Memorandum
To: Brian L. Roberts, Chairman and CEO, Comcast Corporation
From: Ben Levy, Strategic Planning Committee
Subject: Trends Impacting Comcast Corporation
Executive Summary
In this report, I propose two strategic moves that will enable Comcast Corporation to adapt to certain emerging trends. The first trend to address is cutting the cord on cable. Many consumers are looking for other ways to view their content. This is why second-screen viewing is one of the emerging trends that Comcast needs to focus on and have development in.
Side-cars, such as Roku and Apple TV, are examples of devices that Comcast needs to get their content on. There is a high increasing demand for these products and the availability of Comcast content on these devices is pivotal for Comcast moving forward. Another example of a second-screen viewing device is the Xfinity app on the XBOX 360 platform. This is an extremely important industry to consider. The reason why this is so important is because 68% of who Jack Myers refers to as the, “Internet Pioneers,” use a gaming console everyday. Because of this Comcast must guarantee their content is on these devices. One problem Comcast has with these devices is that you can only access the Xfinity app on XBOX 360 if you have Xfinity Broadband Internet. This is a problem Comcast needs to address because many of the consumers of their content are college students and they may not have the same internet service in their college town as they do in their hometown. Comcast does not want to risk losing these consumers because there is also a lot of money to be made in advertising to this demographic. Another trend that Comcast needs to shift their interest to is social integration.
Teens more than ever are on their mobile devices and using apps, but particularly social media apps. Social media platforms, such as Twitter and Facebook, have a huge impact on the content they are watching. Many TV shows now attribute a particular hashtag to an episode of their show and this is important because it notifies the social media world of what you are watching and has the ability to start a movement towards that content. Consumers are more often than not either on a tablet, laptop, or smartphone while they are watching their content on TV. Comcast must use this piece of information to allow for more development in integrating apps and social media into their content.
Consumers want to be their own program directors, which means that they want to access their content when they want and not necessarily when the program is scheduled. In addition to this, consumers want to express their voice and, with the platform of social media, they want their voice to be heard. Comcast must invest time and effort into making improvements with the rise of these two tends. It is vital for them to adapt to these trends in order to remain relevant and a power in the media industry.
Industry Trends: Cord-Cutting
Comcast Corporation is a major media conglomerate that has been successful as a cable company for many years. It has been the dominant sector of the Comcast Corporation business for many years, but there needs to be change in the approach to cable TV as the consumer and the industry is changing now and fast. Cord cutting has become a major trend in the nation and is a trend that is only going to continue. In an article about cord-cutting, AdAge says, “About 1.08 million U.S pay-TV customers canceled service in favor of Netflix Inc. and other online options last year, according to a report, while the proportion of TV viewers watching full episodes free online declined.” This tells us that cord-cutting is something that is very real and something that Comcast needs to worry about.
Some companies have already started to think about providing their service through a different medium because they are aware of the cord-cutting trend. An example of a company doing this is HBO. Richard Pepler said, “HBO is exploring the possibility of offering HBO GO to those without pay TV as part of a broadband package. Under this scenario, users would be charged $50 a month for broadband and an additional $10 or $15 for HBO.” Plepler realizes that consumers are looking to cut the cord on cable and because of this he does not want to loose the consumers of the HBO content. This plays into the trend of people cutting the cord and the fact that second-screen viewing is very popular.
Online options are becoming essential for media companies to invest in because, in this day and age, it is all about the consumer. As Shelly Palmer said, “Anytime, Anyplace, Anywhere (Palmer 199).” This is an important concept moving forward with the development of second-screen viewing of content and the cord-cutting trend on cable. In a report, the Toronto-based Convergence Consulting Group goes on to say that the total number of cord-cutters will reach 4.7 million this year since 2008. This stat gives Comcast valuable information that people are looking to cut the cord on cable and are looking for other ways in which to consume their content. People are cord-cutting not only because they are tired of paying for all of the channels they are getting, but also because of the rise in second-screen viewing.
