ADOTAS — Facebook’s huge acquisitions of WhatsApp and Oculus Rift have been met mostly with pundits and industry leaders scratching their heads. The collective sentiment of “What is Zuckerberg up to?” can be heard echoing from Wall Street to Silicon Valley. However, I think I cracked Zuck’s code, as it may be ripped from another industry’s playbook. Facebook is starting to behave more like cable television providers; in fact, it looks like the social media giant is deploying Comcast Cable’s “narrowcasting” strategy.
After Comcast completed building physical cable plants to carry broadcast media to cities and towns across the country, the company owned and controlled the broadcasting “pipes,” but was beholden to a group of large and small networks for content. It was a “one size fits all” package for viewers. This favored the content producers, but Comcast would soon tilt the scales in its favor when Americans clamored for specialty programs designed to appeal to children, sports fans, news hounds and more.
Rather than create two types of customers – those that have specialty programming and those that do not – Comcast responded by first packaging selected channels and selling “tiers” of programming: “Basic,” “Premiere” and “Premium.” This provided a modicum of segmentation, but not enough for customers. The real revelation came when Comcast elected to bundle programming by specific niches (i.e. sports, arts, children’s, etc.), or “narrowcasting.” This provided the ideal scenario for Comcast, broadcast networks and viewers alike: Consumers were able to better customize their viewing experience, networks could refine programming towards smaller, more engaged audiences that appealed to marketers, and Comcast made a ton of money.
Today, Comcast not only dominates the pipe-to-the-home for both video and the Internet, but has successfully grown by owning more and more of the content providers. The company has fortified its position within the market by creating cross-promotional opportunities and economies of scale as they battle Netflix, Hulu Plus and the growing number of Web-based networks and major behavioral shifts such as millennials’ propensity to consume content online and on demand.
Fast forward to Facebook’s dilemma today. Their huge membership is dazed by the endless roll of their News Feed comprised of an overwhelming amount of dribble posts from “friends,” an increasing amount of ads and a diminishing amount of content they are actually interested in. The result? An aging subscriber population combined with a slow, but steady, exodus of millennials. While Facebook is by no means in trouble, the novelty of the platform is beginning to wear off. What to do?
In order to survive and thrive, Facebook is beginning to employ narrowcasting by acquiring companies that will offer targeted audiences content that is relevant and interesting content to them. The company is seeking out passionate communities to better focus its offerings. For example, Facebook will enable a running club to form as a group under a sports community hosted by Facebook and be afforded tools that are handy for creating and maintaining a sports group site. Facebook will first provide the tools and infrastructure, then later will begin acquiring the content. This will keep the subscribers coming back for more, increasing their time on the site and enabling advertisers to fine-tune their messaging to a highly engaged audience. Content is king.
Imagine a Facebook with niche communities like sports, graphic arts, science, children, education and, within those segments, more and more user- and brand-created sub-communities. Someday everything and everyone – from your children’s soccer team to professional sports fan clubs – will have their own dedicated communities, rich with highly relevant content and plenty of tools to comment, share and rate products who advertisers can target.
And plan on seeing more and more infrastructure acquisitions like WhatsApp and Oculus Rift from Facebook, followed by bids to purchase entire narrowcasting communities like Nike+, Goodreads or Kelly’s Blue Book. They’ve got the vision, history to help guide them and a drawer full of enterprise value with which to play. Narrowcasting indeed. And before you know it, you’ll find yourself saying, “Hey, Facebook looks a lot like Comcast!”