Pay-TV delayers complicate home TV picture

According to new research from The Diffusion Group (TDG), Late Millennials (18-24s) who move into their first non-college residence are equally likely to sign up immediately for cable, satellite, or telco TV services as they are to delay or forgo it altogether. This data is drawn from TDG’s latest multi-client primary research project, Late Millennials: A Study in Media Behavior.

“More than half of these young adults sign up for an MVPD video service the moment they move into their first non-college residence,” notes Michael Greeson, president and principal analyst for TDG. “The others signed at some point before turning 24 (38 per cent) or decided to forgo these services altogether (11 per cent).”

Greeson notes that this last point is very important. “By the time they turn 24, 89 per cent of Late Millennials living on their own subscribe to a traditional pay-TV service, which is about the average penetration of incumbent pay-TV across all broadband households. This is good news for both services providers and networks. Whether they maintain that subscription over time, and for how long, is another question.”

According to Greeson, a number of statistical indicators suggest younger consumers are leaning away from incumbent pay-TV as a default home TV choice, instead turning to alternate TV sources or viewing online video on non-television platforms. “That said, these are behaviours and preferences expressed in early adulthood, prior to landing a decent job, marriage, having children, and moving up the career ladder. As the context changes, says traditional wisdom, so too will their attitude regarding the worth and necessity of traditional pay-TV services. MVPDs have banked on this fact for several decades and this assumption has historically held true.”

However, Greeson noted emphatically, this does not diminish the challenges facing today’s incumbents. “In the next five years, growing competition from virtual operators will test incumbents’ longstanding position as the default home TV service. Greater choice means consumers will have little patience for ongoing price increases that do not significantly expand service benefits.”

Greeson predicts the outcome of TWC/CBS débâcle will be a turning point, proving the extent to which content networks are able to impose their will on operators, both large and small. “When these negotiations are resolved, the entire television industry will know who has the real leverage. Content will indeed be king, if only because incumbent operators are no longer the only conduit capable of reaching the TV,” he concludes.

 

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