Veronica DeSantis9 May 2014Competitive Strategies + Brand ComponentAdult Swim Case Study Portfolio First ImpressionsI chose a television network targeted toward teens and young adult as my media brand because I wish to one day work in some capacity for a network which serves those demographics. Ideally I would like to produce and act as a liaison between the creatives and executives. I chose Adult Swim specifically because I have already observed it for many years from the point of view of a viewer. Therefore I am already invested in Adult Swim and I have just enough knowledge about the company to pique my curiosity and make me want to investigate more. As a viewer my impressions of the company were that they were more innovative, edgy, and had content which was distinct from other networks. I thought they were successful because they were innovative and werent afraid to try new things, even if they ultimately failed. Guiding QuestionsThe guiding questions for my research were: Why has Adult Swim been so successful? What are possible obstacles it faces in the future and is it prepared for these? Will Adult Swim continue to grow as it has over the past ten years? BackgroundAdult Swim was originally created as an adult oriented late night programming block for the Cartoon Network in 2001 (Lee, 2013. p. 3). It was created as a way for the network to cash in with advertisers when they found that one third of their audience was older than Cartoon Networks intended demographic of 2-11 (Plume, 2003.). It began as only a three hour block two nights a week, expanded to five nights in 2003, and eventually aired seven nights a week in 2007 (Lee, 2013. p. 4, 6). In 2005 Adult Swim split from Cartoon Network so that their ratings would be measured separately (p. 5). Even before this official split Cartoon Network had internally considered Adult Swim a separate entity (p. 5). In addition to slowly airing more days of the week, Adult Swim also pushed its start time earlier from 11pm to 9pm and eventually to 8pm in 2014 (Lee, 2013. p. 6 and Carter, 2014.). Although Adult Swim started by airing only animation it has since expanded to live action show but continues to exclusively target young adults (Lee, 2013. p. 2). Adult Swim is owned by Time Warner which is led by CEO Kevin Tsujihara. It falls under the division of Turner Broadcasting Inc. which is headed by Philip Kent. Adult Swim is one of many networks Turner owns. These networks are further broken down and managed by content type so Adult Swim used to be responsible to Stuart Snyder, president and COO of Turner Broadcasting's Animation, Young Adults & Kids Media Division. Snyder recently left however and his replacement has not yet been named (Amidi, 2014.) Under whomever is in Snyders position are executives which work directly for Adult Swims production studio, Williams Street Studios. The top executive is Mike Lazzo who is executive vice president/creative director in charge of Adult Swims original programming, digital, and gaming divisions. AnalysisIn order to analyze the company I will employ a few different frameworks. First I will use Michael Porters four key factors that must be considered when forming a competitive strategy and five forces which drive industry competition. Then I will focus on branding by bringing in David Aakers concept of brand equity. Porters four factors which determine the limits of what a company can successfully accomplish are made up of two internal and two external factors (Porter, 1980. p. xxvi). The internal factors include the companys strengths and weaknesses and the personal values of the executives. Adult Swims strengths include its ability to reach and maintain its audience as demonstrated by it having stayed the number one rated network for men 18-34 since 2005 (Lee, 2013. p. 5). It keeps its production budgets low which allows it to experiment with different types of programming while limiting risk for the company if the shows fail. This basically allows Adult Swim to be one big R&D department (Plume, 2003). Other networks may have to pull a poorly preforming show after a few episodes to save money but Adult Swim can afford to give the show more time to prove itself (Cohen, 2005). This is something which also makes the network more attractive to creators looking for a place to pitch their show. This also gives Adult Swim to have more leeway with its parent company because it isnt a glaring line item on the budget (Cohen, 2005). TV shows are Adult Swims bread and butter but it has also extended its reach into recoded music, music and comedy tours, video games, and an interactive website (Lee, 2013. p. 11, 13-14). One of Adult Swims weaknesses is that it sometimes has poor communication with its viewers leading to uncertainty about shows status including air times and premiers. This was evident when they announced that the show The Boondocks would return in January but it actually premiered in April (Stieber, 2014). They have also frequently had lapses of more than a year between seasons of their shows including The Boondocks which had a third season in 2010 but its fourth season premiered in 2014 (Stieber, 2014). These long periods between seasons could lead to shows having to rebuild its