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Millennial Cord Cutting A Scary Reality for Cable MVPDs

Millennial Cord Cutting A Scary Reality for Cable MVPDs


Image Credit: Pacific Crest

A grim reality has set in for MVPDs (multichannel video programming distributors) a.k.a. the Cable Companies, with the release of new numbers from Wall Street data firm, Pacific Crest.  The data is staggering, with some reporters referring to a “cord-cutting apocalypse”.   The new numbers show a reduction in cable subscriptions that over tripled from Q2 of last year.  Subscriptions fell 141,000 in Q2 of 2014 and then took a nose dive in Q2 of this year with a loss of 463,000 subscriptions.  This is no fluke, either.

Clearly the trend, especially among millennials, has been to forgo an expensive cable subscription for application subscriptions like Netflix, Hulu and Amazon Prime.  In addition, TV shows being produced and released by companies like Netflix are seeing large success and drawing big name actors.

In 2009 the number of U.S. households with cable subscriptions peaked with almost 90% of households having a subscription with a Top 8 Cable provider.  As of Q2 of 2015 that number has dropped to around 76%.  In response to the dropping numbers, Cable companies scrambled to offer “skinny bundles” that allowed a bit more control over the channels being purchased and a reduction in bundle prices.  These offerings (i.e. Sling TV) have seen little little interest, which companies like Netflix, Hulu and Amazon Prime are seeing subscription growth between 20 – 45%.

Millennials believe in having control over content that they specify and having access to it all of the time and while they are willing to spend and spend big on technology, they are frugal and savvy when it comes to contracts and having to pay for what they don’t use.    The trend towards cord-cutting is very black and white and building owners are becoming aware of resident preference for property-wide wireless access to support cord-cutting service, voice calling and of course, provide internet access.

Cord Cutting Making Big Headlines As Giants Like Apple Get TV Serious

We recently wrote an article about Dish TV’s new offering, Sling TV, which is the first really attractive internet TV package.  Attractive because Sling includes both ESPN and Disney Channel, two titan channels previously unavailable in internet TV packages due to the cost to the provider of including them.

Now cord cutting is making quite a bit of major news headlines.  Just this week, two big articles came out in The Wall Street Journal with the lastest on pay-for internet TV and what the future holds.  In “Unbundling Pay-Tv Brings New Questions“, the WSJ states:

“The media industry is racing toward an Internet-TV future at a breathtaking pace.  But the swift changes, highlighted by efforts from Apple Inc, Dish Network Corp. and others, are giving consumers an array of confusing options and forcing entertainment giants to confront some sobering realities.”

For a day and an age, the cable companies have held a tight court over TV viewing, even navigating their rein through the streaming giants: Netflix, Hulu and Amazon Prime.  The bottom line was: if you want live sports, if you want to watch live shows, if you want access to movie channels, you have one option: a $90.00+ / month cable subscription.  This is changing… and changing fast due to serious commitments to internet TV from the likes of Apple, Inc., Sony Corp. and Dish Corp.

The whole pay-for internet TV model is based on the premise that YOU control what you pay-for and get what you want.  This, of course, gives the media giants the argument presented by Philippe Dauman, CEO of Viacom, in WSJ:

“If you buy retail and you have six or seven of these things [referring to pay-for Internet channels], that might cost you as much as a bundle that gives you 400 different networks.”

Dauman’s take on things is simply outdated at this point and not some Millennials seem likely to fall for anymore.  The obvious counter-argument being, 400 channels of what?  Typically a lot of junk no one wants to watch… and the Millennials are not an easily duped generation.   Millennials are used to much more control over their destiny and their consumption.  This is a generation that wants what they want, how they want it.  This is a generation that wants to scale down and live in a customized “small space”, a generation that has obtained flex hours and work-from-home options- shunning the old-school corporate culture, a generation brought up with Napster and most of all a generation that is completely addicted to their devices and the capabilities that their devices offer.

Roger Lynch, chief executive of Dish’s Sling TV, makes mention of the shunning of pay-for cable TV service, simply: “there’s a growing number of consumers for whom that doesn’t work anymore” and pay-for Internet TV will be, “better for many consumers”.

Clearly, we will be living in a much different media consumption work come this time next year…


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