Comcast Is Making a Big Play for Gamers
As video games become the entertainment of choice among young males with a lot of disposable income, cable giant Comcast is launching a $150-million effort in April to create a new cable channel devoted to games.
The launch occurs amid a small resurgence of networks being planned for introduction in 2002 to fill the expanding digital cable universe, which can support hundreds of channels. So companies like Comcast are zeroing in on niche audiences.
Nick Wild, a 28-year-old with a six-figure salary, is exactly the person Comcast has in mind as it launches G4, which will provide news, features and hints on how to play specific titles on its video and computer game channel 24 hours a day.
When Wild isn’t spending hours playing games in his Hollywood Hills home, the self-described “media junkie” listens to music, goes to concerts, eats out and sees movies.
In other words, Wild is in the vanguard of one of the most desirable demographics for today’s advertisers--young, hip males with plenty of disposable income and the desire to spend it on fun.
Even as advertising dollars dwindle amid the recession, Comcast is convinced that companies will pay a premium to reach this media-savvy audience. Purveyors of sneakers, soda, clothing, cars, music and movies are eager to to tap into this prized group.
Comcast, whose shares closed Friday up 14 cents at $37.13 on Nasdaq, is convinced the key is video games.
Long thought to be the bastion of nerds, the games with their near-cinematic virtual worlds have won a broad following ranging from housewives to rock stars. An estimated 145 million people play computer and video games in the United States.
Though Americans exercised fiscal restraint this holiday season, spending on games has grown aggressively, from $7.9 billion in 2000 to well over $9 billion last year.
The question for Comcast, however, is whether gamers would rather play than watch television. Games are interactive. TV, on the other hand, is passive.
“A lot of gamers are more interested in playing than viewing,” said Billy Pidgeon, a game analyst with Jupiter Media Metrix in New York. “It seems like a waste of valuable playing time. A lot of companies have tried to cash in on this crowd. But if you look at the number of game publications, both online and offline, that have folded over the past year, it’s sad.”
The list of recent casualties include magazines Games Business, Next-Generation and online sites Daily Radar, Game Center and Happy Puppy.
Charles Hirschhorn, chief executive of G4 in Santa Monica and former president of Walt Disney divisions Walt Disney Television and Walt Disney Television Animation, says TV is different. “That’s why people watch golf shows and cooking shows,” Hirschhorn said.
The G4 management team has an abundance of TV experience. Debra Green, G4’s chief operating officer, was senior vice president of E Networks from 1991 to 1999. Dale Hopkins, senior vice president of affiliate and advertising sales, also came from E Networks and helped launch CNBC. Vinnie Longobardo, G4’s head of programming, spent 17 years at MTV.
To round out its team with game industry expertise, G4 brought in Tom Russo, former editor of Next-Generation, one of the most well-respected magazines among hard-core gamers before it folded last year. Part of the problem for Next-Generation was its low monthly circulation--just over 120,000.
Hirschhorn said G4 can be successful, even with low viewership, if the network manages to tap into the prized demographic of 18- to 34-year-old males.
“We can succeed with below-average ratings,” he said. “It’s the quality of the audience, not the size.”
Two forces work in G4’s favor. The first is Comcast, which has guaranteed that 7 million homes will receive the channel through basic cable subscriptions. That’s crucial, as many new channels fail because they cannot persuade enough cable systems to carry them. Without viewership, advertising dwindles.
For G4, Comcast is a powerful ally. With 8.4 million subscribers, Comcast is the nation’s third-largest cable operator after AT&T; Broadband and Time Warner Cable.
And if Comcast succeeds in winning federal regulatory approval for its proposed acquisition of AT&T;'s cable business, G4’s viability--at least in the short term--is virtually assured, said Matt Riegner, a cable industry analyst with Janco Partners in Denver.
Second, the spread of digital cable systems, with their capacity to broadcast hundreds of channels instead of dozens, means channels such as G4 that target niche audiences have a better chance of reaching more people.
With digital cable reaching more than 20 million homes, a flurry of network launches are planned for this year, including a proposed channel sponsored by MTV Networks and Showtime aimed at gay and lesbian viewers, a food and lifestyle channel called Fine Living from Scripps Networks and a channel on crime from USA Networks.
“If you have digital cable, you have enough homes to go after ad revenues,” said Simon Applebaum, senior editor of Multichannel News, an industry publication based in New York. “But you still need deep pockets, and you have to have all your ducks in a row. It’s not simple.”
G4 has $150 million from Comcast and four years in which to break even, Green said. G4 is planning to save money by filling much of its 13 weekly shows with promotional video clips supplied by game publishers and developers, much in the same way MTV in its early years aired music videos produced by the marketing departments of major labels.
Russo said programming will include game reviews, previews of upcoming titles and interviews with game designers.
For Wild, that’s enough.
“Video is the best way to understand what a game is about,” said Wild, who last year bought 20 video games at about $40 each, along with three new game consoles--a $299 Xbox from Microsoft, a $199 GameCube from Nintendo and an $89 GameBoy Advance from Nintendo.
“Every day, I’ll read game news online. A lot of sites have small streaming videos, but the fidelity isn’t there. And if you want to download a small clip, that takes awhile. Having a program where you can just sit back and watch is pretty nice. It’ll be interesting.”