Mass to Niche Media

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Mass to Niche Media
Communications Studies 197C Aug. 18, 2004
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Basic Drivers Toward New Equilibrium

• Technology
• New and More Immediate Production and
  Distribution Channels
• Drive Toward Unit Sales and New Technology
• Deregulation
• New Competitors Permitted in Markets
• Global Reach and Expansion
• Drive Toward Syndication of Content Concepts
• Appetite of Capital Markets
• Pushing Expansion Beyond Logicat times

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Explosion of Consumer Options

• Result?
• Propagation of New Distribution Channels, but not
  more time nor advertiser pie increased
  fragmentation of viewing audience and advertising
  dollars
• Consumer product dollars (esp. DVDs) pressuring
  competitive windows, increasing the cost and risk
  of products
• Windows for low-end product to slide into
  diversified distribution channels
• Threat to lock of traditional distribution
  companies/banks/portfolios

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Consumer Good to Divisible, Editable Asset
Nintendo home video game - 1981
Blockbuster expansion starts - 1987
AOL for Windows launched - 1993
Blockbuster founded - 1985
Pay per view starts - 1985
??????
CD launched - 1983
DVD launched - 1997
Wireless media?
Napster - 1999
Broadband
PVRs
1980s
1990s
2000s
2010s
2020s
Digital
Mergers
Consumer Products
Channel Explosions
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Adoption in the Mass Market

• Tipping Point
• How does word of mouth really work?
• How do you influence large numbers of people?
• How do you influence the Right people?
• Depends on Influencers, Connectors, Experts

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Economies of Scale Advertising vs.
subscription model
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Magazine Market

• General Circulation vs. Niche
• Subscription vs. Advertising
• Initially lose money
• Newsletters now can be Internet-distribution

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Top 25 U.S. Magazines Paid Circulation
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Top 25 U.S. Magazines -- Advertising
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Who is Advertising in These Magazines?
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Who are They Really?
Altria Kraft Philip Morris
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Top 10 and the Niche Segments

• What do the 10 powerhouses have in common?
• And what does everyone else read?
• (See articles)

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Costs of Distribution

• Printing
• Distribution physical, relationships
• DSI
• Cost of customer acquisition
• Slotting fees

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Changes in Advertising Marketplace
Source Universal McCann

• Bigger pie?
• Smaller pieces?

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Example Buying Women

• Magazines
• Cable
• Lifetime
• Oxygen
• Internet

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Example Buying Kids

• Disney for Disney cross-promotion, movies,
  music
• ToonDisney Playhouse Disney brand extensions
• Nickelodeon movie sourcing
• Discovery Kids NBC
• WB Kids Cartoon Network boys
• Noggin

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Migrating Males
Christopher Reynolds. American Demographics. Feb
2004.
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Where Have All the Young Men Gone?

• Disappearance of Young Males from Network TV
• Computer games
• 2003 daily video game use up 22M18-34
• G4 Media G4techTV Cable
• Sports
• ESPN up slightly

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Advertisers Concerned?
Adweek, Dec. 1, 2003
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Long Term Impact?
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Example Scandal Sheets going the other way
Louella Parsons, Hearst, 400 papers

• Long history on radio and newspaper
• National Enquirer and Star, US
• Entertainment Tonight
• People
• Now syndicated on most major media

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Example Big Ticket News

• Network News Big 3 expensive infrastructure
• Merging of news companies in long discussion
• Local News Sweeps week sensationalism low
  cost
• AP/ UPI/ Reuters
• CNN loss leader for Turner Broadcasting
• CSPAN / Bloomberg niche markets
• MSNBC Internet Bridge between MSN NBC

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Niche News

• Fox News sold along with Mens Channels
• Initial loss leader
• Niche news
• G4 gaming news
• E!
• SportsCenter
• Internet further niches
• The Onion
• Slate
• zero cost distribution

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Music -- Cable

• MTV initial loss-leader by Viacom
• International launches
• Major influencer of music purchase in US
• Minimal cost of programming videos provided
• Shifted to reality and series
• VH1
• Fuse
• Much Music
• DMX

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Top Cable Networks by Ratings
Source Kagan Research, LLC
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Top Cable Networks by Revenue
Source Kagan Research, LLC
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Reaching the US TV Consumer
Source Nielsen 2002 weekly cume
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Fragmented Competition Number of US Cable
Satellite Channels
1997 Launch of Digital Cable
1994 Launch of Digital Satellite
Source Screen Digest
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US Channels Available Doesnt Materially Impact
14-19 Channels Watched
Source Nielsen, National People Meter Sample
8/01 TVB
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Network Concentrated Landscape
Turner
ABC/ESPN
MTV Networks
Discovery
Fox
NBC
Scripps
10 10
19 13
8 6 4

• Animal Planet
• En Español
• Learning
• Discovery

• excluding regional)
• Fox Movie
• FX
• Fox News
• Fox Sports
• Nat Geo

• CNBC
• CNBC world
• MSNBC
• Bravo

• Food
• HGTV
• DIY
• Fine Living

• CNN Fin
• CNN Int
• Cartoon
• TBS
• TNN
• TNT
• CNN
• TCM

• Disney
• ESPN
• Toon Disney
• SoapNet

• VH1
• Comedy
• MTV
• Nick
• TV Land
• Spike
• Noggin

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Defensive Strategies in Niche Markets

• Niche adjacent niches pre-empt competition
• Buyers Power aggregate to match up
• E.g. Fox Mens channels
• Radio Clear Channel surrounding the formats

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Music -- Radio

• Traditional Radio limited stations -- Closed
  loop own format families
• XM Sirius (NFL NHL on Siriussports expanse)

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Local AND National

• Central programming of niche Bakersfield from
  New York
• New Local Media
• Computerization of local content bringing info
  back

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Search Engines

• Mass Market with Customization Niche
• Yahoo ability to customize ads
• Communities message boards portal stickiness