As many operators work to expand their bandwidth to accommodate more high-definition content, the new capacity is opening up opportunities for MSOs to increase their Hispanic channel lineups.
“Having more capacity has strengthened our position,” said William Ortiz, senior director of corporate multicultural marketing at Time Warner Cable. “It is giving us an opportunity to really look at our programming offerings and see how far we can go in the market.”
Ortiz pointed out that Time Warner Cable launched an El Paquetazo Hispanic-targeted offering in Los Angeles that includes more than 50 Spanish-language networks and over 100 English-language services, as well as video-on-demand programming in Spanish and English for $34.95.
Hispanic and ethnic programming is particularly important for Time Warner Cable. With systems in New York, Texas and Southern California, the three largest Hispanic markets, as well as a number of other markets with rapidly growing Hispanic populations, Time Warner Cable currently operates in DMAs where about 47% of all Hispanics, 30% of all African-Americans and 42% of all Asian-Americans live.
“With 47% of all Hispanics living in our footprint, we see a lot of opportunity,” Ortiz said. “It is clear to me and our senior management that our future hinges on the multicultural segment.”
Similar sentiments are being echoed at other operators, including Cox Communications and Comcast.
Over the last year, Comcast, which operates in markets that are home to over 4 million Hispanics, has also expanded the number of corporate programming deals with Hispanic networks to 80 from 70. Some of the company's local systems are planning to use the additional bandwidth gained from the transition to digital TV on Feb. 17, 2009, or the deployment of switched digital video to add ethnic networks.
For example, Comcast's Houston system is planning to add 18 Hispanic-targeted channels. Chicago and Boston are also eyeing additional Hispanic channels.
“[Direct-broadcast satellite] has been focusing on the Hispanic market longer than cable but as more bandwidth becomes available, cable is now in a very good position, not only with DBS but also with the telcos,” said Mauro Panzera, senior director of multicultural marketing at Comcast. “Our ability to offer VOD, [low-cost] international calling plans and the triple play has made us very competitive.”
Charter Communications is also working to strengthen its competitive position. In the first quarter of 2009, the MSO is planning to relaunch and rebrand its Hispanic video offering. Details of the package and channel lineup aren't yet available, but the company has been conducting research and is hiring an agency to advise it on marketing, branding and lineups.
Meanwhile, satellite, which still dominates the Hispanic video markets, continues to add networks and heavily promote its packages.
Over the last year, market-leader Dish Network has added two channels and has launched new promotions to attract more Hispanic subscribers in the run-up to the digital transition. It is currently marketing a $9.99 Welcome Pack that offers 20 English and Spanish-language networks and is designed to bring in new customers.
DirecTV has also been busy, adding eight new channels, said John de Armas, vice president of the satellite provider's WorldDirect platform.
Its least expensive package, DirecTV Más Básico, which costs only $19.99 for the first year, now has 65 channels, including 45 Spanish-language channels, local broadcasters and secondary audio programming feeds.
“All the new channels were bought on an exclusive basis,” which has helped boost subscriber counts, said de Armas. “DirecTV has consistently outperformed all of our competitors for many consecutive quarters in a big way.”
Time Warner Cable's Ortiz also highlights the importance of acquiring exclusive programming. “If you are going after programming that everyone else has you are not differentiating yourself,” Ortiz said. “We want to be the programmer of choice. Simply offering the same thing isn't a winning strategy.”
Among the MSOs, there are signs that the expanded Hispanic offerings are beginning to pay off in increased Hispanic customers and in the sale of bundled products.
Tony Maldonado, vice president of acquisition and marketing sciences at Cox, said the MSO has always focused on developing a strong Hispanic video product as a way of attracting new subscribers and then selling bundled services.
“Having Spanish language tonnage in Paquete Latino [Cox's Hispanic offering] allows us to generate a relationship that we would otherwise not get and then allows us to use that relationship to leverage the bundle,” Maldonado said.
As a result of that strategy, Cox continues to see healthy growth in the number of subscribers to the Paquete Latino video offering, which grew by about 5% between June 2007 and June 2008.
More important, Maldonado said, Cox saw even bigger growth in its phone product, which increased 10% among Hispanics during the same period and its high-speed Internet services, which climbed 12%. Overall, about 65% of their Hispanic customers now take two or more products.
Comcast's Panzera also highlighted the value of the bundle. “On a percentage basis, more Hispanics take three products than the general market.”
A particularly attractive feature of the bundle is low-cost international calling plans, which have now been deployed by Cox, Time Warner, Charter, Comcast and other cable operators.
Last year, Time Warner introduced an International One Price calling plan that offers 1,000 free minutes to over 100 countries, including many in Latin America, for $19.95 on top of the cost of the phone service for anyone who takes two products.
“We use it not just to increase phone penetration but for acquisition of new subscribers,” Ortiz said.
Panzera said Comcast introduced two calling plans this year: a Mexico 100 plan, which is priced at $4.95 for 100 free minutes, and Latin America 100, which offers 100 free minutes to the region for $9.95.
Low-cost calling plans and bundles of mobile phone services are likely to also play an important roll in the Hispanic strategies of the major telcos, which are becoming increasingly important players in the Hispanic multichannel business.
AT&T already offers Hispanic content for mobile phones and continues to roll out a large package of Hispanic-targeted programming wherever it launches its U-verse service.
As telcos gain market share and increase the overall penetration of their video services, they are also heavily promoting their Hispanic tiers.
Verizon Communications, for example, is currently running promotions in California, Texas, Florida, Massachusetts and Rhode Island that offer new FiOS TV customers its entry-level Spanish-Language Package free for 12 months — a savings of $140 — if they order by Nov. 7.
All of this is opening up new opportunities for programmers. According to the list of Hispanic networks (see page 20A), there are now at least 88 available in the United States, up from 78 last year.
And, as MSOs and telcos offer more Spanish-language content, the number of Spanish-language on-demand products has also increased.
A big disappointment for all operators remains high-definition fare. Major Spanish-language programmers have yet to convert to HD, though operators hope they will make the transition in time for next year's qualifying matches for the 2010 FIFA World Cup soccer tournament.
“When it becomes available, we want to be a leader in HD programming for Hispanics, the same way we are a leader in the overall HD business,” said DirecTV's de Armas.
For complete coverage of the Sixth Annual Hispanic Television Summit, click here.