audience from scratch every time a new season premiers. The other internal factor, the personal values of the executives, are a strong influence on Adult Swim because it is led by a small group of people which has been with it from the beginning. The major player at Adult Swim is Mike Lazzo who was integral in the creation of the Adult Swim programming block in 2001 and is now Adult Swims creative director. The rough, DIY, garage feel of Adult Swims original programming was Lazzos decision which has influenced the way Adult Swim brands itself (Plume, 2003). The experimental style of Adult Swim can also be attributed to Lazzos view that mistakes and missteps are unavoidable but they are good as learning experiences (Plume, 2003). This fed into Lazzos philosophy that good and tight is better than extremely well-funded and large (Plume, 2003). This worked in Adult Swims favor since it had basically no money starting out for original content (Plume, 2003). It was also Lazzo who decided to keep production in house, including art direction and on-air-promotions, in Atlanta rather than work with New York or LA because he wanted to escape what he refers to as the machine of the entertainment industry (Cohen, 2005). This physical distance from other entertainment entities supports Adult Swim positioning itself as an outsider. Lazzos vision for Adult Swim is that it should represent the opposite of whatever is being shown on other networks (Cohen, 2005). Besides ingraining Adult Swim with his values during its conception Lazzo continues to wield influence over the network because he vets all the scripts, and no other network executives have veto power (Cohen, 2005). External factors for Adult Swim begin with the opportunities open to them currently which are mostly the result of its staggering success among its target demographic. Viewers tend to watch Adult Swim live which makes the network more attractive for advertisers (Carter, 2014). This gives the network greater leverage as well as profit potential. It was because of demand from advertiser that Adult Swim decided to expand yet again by an hour (Carter, 2014). Adult Swim eventually plans to use this space to expand their original programming (Adalian, 2014). Besides the high ratings giving Adult Swim leverage with advertisers it also gives it a good amount of autonomy from Turners executives. As long as what theyre doing at Adult Swim continues to work theyll be given space to take risks that other companies may not allow (Cohen, 2005). There are a few threats facing Adult Swim including viewers gradual switch from watching TV on the television to consuming content digitally. This can include recording shows, watching them online, or on mobile devices. As pointed out, one reason why Adult Swim is so successful is because people watch it live so a shift away from watching live TV would greatly impact their ratings as well as advertising profits. Adult Swim has experimented with posting content online but their efforts so far still treat digital spaces as extensions to the network rather than a fully formed alternate space for programming. For instance, although Adult Swim does make a few full length episodes available on their website and mobile app on a rotating basis these are only available for free to people who also receive Adult Swim as part of their cable or satellite package (Lee, 2013. p. 11). As the trend of cord cutting, or going without cable, becomes more prevalent this could lead to Adult Swim losing viewers entirely or viewers turning toward pirating content because they have no legal way to access it through Adult Swim. Recently Adult Swim has been experimenting with going beyond their subscription requirement by posting episodes of their break out new show Rick and Morty on YouTube for free. However this is still intended to drive viewers to watch the program on TV since episodes are only posted for a week which helps create a scarcity, one that can be resolved by actually turning on the TV and watching Rick and Morty there (Gutelle, 2014). Adult Swim has also created shows based on web series which is a strategy designed to pull online viewers to the network (Carter, 2014). These are both good strategies to cultivate viewers but they still ignore the fact that overall more and more people are not watching content live and are going without cable entirely. There is plenty of internet content from YouTube, or sites which offer the same type of experimental short form entertainment as Adult Swim but can be watched anytime anywhere (Lichman, 20120). Adult Swim may be in a good place now but if they dont prepare for the future they face getting left behind. Other threats Adult Swim faces are from competing networks such as FXX, an offshoot of FX, which will be the exclusive cable home to reruns of The Simpsons, which targets the same audience as Adult Swim and will be airing opposite of it (Adalian, 2014). Another threat comes from Fox which is home to the primetime Animation Domination Sunday line up as well as the Saturday late night Animation Domination HD block which offers the same type of short form, experimental comedy programming as Adult Swim (Fox, 2013). This block is the initiative of Nick Weidenfeld, who was