families with very diverse interests. The household may include an older person that prefers Spanish-language programming, as well as younger people that view lots of English-language programming. In between, there is a large bilingual group. “We have to offer packages that appeal to all those groups,” Panzera said.
The Hispanic audience is also much younger than the general population. Hispanic youths are big users of cell phones and are extremely active online, according to mun2 director of digital media Jose Marquez.
Citing Comscore Media Metrix, Marquez said that there are about 16.5 million Hispanics online. Younger Hispanics aged 15 to 24 make up 27% of the group’s online population, a much higher proportion than the general market, where the same younger audience comprises only 18% of the online population.
Data for younger African-Americans suggests that they are also early-adopters. “Our research suggests that younger Hispanics and African-Americans are leading the charge in terms of taking advantage of opportunities to access content on newer platforms,” said Colleen Fahey-Russ, executive vice president of research at MTV Networks. At the same time, they tend to watch more TV than the general market, she added.
The growing pool of tech-savvy younger Hispanics is pushing programmers to beef up online offerings for Hispanic viewers.
Peter Blacker, senior vice president of digital media at Telemundo noted that “over the last eight months, online video consumption by Hispanics has really skyrocketed. We’re seeing incredible growth in the number of Hispanics having access to high-speed Internet services. In some markets like Los Angeles broadband penetration for young Hispanics outpaces the general market.”
To capitalize on that trend, Telemundo and mun2 have been beefing up their Internet presence. Mun2 recently relaunched its Web site, and last May, Telemundo merged its online operations with Yahoo! en Español to create telemundo.yahoo.com.
Since then, Telemundo has been beefing up its video, launching some content online before it bows on TV. “Online video creates a circle of engagement that drives people to TV, where we can drive them back to online,” Blacker said.
Asian-Americans offer an even more complex demographic profile.
Given their cultural and linguistic diversity, many of the 75 to 80 Asian-targeted networks available in the U.S. are premium channels targeting a specific language group such as Mandarin Chinese or Hindi.
While Comcast’s International Networks operation offers a number of premium networks targeted to specific language groups, it also has the country’s only national Asian-targeted network, AZN.
The network’s programming is in English, because 85% of the group is fluent in the language, according to AZN senior vice president of ad sales Bill Georges. It has also focused on content — such as Korean dramas and anime, which have wide appeal among Asians — in an attempt to build a brand among the entire Asian-American community.
“They are early adopters of technology,” Georges said, and new media is increasingly part of their plans. AZN has launched a VOD product and it is also building up its Web site, which got nearly 1 million page views in August, up from over 500,000 in January.
“We’ve been experimenting with the video players and have learned that they are willing to watch full shows online,” he said, adding that the average viewing experience is just shy of an hour. “In 2007, online will be a major focus for us.”
Focusing on ethnic groups can also pay off for general market programmers. Nickelodeon, for example, has had big hits with Dora the Explorer and Go, Diego, Go!, which feature Hispanic characters.
In the premium sector, Starz was the first premium network to launch an African-American-targeted network and, to build on that success, the company’s new film studio hopes to work closely with black directors and talent.
“Our penetration in African-American homes is higher than that of the general market,” said Robert Clasen, chairman and CEO of Starz LLC.