It is arguably one of the most important issues facing the future of TV — the way swiftly evolving viewing options have placed millennials at the content crossroads. One road leads to connected multichannel TV viewing, the other to a stream of unconnected digital options.
Many press accounts see millennials taking the newer route, tagging their embrace of over-the-top video as long-term trouble for the $150 billion TV industry. Others argue that young people have always been slower to subscribe, and that once they get out of school and start families, they’ll return to multichannel TV, and all will be well. The reality, as usual, is far more complex, as new key data points suggest.
Despite widespread predictions of an imminent collapse, total multichannel TV subs fell by only 0.2% in 2013, and only 0.1% in 2014, according to research from MoffettNathanson, with similar small declines being reported by SNL Kagan and Magna Global.
That prompted Magna Global to revise upwards its estimates of U.S. multichannel TV subs. It is now predicting that the number will fall from 103.6 million in 2014 to 103.4 million in 2015 and 102.9 million in 2018. That would still be above the 101.1 million subscribers reported in 2005 but below the peak of 104.3 million U.S. subs in 2009.
It has long been known that younger people have lower levels of multichannel subscriptions than the general population, and some data suggests that their higher usage of streaming video makes them even less likely to subscribe. “Their penetration rates have been declining,” said Dounia Turrill, Nielsen senior vice president, Insights.
Overall, the number of people aged 18- 34 with a multichannel subscription fell about 2.3% between the fourth quarter of 2013 and the fourth quarter of 2014 to 57.8 million, Nielsen reported. Interestingly, declines are also occurring in the number of millennials in broadcast-only homes and among those with only broadcast and broadband, two categories that tend to include cord-cutters and cordnevers.
TECH AND TV
There is little doubt that younger age groups such as millennials have embraced smartphones and streaming video devices much faster than the general population. A recent survey by Frank N. Magid Associates, for example, found that millennials spend about 32% of their video viewing time with streaming video, nearly as much as their live TV viewing (34%), noted Maryann Baldwin, vice president at the firm.
Nielsen meanwhile is reporting a precipitous decline in their traditional TV viewing. Between the fourth quarter of 2011 and the fourth quarter of 2014, the amount of live and on-demand TV viewing fell by nearly five hours a week by those aged 25-34 and nearly seven hours for those aged 18-24.
Those figures are contested, though. Programmers contend these declines reflect the fact that TV viewing on mobile phones and other devices is not being measured.
While the number of multichannel subs is relatively flat, Magna Global estimated that the number of homes that primarily access video content over the Internet will grow from 7.3 million in 2014 to 9.4 million this year, and to 15.9 million in 2018.
At the same time, pay- TV subs have not kept the same pace, noted MoffettNathanson in a recent report. “It appears that 1.4 million homes [in 2014] have cut [or never had] the cord, the highest 12-month total yet,” the analysts noted.
A variety of surveys have also found that millennials are much more likely to cut the cord and rely on over-the-top video, noted Paula Minardi, digital TV marketing manager, Ooyala, who authored a recent report on the subject.
But recent surveys from Magid and Horowitz research also highlight widespread interest in TV programming. Horowitz Research, for example, found that over three quarters of those aged 18-34 cited the value of having a large variety of channels as one of the key advantages of a multichannel subscription. “Millennials are an opportunity wrapped in a challenge,” said Howard Horowitz, president of the firm, who believes that networks and operators have an opportunity to thrive in the emerging OTT landscape if they craft offerings and services targeted to the habits of millennials.
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