also head of development at Adult Swim for eight years, and features shows created by former employees of Adult Swim so there is no doubt that both networks are targeting the same audience (Fox, 2013 and Stampfli). Animation Domination HD also has a digital component which allows viewers to watch content online meaning that unlike with Adult Swim, viewers can easily watch shows when and where they want (Adams, 2014). Adult Swim and Animation Domination HD share the same strategy of importing series which were originally popular on the internet and making them into shows (Fox, 2013). This shows that as smart as that strategy is there is nothing unique about it and it is not a way for a network to differentiate itself. The second external factor is broader societal expectations which in regards to Adult Swim mostly relates to social concerns relating to the networks content. With Adult Swims move into prime time it now faces the potential problem of alienating the more mainstream crowd which will be watching or alternatively tuning down its signature lunacy and crudeness which has made its shows a success (Lee, 2013. p. 7). Since Adult Swim is a cable channel it does not have the same decency standards of broadcast TV but it still risks putting off advertisers who are looking to reach younger males but are uncomfortable being associated with risqu or vulgar content (Crupi, 2010). This could cause the parent company to also become stricter about content because the potential amount of money to be made during prime time is larger and so they do not want to risk driving away viewers or advertisers (Plume, 2003). Adult Swim has already experienced the huge repercussions of violating societal boundaries when the light panels put up in Boston as part of its guerrilla marketing campaign for the show Aqua Teen Hunger Force were mistaken for bombs (Lee, 2012. p. 252). This caused a public panic, a two million dollar fine, and resulted in Jim Samples, the head of Carton Network at the time, to resign (Cartoon Network, 2007). Societal expectations were also the ultimate downfall competitor Animation Domination HDs Saturday night block which will only run for about a year before being pulled due to viewer complaints about its inappropriate content (Adams, 2014). However, the programming will still be available online and will continue to serve as a potential incubator for primetime series on Sunday nights (Adams, 2014). This means that although Fox will no longer be competing with Adult Swim on Saturday nights it will continue to compete on Sundays and in the digital realm. Besides Porters four key factors, his five forces driving industry competition are also a valuable tool for revealing Adult Swims current situation. These five forces are rivalry among existing firms, threat of new entrants, threat of substitute products or services, and bargaining power of both suppliers and buyers (Porter, 1980. p. 4). Industry competitors have already been addressed above as FXX and Fox, as has substitute products which is mainly the internet. Threat of entry for the industry of adult oriented animated television is low overall because the barriers to entry are high. For someone who is not in TV and wants to get into the industry barriers are high because producing TV shows requires huge capital requirements for equipment and personnel. One needs cameras, sets, actors, editors, editing equipment, writers, as well as personnel handling the normal aspects of any business such as money and management. If an existing network wants to get into adult oriented animation then this also requires a large capital investment since animation requires different equipment than live action shows as well as personnel who know how to use it. Getting into TV also requires access to distribution channels in order to actually air the shows produced which is difficult to get because airspace is regulated by the government. Government policy dictates that one must go through the process of getting a license before they can air their programming. Another way for programming to find distribution is through a network which already has airspace but this is also difficult as it requires selling a show to them. Networks see many pitches each year and only a select few ever make it to the pilot stage let alone get picked up for more than one season. Finally, product differentiation may pose one of the greatest barriers to entry since established companies, especially Adult Swim, have such high customer loyalties as will be demonstrated below during the exploration of brand identity and brand equity. Since Adult Swim has such a loyal viewer base this means that a new company would have to make a significant investment just to overcome existing company loyalties (Porter, 1980. p. 9). Since Adult Swim creates programs which are shown direct to the consumer its buyers could either be viewers or advertisers. Viewers do not face any switching costs since Adult Swim is part of a cable package so competitor channels like also included in this package. Advertisers also do not face switching costs since advertising on any television channel requires the same process. Advertisers have leverage over Adult Swim because that is Adult Swims