The latest study to put the television business in a tizzy is a study from TDG that shows the number of “Pay TV refugees” -- users who have broadband but not TV-- growing from 9.5% to 12.5% over the past 2 years. Particular attention is being paid to “cord nevers” -- people (usually in their 20s) who have never had a cable subscription.
The easy conclusion is that because this generation grew up with a wide array of online video options, they are going to abandon TV en masse and that it’s just a matter of time until pay TV dies.
Not so fast...
The problem with making sweeping generalizations about generations and their behavior is that the generalizers forget that the behavior often has more to do with life stage than with birth year. Millennials switch jobs and careers a lot because they’re in their 20s and people in their 20s have always switched jobs and careers a lot: they’re unburdened by families and mortgages and society has deemed it acceptable to spend the post-collegiate years making these types of choices. (Let’s not even get started on the NASCAR Blindness of focusing on “post-collegiate years” which only takes in the experience of the most affluent third of the millennial generation.)
But back to TV: I suspect the reason for the increase in “TV Nevers” is mostly due to the fact that single 20somethings have active social lives and don’t spend a lot of time watching TV and so don’t really miss it, along with a push from a poor economy and the hassle associated with installing a pay-TV setup.
The availability of services like Hulu and Netflix no doubt serves to lessen the pressure for those who are avoiding TV simply because they don’t have time to watch a whole lot of it. But that's the key: it's a great panacea for someone who only watches a couple of hours a month. But if you're a heavy user, there's not enough content available to scratch your itch, and pretty soon you are bound to come up against bandwidth caps that make your decision more about principle and less about actually saving money.
That's why I suspect a whole lot of these “TV Nevers” will be coming back to pay TV as they move on to the next phase of life, the one where they settle down and have kids. Especially now that OTT services like Netflix are going to be integrated into the EPG, making consumption via the pay TV provider an even more seamless experience (Google is already providing OTT integration in its Google Fiber TV -- other MVPDs are not far behind.)
Chillax Chicken Little. The sky is not falling.
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