The Weather Company from a Weather Channel: Transformation story

With this piece, we take a look at the transformation story of the a weather channel to the Weather company. We look at the motivating factors (disruption) for this transformation and take a look at how the company leveraged the power of digital to ensure a successful transformation.

You woke up, the first thing you probably did was to check your email/messages, possibly video called your loved one, glanced through important news, and then got up to get ready for the day, didn’t you? You Probably did. Digital has penetrated so deep in our life that we seldom imagine a moment without it. It has disrupted the way business is done and has given birth to companies like Facebook, Google, Amazon, and Apple. But as much as digital posed a threat to the traditional businesses, it has opened doors to endless opportunities for the incumbent players.

In the post-COVID world, Digital transformation is no longer an option – it is a necessity. Every business leader is ready to jump on the pursuit of finding new and viable options to digitize their business.

But is it sufficient? Will the mindless copying of digital initiatives from peer companies suffice for creating exponential profits?

Prof. Sunil Gupta of Harvard Business School mentions that “leaders who achieve transformative results go all-in on digital”.  As per him, in these changing times, it is important to have a strategy where the business is reimagined keeping digital at the core. Which according to him can work wonders!

Figure 1 A framework for Digital Leadership [Sunil Gupta’s Driving Digital Leadership-Page #6]

In this post, let us discuss The Weather Company which achieved phenomenal results by re-imagining its business.

The Weather Channel (TWC)

The Weather Channel, founded in 1982, was the first 24-hour weather channel on cable TV. Buoyed on rising TV viewership, it retained pole position in its segment for several years.

The business model was simple –

  • Earn advertising revenue
  • Charge subscription fees to cable operators.

It also leveraged its leadership position to provide weather data services to airlines and insurance companies through its B2B subsidiary Weather Services International (WSI). However, there was a catch. The late 2000s saw the rise of a new phenomenon in the US market – “The rise of mighty OTTs”.

The Rise of OTTs

The US TV viewers began to transition towards OTT platforms because of which cable TV subscriptions declined steadily. With this decline, TWC also witnessed a disruption in its revenue (~60% of its revenue came from TV business). To battle the disruption, TWC launched a mobile application but couldn’t monetize it since people stayed on it for less than 30 seconds/day. There was also a looming threat of new players like Google & AccuWeather, who could tap into freely available weather data to quickly capture the critical consumer mass and become leaders in the market.

Related: Take a look at the rise of Audio OTT Industry in India

In 2012, David Kenny took over the reins from Mike Kelly. His foremost priority was to stop the downward slide and make TWC great again. To make TWC a leader, he focussed on how to “Re-Imagine Business” and set a personal goal of making revenue from $600 million (2012) to $1 billion in 2016.

“When I joined TWCC, I saw a company that was heavily reliant on TV, and although it was active in new media, it was moving slowly……..The question that I focused on the most was, how do we add value to consumers and our partners in this new environment?”  – David Kenny (Driving Digital Strategy, Page 38)

Re-inventing the Approach: The Weather Company

He started by hiring a team of digital leaders and changed the name of the company from The Weather Channel to The Weather Company to showcase its 360⁰ focus. Realizing that people use the mobile app to check weather details first thing in the morning (>40% of users), he changed the app into a platform on which publishers curated and created content. Through this exercise, the average usage of the app nearly doubled, which simultaneously led to improvements in the revenue.

Kenny then focussed on providing insights to various companies based on weather data. TWC analyzed the past 5 years of sales data to come up with not so obvious recommendations that were readily accepted by several B2C companies. As an example, Pantene partnered with them to come up with customized advertisements based on data analytics provided by TWC. That is, what products go well in which season. This is an exciting transition from just a weather-based channel to leveraging both digital and weather-based data to make recommendations.

The Partnering and the acquisition

TWC already had a subsidiary WSI, which provided data services to airlines and insurance companies. They also extended these services to Cars as well. BMW and Tesla partnered with TWC to provide its riders real-time weather update and suggestions. In return, the carmakers shared their sensor data with TWC which improved the accuracy of suggestions.

Kenny then looked around to partner with companies which increased the global outreach of TWC. It started its journey with IBM. IBM bought TWC data to leverage its Watson platform and sell insights to its clients. TWC also provides services to Mahindra, our Indian Tractor manufacturer. Mahindra required weather data and soil profile to efficiently dispense fertilizers through its driverless farming machines.

By re-imagining the business, TWC expanded its horizon and changed its DNA from being a TV channel company to a digital giant which provided weather data insights across the globe. In 2016, it was acquired by IBM for $2 billion.

Thus, a vision to re-imagine using all resources can help an organization survive the winds of change.

The Author

The author of this piece is Ankan Seth, a recent pass-out of IIM-A. He is a digital strategy and a Product Management enthusiast. The piece is to showcase his sheer love for the company, the views expressed are his own.

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