main source of revenue and so it must be responsible to advertisers interests. However this is basically all the leverage the buyer has over Adult Swim since they do not pose a credible threat of backward integration since there is no precedent for a group of viewers or advertisers getting together to form their own TV station or production company (Porter, 1980. p. 25). Additionally advertisers are dependent on Adult Swim to bring them the young male audience that they want and therefore its in the advertisers interest to preserve the health of Adult Swim (Porter, 1980. p. 25 and Carter, 2014). Suppliers have a much larger bargaining power than buyers at Adult Swim since it relies heavily on licensing programs from other networks, especially during its primetime hours when its own original shows may be inappropriate for mainstream audiences. Adult Swim was initially built on licensed programs as it used shows which had been cancelled by other networks such as Family Guy, Futurama, Mission Hill, and The Oblongs, to fill out its schedule when it initially expanded to five days a week (Lee, 2012. p, 4). Adult Swim is not as reliant on others programs as much now but licensed content still remains an integral part of their prime time line up. For instance a random rerun of the Fox show American Dad which is one of the many shows Adult Swim has licensed from Fox, was the number one show in prime time for men under 35 on the night it aired (Adalian, 2014). This is great for Adult Swim since it makes the network a hot spot for advertisers but it also reveals that the network is dependent on content from other places to get its stellar ratings early in the night. Since these Fox shows are an important input into Adult Swims business it gives Fox a lot of bargaining power over them (Porter, 1980. p. 27). Fox also possesses a real threat of forward integration which they have shown by launching their Animation Domination HD programming block. Although this block will soon be off the air, it has made it clear to Adult Swim that it is fully capable of distributing their own shows during Adult Swims prized late night time slot. The other programming block which Adult Swim is reliant on licensing programs for is its Japanese animation block called Toonami. This is a block made up entirely of animated series from Japan but the suppliers of these shows do not have bargaining power because the Japanese animation market has been severely depressed since 2005 (Lee, 2012. p. 237). However Adult Swim still faces the threat of substitute products for the Toonami block. This is because the shows which Toonami feature can also be found on websites which specialize in free, legal, online distribution of Japanese animation (Lichman, 2012). Going forward Adult Swim must be weary of its industry competition, threat of substitution from the internet, and the bargaining power of its suppliers. One of Adult Swims greatest strengths, if not the greatest, is its massive brand equity which it has worked on building since it was initially created as part of Cartoon Network in 2001. Adult Swim has been masterful in build brand equity in many different aspects of its marketing, advertising, public relations, and other ways it interacts with viewers. There are four dimensions to brand equity: brand awareness, perceived quality, brand associations, and brand loyalty (Aaker, 2000. p. 17). Though Adult Swim has strong brand equity it has a low perceived quality as Adult Swim is known for low budget, low quality programming. However, its low quality productions are actually part of its strong brand identity which is a positive influence on its brand loyalty. Adult Swim is stronger when it comes to brand awareness since its expansion into prime time makes it more likely that a TV viewer will be exposed to Adult Swim. Adult Swim is also known to successfully generate awareness when they put on special events which target its young demographic such as when they toured college campuses with an inflatable fun house (Thielman, 2014). Adult Swim has strong brand associations with certain traits, imagery, and symbols. The brand is most associated with the traits of different, creative, and edgy as well as irreverent and risky (Lee, 2012. p. 13 and 227). They have iconic bumps (promos for other shows or the network in general which are situated between programs and commercial breaks) which are just white text on a black background. These bumps are the result of Adult Swim having no funding to create anything more elaborate but this low quality product has become an integral part of Adult Swims branding and identity (Lee, 2012. p. 229). The strongest part of Adult Swims brand equity is their brand loyalty which they have built up by cultivating a strong brand identity. The relationship Adult Swim has established between itself and its viewers is so strong that it creates fiercely loyal fans which are willing to do incredible things for it. For instance, during the Boston bomb scare when Adult Swim was fined two million dollars, fans came together online with the idea of raising money to help Adult Swim pay it (Lee, 2012. p. 256). Although there are four perspectives related to brand identity, brand as product, organization, person, and