Pay-TV operators "at risk of losing Gen Y subscribers"

Pay-TV operators are at risk of losing 'Generation Y' subscribers, who are less attached to traditional television and more prone to finding a greater cost-benefit equation with alternative viewing platforms such as online video, according to a new report commissioned by US consultancy Ideas & Solutions!.

The study was carried out with 500 US-based respondents aged between 18 and 29 (the so-called 'Generation Y'), who were segmented into three groups: 'Loyalists', 'Leaners' and 'At-Risk'. Within this "highly influential" age group, the customers deemed least likely to cut their pay-TV service (the 'Loyalists') represented the largest segment, at 40%. The remaining 60% of respondents were either leaning towards cutting their service (the 'Leaners') or seriously considering it (the 'At-Risk' group).

"While the media has focused much of its reporting on the extent of cord-cutting overall, there is little mention of the behaviours and attitudes of vulnerable groups within this key constituency," said Glen L. Friedman, president and founder of Ideas & Solutions!. "This is the demographic that completely transformed the music and the phone business and has already started to dramatically reshape the pay-TV ecosystem.”

Those who considered cutting the cord were found to be more likely to be early adopters of new technology (and thus less hesitant to experiment with online video services such as Hulu and Netflix), and also displayed a strong desire to control their TV viewing by using a DVR as well as on-demand services.

“You have to look at the trends and young consumers’ comfort zone in getting their media from a wide array of sources," added Mr. Friedman. "Clearly, the population that is emerging - and it is a large and dynamic group of more than 70mn consumers - is going to be more receptive to alternatives and much less prone to automatically subscribing to cable. It’s not that the sky is falling, but it certainly warrants a lot of attention, and the subscription-based pay-TV providers, along with the programmers who rely on them for distribution, should really invest the time and the resources to get to know this audience better.”

Encouragingly for pay-TV providers, the report found during qualitative interviews that many of those who have already cancelled their pay-TV service in favour of online alternatives would consider returning if their lifestyle situations changed and providers were more attuned to their preferences. The report emphasises the importance for operators of actively responding to the needs and habits of 'At-Risk' and 'Leaner' customers by emphasising the services and features that the group embraces.

Within the 'At-Risk' group, respondents named the cost-benefit equation of pay-TV services as the biggest reason why they would cancel their service: 69% of 'At-Risk' responders and 61% of 'Leaners' cited expense as their main reason for considering the discontinuation of their pay-TV service.