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Viacom Hatches Gay Network
Penelope Patsuris, Forbes.com, 01.14.02, 11:39 AM ET
NEW YORK - Ellen, you've come a long way, baby.
When the title character of the ABC sitcom Ellen came out a few years ago, it made front-page news and drove some of the show's advertisers to pull their commercials. Now the Viacom-owned networks MTV and Showtime are developing a gay- and lesbian-themed cable network, hoping to tap into an audience that was, until very recently, taboo with American marketers.
So if a single show couldn't make it, what makes these programming executives think an entire network devoted to this niche audience will fly? \"The economics of this are totally different,\" says Wilkofsky Gruen Associates media economist Arthur Gruen. \"Network shows need ratings of 9 or 10, whereas you don't need anywhere near that kind of audience reach to make a cable network work.\" Most cable channels draw ratings of less than a 1.
Viacom (nyse: VIA.B - news - people) says the gay channel will be supported by a mix of advertising and subscription fees, which may run from $5 to $7 a month. \"Niche audiences are definitely willing to pay for programming that they can't get elsewhere,\" says Gruen. No launch date for the gay network has been scheduled, but Interpublic Group chief of business development Barry Linsky expects there will be an advertising market for it when it does.
\"The public is more accepting of alternative lifestyles,\" he says, \"so marketers are more comfortable reaching out to these markets.\" The NBC (nyse: GE - news - people) hit Will and Grace, for instance, hasn't been lacking for advertisers and has, in fact, become a key draw for the network's Thursday night \"must-see TV\" lineup.
Advertising in alternative lifestyle outlets, which, until this point, has primarily been in magazines like Out and The Advocate, is generally considered another way to reach people that are also part of the mass-market audience, says Linsky. \"But niche advertising is a way for the marketer to demonstrate to the audience that it is attuned to that audience's particular needs.\"
And it's a market well worth catering to. Median income for the households of gay couples is $65,000, compared with a 1999 U.S. median income of $40,800, according to a study by the OpusComm Group in conjunction with Syracuse University's Newhouse School of Public Communications and GSociety. Gay Americans generally have 10% more disposable income than the average American, according to Prime Access, and the population's total spending power is estimated to be $450 billion by Gay Market Express.com. That's less than the country's African-American market, but more than the Hispanic or Asian markets.
This new marketing opportunity presents itself at a time when advertisers have been pulling back on mass-market ad spending and, instead, experimenting by trying to reach more focused targets. Viacom has an excellent track record of launching other successful niche cable networks, like VH1 and Nickelodeon, but this market is much smaller--by orders of magnitude--than the ones for music or children's programming.
Indeed, there are only an estimated 15 million or so gay Americans, so this channel will have a substantially smaller pool of viewers to draw from. And there is, of course, very little gay programming around to recycle as reruns. Showtime's gay-themed series Queer as Folk is actually one of the network's highest-rated programs, but it's unclear how many other gay-oriented shows Viacom has in its library.
So Viacom faces the challenge of building a never-before-cultivated viewership from scratch while keeping programming costs down. Can it work? Stay tuned.
http://www.forbes.com/2002/01/14/0114gay.htmlPenelope Patsuris, Forbes.com, 01.14.02, 11:39 AM ET
NEW YORK - Ellen, you've come a long way, baby.
When the title character of the ABC sitcom Ellen came out a few years ago, it made front-page news and drove some of the show's advertisers to pull their commercials. Now the Viacom-owned networks MTV and Showtime are developing a gay- and lesbian-themed cable network, hoping to tap into an audience that was, until very recently, taboo with American marketers.
So if a single show couldn't make it, what makes these programming executives think an entire network devoted to this niche audience will fly? \"The economics of this are totally different,\" says Wilkofsky Gruen Associates media economist Arthur Gruen. \"Network shows need ratings of 9 or 10, whereas you don't need anywhere near that kind of audience reach to make a cable network work.\" Most cable channels draw ratings of less than a 1.
Viacom (nyse: VIA.B - news - people) says the gay channel will be supported by a mix of advertising and subscription fees, which may run from $5 to $7 a month. \"Niche audiences are definitely willing to pay for programming that they can't get elsewhere,\" says Gruen. No launch date for the gay network has been scheduled, but Interpublic Group chief of business development Barry Linsky expects there will be an advertising market for it when it does.
\"The public is more accepting of alternative lifestyles,\" he says, \"so marketers are more comfortable reaching out to these markets.\" The NBC (nyse: GE - news - people) hit Will and Grace, for instance, hasn't been lacking for advertisers and has, in fact, become a key draw for the network's Thursday night \"must-see TV\" lineup.
Advertising in alternative lifestyle outlets, which, until this point, has primarily been in magazines like Out and The Advocate, is generally considered another way to reach people that are also part of the mass-market audience, says Linsky. \"But niche advertising is a way for the marketer to demonstrate to the audience that it is attuned to that audience's particular needs.\"
And it's a market well worth catering to. Median income for the households of gay couples is $65,000, compared with a 1999 U.S. median income of $40,800, according to a study by the OpusComm Group in conjunction with Syracuse University's Newhouse School of Public Communications and GSociety. Gay Americans generally have 10% more disposable income than the average American, according to Prime Access, and the population's total spending power is estimated to be $450 billion by Gay Market Express.com. That's less than the country's African-American market, but more than the Hispanic or Asian markets.
This new marketing opportunity presents itself at a time when advertisers have been pulling back on mass-market ad spending and, instead, experimenting by trying to reach more focused targets. Viacom has an excellent track record of launching other successful niche cable networks, like VH1 and Nickelodeon, but this market is much smaller--by orders of magnitude--than the ones for music or children's programming.
Indeed, there are only an estimated 15 million or so gay Americans, so this channel will have a substantially smaller pool of viewers to draw from. And there is, of course, very little gay programming around to recycle as reruns. Showtime's gay-themed series Queer as Folk is actually one of the network's highest-rated programs, but it's unclear how many other gay-oriented shows Viacom has in its library.
So Viacom faces the challenge of building a never-before-cultivated viewership from scratch while keeping programming costs down. Can it work? Stay tuned.
Pulled this off another board...so what do you guys think will be the fate of this network?