symbol, Adult Swims identity is almost exclusively formed by the last two. It has already been pointed out that Adult Swim uses its unique bumps as a symbol which provides cohesion and structure to its identity (Aaker, 2000. p. 54). Beyond being a recognizable symbol of the brand, these bumps also help the build the customer/brand relationship. This is because in its bumps Adult Swim directly addresses fans as you while referring to itself as we (Lee, 2012. p. 228). This creates the illusion of a dialogue between brand and consumer and helps establish a relationship (p. 231). These bumps were the brain child of Mike Lazzo, who also encourages the idea that Adult Swim is more human than other networks because its bumps just talk to people (Plume, 2003). The bumps also establish a relationship by often making jokes referencing the content of their original programming. This makes frequent viewers feel like they share inside jokes with the network which creates a bond. It also works to encourage people who do not frequently watch Adult Swim to watch it more in order for them to get these jokes and feel included (Lee, 2012. p. 230). By incorporating humor, these bumps also help build Adult Swims personality as witty and light hearted. Also part of the brand identity system is the value proposition which includes emotional and self-expressive benefits (Aaker, 2000. p. 49). Some emotional benefits that watching Adult Swim has for viewers is a feeling of inclusion, belongingness, and being listened to. Its already been pointed out how the bumps help viewers feel they are part of a special or exclusive group who are in the know. The idea that Adult Swim listens to viewers is backed up, weather accurate or not, by Lazzo who has publicly stated that Adult Swim does listen to the viewer (Plume, 2003). In the past Adult Swim has had initiatives where they let fans vote on what episodes of shows they want to air during certain special programming blocks (Plume, 2003). One major symbol of Adult Swim listening to its fans is its Toonami block of programming which it cancelled and then brought back, seemingly at the request of fans. Fans overwhelming took this as evidence that Adult Swim was responsive to their wants and felt as though it being brought back was the result of a grassroots movement that they started (Lee, 2012. p. 238). However, it is also possible that Adult Swim brought Toonami back simply because licensing rights for Japanese animation were extremely cheap or because it wanted to cash in on viewers nostalgia. Its notable that the shows which aired during Toonami after it returned were not the same as the ones which were originally included in the block. This is because the licenses for shows which were originally part of Toonami were too expensive for them to afford (Lee, 2012. p. 237). Therefore its debatable if Toonami was really brought back or if this should be considered a different block of Japanese animation which has coopted the Toonami name.As for self-expressive benefits, viewers who align themselves with Adult Swim feel they are unconventional, unique, and different from others (Lee, 2012. p. 256). Adult Swim directly facilitates viewers getting self-expressive benefits through its website. This is because its site has a message board which allow fans to interact with each other as well as with employees of Adult Swim. Fans can also use the website to submit suggestions for bumps (p. 225). The possibility that employees of Adult Swim may be reading or viewing what fans post online contributes to their emotional benefits of belongingness. Contributors who create bumps try to make them witty and smart to show that their identity mirrors that of Adult Swims (p. 231). Of course while fans feel that Adult Swim is giving them a voice, Adult Swim is also using them as a source of free labor to create promotional material (p. 226). Finally, there is the relationship construct between consumer and brand which Adult Swim has built mostly through its bumps and website. Adult Swim has positioned itself as a friend of the viewer. Everything it does tries to paint the picture that Adult Swim is made up of people who are no more special than the average person watching. Part of this comes from the mystique surrounding the founding of Adult Swim by people who were not professionals but just TV viewers themselves (Plume, 2003). There is a sense of de-differentiation between the producers and fans which creates the image of Adult Swim employees as fellow fans who just happen to be making the shows instead of watching them (Lee, 2012. p. 232). For all of the good work Adult Swim has done to build its brand equity, there are still potential problems with its brand identity and equity which it needs to navigate. There has recently been a change in top management as Stu Snyder left the company along with Paul Condolora who was responsible for strategic development at Adult Swim and Stacy Isenhower, who oversaw Adult Swims on-air promotion (Getzler, 2014). This could mean changes in business strategy which could influence Adult Swims brand equity (Aaker, 2000. p. 23). In addition eventually Mike Lazzo, who is the founding-father-cum-father-figure at Adult Swim and has been