Side-Cars
In her article, Rebecca Greenfield says, “Statistics show that a growing number of people have forgone cable for other sources of media. So, yes, more people than before prefer streaming.” The thing with streaming is that there are multiple options to how consumers can stream their content. One way in which a consumer can access their content is through what Shelly Palmer, President of the National Academy of Television Arts & Sciences, refers to as a “side-car.” An example of one side-car is a Roku. Roku offers a service that is internet ready and links to your TV, which allows you to watch the content you are accessing from the internet on your TV monitor.
Darrell Etherington, in his Tech-Crunch article, said, “Roku just announced via its blog that it has sold 5 million of its streaming Internet media players since its launch back in 2008.” The article goes on to explain that 2.5 million of the sales of the Roku box have occurred since January of 2012. “The milestone is significant, since it indicates that there’s a very real and growing market out there for a device that essentially just acts as a service layer for bringing web-based content to televisions.” This is just an example of one side-car device that is making an impact in the industry. Apple TV is an example of the same technology and it has increased the sale of its products the past three quarters up to selling 2 million in total last quarter. Comcast needs to have their content available on these side-car technologies and on the internet. While Comcast customers can access their content on xfinity.comcast.net, the availability of their content on the side-car pieces of technology needs to increase because there is a rising demand in the industry for these devices. Especially with the acquisition of NBCUniversal, Comcast needs to make sure the content makes it to these devices. Another example of an internet ready device that consumers use to access their content is gaming consoles.
Gaming Consoles
One gaming console that does a great job of allowing content accessibility is the XBOX 360. They provide a platform that allows access to things such as: Netflix, Hulu, HBO GO, ESPN, and even Xfinity. Jack Myers, in his book, Hooked Up, talks about a generation of consumers that he refers to as the “Internet Pioneers.” He defines the Internet Pioneers as the “generation that spans only a 5-year period, encompassing those who were born between 1991-1995…They comprise more than 95 percent of current college students (Myers 5).” It is his belief that they are the most important demographic to target because they are the first generation of consumers who grew up with the internet and have become “dependent on the Internet for managing almost every aspect of their lives (Myers 5).”
In a study performed by Jack Myers, he found that 68 percent of the Internet Pioneers engage in game console activities and it accounts for 54 minutes of their time daily. Shelly Palmer in his book also speaks on the rise and development of the game console by saying of gaming consoles “that it is customized and heavily skewed toward males 13-32 years of age – a demographic that is solid gold for an extraordinarily large segment of brand and lifestyle advertisers like quick-serve restaurants, soft drinks, cars, athletic equipment, electronics and many more (Palmer 50).”
With the knowledge of this information, Comcast must solidify their content in this space. Not only will Comcast improve the viewing and distribution of their content, but also the advertising in this market is something that can succeed at a tremendous level. While Xfinity is available as an app on the XBOX 360 platform, the consumer can only access the app on their XBOX 360 if they have an XBOX Live Gold Membership AND Xfinity Broadband Internet.
Comcast should not limit their consumers because as Shelly Palmer said, “Contact is King (Palmer 184)!” Palmer talks about how the directed viewer is a consumer who “takes a proactive role in their television watching experience, they plan what they are going to watch and they plan when they are going to watch it (Palmer 128).” It is clear that this type of consumer no longer exists as many people are cutting the cord on cable and still have the ability to watch the content that they want. Comcast must continue to do this and the way that will happen is improving the availability of their content. While the Internet Pioneers are a vital consumer demographic, they are also primarily college students. This is important to understand because consumers of Comcast Xfinity in their hometown may not have Comcast Xfinity in their college town. With this you are losing a device in which you can contact your consumers. Another improvement Comcast can make on this front is the use of the Comcast Spotlight technology.
Advertising on the Second-Screen
Comcast has the opportunity to take a huge advantage in the advertising industry with the trend of second-screen viewing. According to the Benton Foundation, Comcast is now the nation’s second largest advertiser. The article said, “The New York research firm Kantar Media says Comcast uncorked $1.7 billion in ads on consumers in 2012. Proctor & Gamble, whose brands include Tampax, Pantene, Pampers, and Duracell, spent $2.8 billion.” Clearly Comcast has the power to reach their consumers, but there is more opportunity for Comcast to advertise.
