Pay-TV less relevant for next generation

The pay television industry isn’t threatened by those are cutting the cord now but will be by the people who won’t buy the cord in the first place, according to Credit Suisse media analyst Stefan Anninger who warns that today’s teenagers are tomorrow’s “cord-nevers.”

“They are growing up in an Internet-based video culture in which the mantras of ‘why would I pay for TV?,’ ‘pay TV is a rip-off’ and, ‘I can find that for free on the web’ are getting louder. We fear that some of these consumers will find pay TV far less relevant to their lives than do today’s adults,” Anninger wrote.

In the report, Anninger predicted that the pay multichannel universe will drop by 200,000 subscribers in 2012 to 100.5 million.

Most of the major multichannel video programme suppliers (MVPDs) have seen subscriber numbers fall over the last few years. Those declines have been blamed on a weak economy. Anninger says that while the economy has indeed played a big part in people deciding to go without a pay-TV service, to assume that the numbers will grow in an economic recovery is “Pollyannaish and overlooks the longer-term behavioural shift that younger consumers are undergoing.”

Won’t kids ultimately grow up and come around to pay cable? The same thing was said about kids getting land-line telephones, Anninger said, but many consumers use only a mobile phone for their telecommunications needs.

The MVPDs, Anninger said, need to start offering lower-priced programming packages. Some operators — including Time Warner Cable and Comcast – are doing just that. The problem is that typically those packages don’t carry all the big – and thus more expensive – cable networks including ESPN.