Weathering the Digital Transition – Rehire Al Roker

The Weather Company (TWC) is best known for its marquee TV channel, The Weather Channel. For years, viewers across the nation have woken up to Al Roker’s sweet dulcet voice, providing a comforting overview of the weather and building a cult following of loyal viewers.  Founded in 1980, TWC is now seeing massive changes in both the amount of digital weather data available and the digital consumption of weather-related information.

Business and Operating Model

The first more widely known business model is its B2C offerings such as its TV channel, website, and mobile app. It’s TV business makes money based on advertisements shown between weather program segments and through charging carrier rates to cable providers based on their number of subscribers. TWC’s website and apps primarily make money through banner display advertisement shown alongside its weather-related content.  As of 2015, TWC had TV distribution to 77% of all US households with more than one TV and charged average carrier rates of $0.11/month/subscriber. [1] [2]

TWC has a second B2B business model offering providing weather information and forecasts for customers in aviation, energy, media, and government. These deals are negotiated on a contract-by-contract basis based on the value customers derive from TWC’s weather data.

At its core, TWC’s mission is to provide the accurate weather information and forecasts to customers with a side helping of weather inspired-entertainment.

Challenges

The biggest challenge to TWC’s business model is the digital accessibility of weather information disrupting its TV programming offerings. In an age of ubiquitous smart phone ownership with easy access to up-to-date weather information, it’s difficult for TWC to keep its TV programming relevant. Because of this, TWC has been facing declining TV viewership and decreasing leverage in negotiations with cable networks [3] [4]

Opportunities

While digital disruption is creating new consumer habits and distribution channels, this also creates opportunities for TWC to connect with its users in new ways through its mobile app. TWC has invested a significant amount into developing a compelling mobile application and is now a top 20 app. [5]

The second major opportunity is related to the increasing amount of weather data available due to the decreasing cost of big data collection, storage, and analysis. The most important service that TWC provides is up-to-date accurate weather forecasts. In the digital age, the value of data is only increasing and because of that TWC has pursued an acquisition strategy to buy companies with unique and valuable weather data sets such as Weather Underground. [6] Because of this investment in data collection, in early 2016 the Weather Channel sold its B2B digital business to IBM for $2.3B to be incorporated into IBM’s Watson B2B offering. Now through leveraging Watson’s machine learning algorithms, the TWC offers over 26 billion weather forecasts per day. [7]

Lastly, in addition to big data analysis becoming cheaper, much more digital customer data has become available for companies to use to create and capture value through improving the advertisements.  For TWC’s, one of the most important new sources of digital data has been the ability to cost-effectively geo-locate web users to provide weather triggered, locally targeted digital advertising, which in turn has allowed them to attract more users and charge significantly higher rates for their advertisements.

The Plan Going Forward

The company’s current plan for navigating the digital transition include the following tow major initiatives:

• Refocusing programming back on core weather information and forecasting is this is what provides the most value to consumers. Especially in times of extreme weather events, it’s incredibly important to have this kind of information and having more of it provides lots of value to consumers when they need it most.  Accordingly, they are putting less of a focus on weather-inspired entertainment programming such as reality shows.
• Providing an Over-the-Top (OTT) streaming offering, so that consumers can access TWC’s weather programming on-demand on any device they want.

In addition to the actions already being taken by TWC to navigate the digital transition, I would recommend the following initiatives:

• Immediately hire Al Roker back onto the station. In an era where weather information is becoming more commoditized and mobile accessible, it’s incredibly important to provide unique value to customers to maintain loyal users. In contract negotiations with cable carriers, it’s incredibly important for TWC to have vocal loyal customers who will demand that their cable provider not drop The Weather Channel and Al Roker is the single most promising way for TWC to do this.
• Invest in providing more live coverage of weather events. In the age Netflix, the value of linear programming has been decreasing due to the lack choice it provides consumers and the inconvenience of the ad supported model. However, the type of programming that has most maintained and increased its value is live TV events such as sporting events, major political events (such as the presidential debates), and Award shows (such as the Emmy’s). TWC should invest accordingly. (799 Words)

 

Footnotes:

[1] TV By The Numbers by zap2it.com. 2016. List of how many homes each cable network is in as of July 2015 – Page 434373 – TV By The Numbers by zap2it.com. [ONLINE] Available at: http://tvbythenumbers.zap2it.com/reference/list-of-how-many-homes-each-cable-network-is-in-as-of-july-2015/434373/. [Accessed 15 November 2016].

[2] Brian Stelter. 2016. Weather Channel’s Move Beyond Forecasts May Be Costly – The New York Times. [ONLINE] Available at: http://www.nytimes.com/2010/05/22/business/media/22weather.html. [Accessed 15 November 2016].

[3] Joe Flint. 2016. DirecTV no longer carrying Weather Channel after contract dispute – LA Times. [ONLINE] Available at: http://www.latimes.com/entertainment/envelope/cotown/la-et-ct-weather-channel-off-directv-20140113-story.html#ixzz2qOYJ2DkU. [Accessed 15 November 2016].

[4] Washington Post. 2016. Verizon FiOS drops The Weather Channel, picks up AccuWeather – The Washington Post. [ONLINE] Available at: https://www.washingtonpost.com/news/capital-weather-gang/wp/2015/03/10/verizon-fios-drops-the-weather-channel-picks-up-accuweather/. [Accessed 15 November 2016].

[5] “The 2015 US Mobile App Report.” ComScore. September 22, 2015. http://www.comscore.com, accessed November 15, 2016.

[6] TechCrunch. 2016. Nice Move: The Weather Channel Buys Weather Underground To Sharpen Focus On Digital | TechCrunch. [ONLINE] Available at: https://techcrunch.com/2012/07/02/nice-move-weather-channel-buys-weather-underground-to-sharpen-focus-on-digital/. [Accessed 15 November 2016].

[7] The Weather Company, an IBM Business | The Weather Company. 2016. The Weather Company, an IBM Business | The Weather Company. [ONLINE] Available at: http://www.theweathercompany.com/company/worlds-largest-private-weather-enterprise. [Accessed 15 November 2016].

[5] “The 2015 US Mobile App Report.” ComScore. September 22, 2015. http://www.comscore.com, accessed November 15, 2016.

[6] TechCrunch. 2016. Nice Move: The Weather Channel Buys Weather Underground To Sharpen Focus On Digital | TechCrunch. [ONLINE] Available at: https://techcrunch.com/2012/07/02/nice-move-weather-channel-buys-weather-underground-to-sharpen-focus-on-digital/. [Accessed 15 November 2016].

[7] The Weather Company, an IBM Business | The Weather Company. 2016. The Weather Company, an IBM Business | The Weather Company. [ONLINE] Available at: http://www.theweathercompany.com/company/worlds-largest-private-weather-enterprise. [Accessed 15 November 2016].