Comcast should look into using some of their advertising dollars on the XBOX 360 platform with the integration of their Comcast Spotlight technology. As Shelly Palmer said, the age cohort of those on the XBOX 360 platforms is “solid gold” and with the spotlight technology they will be able to more personal target their ads. The Comcast Spotlight website says, “From mom-and-pop stores around the corner to the leading brands in the country, our focus is on helping our clients become more effective and efficient with their advertising spend…Comcast Spotlight’s more than 3,000 employees are true local media consultants.” The multiscreen service that is offered on side-cars and game consoles allows Comcast to have their content distributed all over the country. Because of this why don’t they become better at advertising to their consumers all over the country? If Comcast uses their spotlight technology on these second-screen devices they will be able to advertise to their consumers on a personal level. If Comcast can improve how they advertise, especially on the gaming consoles, they have an opportunity to make a lot of money in advertising dollars and stretch their advertisement across the country. Jack Myers said, “Advertising is shifting its focus from mass media to the individual; it is interactive and needs to be engaging (Myers 179).” Another trend that Comcast must focus on in order to advance and remain relevant in the media industry is the development of social media and integration with content, particularly mobile.
Industry Trend: Social Media
Jack Myers said, “News and information comes at Internet Pioneers 24/7; they’re constantly engaged in online and mobile social interaction…They have grown up with information at their fingertips (Myers 7).” For Comcast, this is an important concept to understand. People now more than ever are mobile and because of this there are extremely social with their friends and even people they don’t know. The impact of social media sites and apps, such as Twitter, Facebook, YouTube, and Tumblr, cannot be overlooked. CBS understands the impact social media has on the consumers of Hawaii Five-O. The network produced a commercial that gave viewers the ability to tweet and vote on which ending they wanted in the season finale of their show.
This is a trend that is strong to continue. Consumers want to know that they have a voice and they want that voice to be heard. The way they can be heard is through some of the interactive social media sites. The graph below shows the percentage of Internet Pioneers that use social media applications. We can see particularly Facebook and Twitter are to the Internet Pioneers.
For a demographic that is so important to the future of the media industry, Comcast must recognize these numbers and take aim and realize the consumers are what drives your content and business forward. As Jack Myers said, referring to the Internet Pioneers, “Their attitudes, hopes, fears, and actions are setting the agenda for the future (Myers 13).” This trend is only rising and people want to be involved with the show.
Shelly Palmer talks about a concept that he refers to as the “Gatekeepers”. He defines the gatekeepers as the people who control the content that we watch and how it is given to the consumers. He makes the argument that the gatekeeper is lost in today’s industry because of not only second-screen viewing, but also because of the impact of social interaction in shows. He says, “We are going to see great strides made in interactive, behaviorally driven and collaboratively rich media gatekeepers in the very near future. They may do a much better job of reflecting audience needs, wants and desires than their human counterparts could ever imagine (Palmer 94).”
This quote reflects on the rise of Big Data. Comcast needs to use this valuable information to better distribute their content and make sure it is the content that the consumer wants. Through Facebook groups and Twitter hashtags, Comcast has the ability to see what their consumers’ want, which is vital for the content to remain successful. With Big Data, Comcast can match the wants, desires and needs of their consumers and the way they find this Big Data is through social media platforms. Stephen Rappaport writes “that social media is a reliable means to explore the culture, views and lifestyles that influence consumer behavior. The social media arena is a means to profile a target audience to develop marketing and advertising strategies.” This is significant because Comcast has the ability to know their consumers inside and out. As was mentioned earlier, since Comcast is the nation’s second largest advertiser they can target their consumers not only by a demographic, but also at a personal level through social media.
Social Interaction
The impact of social interaction of consumers with their content is not something Comcast can take for granted as its can be seen in multiple examples. One example of this is with the “Why So Serious?” campaign that came out before the release of The Dark Knight. This campaign was an attempt by 42 Entertainment, the company that started this campaign, to get the consumers excited for the release of The Dark Knight and have them interact with the content and participate in what essentially became an alternate reality game. Digital Buzz Blog writes, “The campaign won the Cannes 2009 Cyber Grand Prix in the viral category with over 10 million players participating globally.” People really liked the idea of this and rallied around it. Alex Billington, a participant of the game, said, “It is allowing fans to become even more passionate and it’s empowering them – pretty much as actual citizens of an entire working fake city.” This validates the fact that consumers want to be heard and the ability for them to interact with the content they are consuming is not only important to them, but also fun. It gives them another group to be a part of and a community they can interact with. Comcast needs to see the importance of this not only for their television shows, but also for movies.
