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MBPT Spotlight: Please Shut Up About Millennials Cord Cutting - Broadcasting & Cable

MBPT Spotlight: Please Shut Up About Millennials Cord Cutting

We sure do love our buzzwords; they have their time and place, and can be effective when used properly. But when it comes to digital video and the usage of "cord cutting," I just want to bloody scream! Not a frustrated, just-missed-the-last-train scream; I'm referring to a blood-curdling psycho scream. Yes, we love our buzzwords, but when we use them without considering the economic inference to industry, we’re left looking quite dumb.

To begin, let's set the foundation that when people discuss "cord cutting," they are mainly referring to Millennials. The overarching view — for those living under a rock without WiFi — is that this swath of consumers (18-34-year-olds) are changing the video consumption paradigm in such a way that, economically speaking, supply needs to dramatically change delivery methodologies to meet demand. The basis of this view is driven by consumption data, which claims Millennials are not signing up for traditional TV/cable subscriptions but adopting greater attrition to digital subscriptions like Netflix, Hulu and Amazon Prime. This can be backed by data. According to a recent study by NATPE/Content First and the Consumer Electronics Association, 51% of millennials consider Netflix subscriptions very valuable, compared to 42% for broadcast channels and 36% for cable subscriptions.

Those stats are great, but according to the Census Bureau over 30% of this sought after millennial group is still living at home with their parents. That skews that data a little bit, doesn’t it? If you live at home and mommy and daddy already have cable, do they really appreciate the value? If we discount the data that talks of traditional cable abandonment for digital subscriptions, is it still as compelling?

Based on this “compelling” data, many argue in favor of a trend shift that requires the entire industry to turn on a dime. But a trend shift of that nature would have detrimental affects across the entire entertainment industry. The reality is, cable isn’t dead, broadband isn’t dead and Millennials aren’t these revolutionary cord-cutters. Nearly 85% of people who own streaming players, like Apple TV and Roku, also subscribe to cable or satellite, according to IDC. There are currently 100 million people in the US who have a cable subscription. While over-the-top players like Hulu and Netflix have differentiated the industry, and Millennials are more accepting of the offerings, it doesn’t mean the demise of cable.

The fact is, we know at least 30% of Millennials have access to traditional cable TV. When and how they consume it depends on one major factor: if mom and dad are watching something. More often than not, the engagement of IPTV and connected devices are relegated to watching something away from other family members, so of course they are not watching traditional TV. The point being, that the two activities are not statistically mutually exclusive. Simply put, necessity forces certain decisions that drive user patterns.

The trend of TV Everywhere and OTT consumption is not going anywhere. At family events, I literally cannot peel my teenaged nephew’s eyes away from watching videos on his phone, unless we put something on the big screen that he wants to watch. I love him, but he is definitely not an anomaly. In fact, he’s probably the new norm. And within that new norm, the consumption patterns have lent to consolidation. The consensus on traditional cable programming, even in the 90s, was that there are over a thousand channels, but nothing on. If you have ever browsed for TV Everywhere or OTT apps, you see a strikingly similar cycle forming. Given the climate of mergers and acquisitions, along with low interest rates, now is the time for cable systems, telecoms and even hardware manufacturers to start shopping. Economically speaking, some of the big players like Netflix and Hulu are probably off the table, but by simply looking at the market you can see that the trend is here. The acquisitions of the Intel Media by Verizon, Gracenote by Sony, then Tribune and even the Dish acquisition of Sling Media show how the trend line has already started shifting.

And if there was one conclusion we could draw from this “cord-cutting” conundrum, it’s that there are two cords that haven’t been cut — the other being the umbilical cord. While over 30% of millennials are currently living at home today, in 1980 the same age demographic living at home was 22%. Do you know what 30% of a demographic group is known as in other parts of the world? A coalition!

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