integral to shaping the network will retire (Cohen, 2005). Lazzo has had so much influence over the network that this could be extremely disruptive and potentially cause the network to decline. Other major challenges to its brand identity is its move further into prime time as well as its foray into live action programming. As previously pointed out, a move into prime time means that Adult Swim has to tone down its content to appease viewers and advertisers. This could dilute its identity as edgy and have the network come off as too mainstream (Lee, 2012. p. 7). Adult Swim was initially founded as a dedicated animation channel, like Cartoon Network, but they have now introduced live action programing. This is conflicting with its identity as an animation centric network and though live action shows may attract new viewers, they could also alienate longtime fans (Fennessey, 2011). Adult Swim has already had a backlash among some fans about its expanding live action line up as shown by the wealth of angry threads on their message boards (Lee, 2012. p. 247). RecommendationsOverall Adult Swim continues to see amazing growth and ratings but that doesnt mean there isnt room for improvement. It is especially important for a successful company to be aware of the climate in its industry so that they dont get blindsided by a new competitor or emerging trends. First off, Adult Swim needs to address its weaknesses and threats. It needs to improve communication with the viewers to ensure that information about show premier dates is accurate. It should also eliminate the large gaps between seasons of its shows so that it retains more viewers from season to season. It also needs to address the building threat of the internet as soon as possible so it doesnt get left behind in the coming digital world. It needs to build up its digital presence and find a way for people to enjoy their content online or on mobile devices which is agreeable for both viewers and the network. Finding the best way to monetize this content may take time they should start figuring out their strategy immediately. Adult Swim should also work towards producing more of its own content so that it is not so dependent on licensing shows from other networks. This will strip bargaining power from its suppliers, strengthen its brand identity, and potentially generate more income in the long run. Finally, Adult Swim should sort out the problems with its brand identity. Unfortunately, the problem of its imagine being less edgy than usual during prime time does not really have a solution since there is just no way for them to air their usual programming during that time slot. Still they should create their own original shows for that block instead of relying on licensed content. This way although the content wont be exactly spot on identity wise, itll still be unmistakable that one is watching Adult Swim and not another network, such as Fox. As for the brand identity dilution caused by live action programming Id recommend minimizing its existence or relegating it to a designated live action block. This is similar to how Japanese animation is only aired as part of the Toonami block. This acts as a sort of mediator between Adult Swim and Japanese animation which communicates to the viewer that although it is on Adult Swim, the shows are still one step removed from the heart of the brand.

ImplicationsAfter conducting my research I can now revisit my guiding questions and attempt to answer them. As for why Adult Swim been so successful, Id say that the main reasons are strong brand equity and brand identity, especially when it comes to brand loyalty and the value proposition. The biggest obstacles Adult Swim faces in the future is diluting its brand identity and the threat of substitution from the internet. From what Ive researched it seems that Adult Swim is probably aware of these issues but I do not think it has adequately prepared for them. The final question is the future of Adult Swim and weather it will continue to grow as it has over the past ten years. Although Adult Swim does face some short and long term problems there is nothing to suggest that as long as they continue to have strong brand equity, they wont also continue to grow. Every time they have expanded their programming so far it has led to an increase in ratings and ad revenue so theres no reason why this should not continue to happen. Still Adult Swim needs to keep its eyes out for competitors and should never feel too secure no matter how well they are doing. Final ImpressionsMy admiration for Adult Swim has not changed much after conducting this research but I now feel like I have a deeper insight into how their brand operates. I realize that my initial view of them as innovative, edgy, and distinct, though there is some truth behind it, is also a carefully crafted brand identity. Adult Swim being founded with little money or resources has given it a unique feel but these days it seems that its biggest differences from other networks isnt its content, but in the way it has forged a relationship with its viewers. I will continue to watch and enjoy Adult Swim but with a bit more of a critical eye than before.

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