With the acquisition of NBCUniversal, Universal Studios is now a Comcast company. This is an excellent opportunity for Comcast to venture into something where they can get fans more involved with the content. With the release of movies like Fast & Furious 6, Despicable Me 2, and others, the chances to get consumers involved with the content is out there. Plus, Comcast does not need to create an alternative reality campaign like 42 Entertainment did with the “Why So Serious?” campaign. The power of the hashtag on social media has never been stronger and an example of it can be seen with the #OWS. The “Occupy Wall Street” movement has been extremely successful and it is all linked through social media, in this case Twitter. This hashtag sparked a movement across the country and allowed people to be a part of a rebellion and feel empowered across the United States and 85 nations. Comcast needs to take the power of the hashtag to their TV shows and their film division. Jack Myers says, “Those who focus on the size of the crowd fail to understand the power of crowd sourcing and social media to spread and sustain a message and movement (Myers 74).” Comcast has the resources and the ability to spark this movement and it will help rally consumers around particular content and empower them. This feeling of belonging to a group and being able to have an interaction with the content is a trend that will only continue to rise in the behavior of the consumers.
Mobile Availability
One of the reasons that social media is becoming such a phenomenon is because of how mobile it is and the development of apps. Apps are driving the industry forward, but particularly the social apps. The thing with this concept is that many consumers are accessing these social media sites on their mobile devices while watching the content they are consuming. The graph on the right is a study showing that 77% of viewers use another device while watching their content. 
One of the reasons is that many people are tweeting hashtags that go along with the TV shows they are watching and interacting with their Facebook groups. This is a reason why Comcast needs to incorporate hashtags into their TV content. It will stimulate interest in the consumers and get people talking about a particular show, which will bring in more viewers and interest.
Francesco Venturini, broadcast lead from Accenture’s Media & Entertainment Industry Group, said, “Consumers can’t just watch TV anymore. The rise in multitasking while watching TV suggests that scheduled programming, also known as Linear TV, may be losing its appeal for sophisticated users, presenting both challenges and opportunities for broadcasters and content providers.” Comcast must learn this and recognize that because of the rise in multitasking that there is an opportunity to integrate the apps consumers are using with the content they are watching. Comcast can take this content integration to another level though.
What if you were watching a show and you saw a piece of clothing that you were interested in buying? How would you know where to get it or what it was? Palmer uses the example of watching an episode of “Friends” and when Jennifer Aniston walks in wearing a sweater that you like you can click on the sweater and find all of the information that you need on the particular sweater. What if there was an app integrated into your programming that would help you learn where to find it, how expensive it is, have an online option to buy it and even have directions for how to get to the store. It is important that Comcast realize the opportunity this new technology allows and the advantage of the money and profits that can be earned from it. Comcast, as the nation’s second largest advertiser, could use this technology to target consumers and it will stress the importance of product placement in their content.
In conclusion, there are major changes that are happening in the media industry that Comcast must focus and pay attention to. The rise in second-screen viewing poses a direct problem to Comcast as a cable company. With that being said, their content and the content they have acquired from NBCUniversal need to make an impact on second-screen viewing devices because of people cutting the cord on cable. Consumers only have an interest in accessing their content when they want it. As Shelly Palmer said, “Anytime, Anyplace, Anywhere.” If Comcast can improve distributing their content on different screens it will improve their advertisement and they can reach across a greater audience. Another trend impacting the industry is the rise of social media and mobile apps. Consumers want the programmers and gatekeepers to have their voice be heard across the industry. With social media, this is now happening and consumers have a say in the content they are watching. This is important to continue because integration of consumers with their content is a trend that will rise and become very powerful. Comcast needs to improve the social of integration of social media and other apps into their content because it will drive the consumer interest in the content and will also allow Comcast to take advantage of their ability as the nations second largest advertisers.
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