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Cable Technology Feature Article

September 20, 2013

Demand for Subscription TV is Falling

By Gary Kim, Contributing Editor

It’s hard to ignore the lack of demand that has led Northwestern University to get out of the business of providing a cable TV entertainment service on campus. What is harder is to discern precisely what that means.

Some might say college students prefer to watch TV on devices other than TV screens. Others would say Netflix is the preferred choice for video entertainment, since paying for Internet access tends not be an issue, and access tends to be fast.

The big issue is whether college students are acquiring new habits that will persist after they have graduated. In fact, there already is evidence that earlier generations of students have indeed been less enthusiastic adopters of the subscription TV service habit when they have gotten into the workforce.

In fact, newly formed households have been buying subscription TV at lower rates than older consumers. While 3.2 million new U.S. households were set up since about 2010, the subscription TV industry (cable, satellite, telco TV) only added 250,000 subscriptions in that same period, according to SNL Kagan.

Image via Shutterstock

That is an issue for younger people overall, who seem to be losing their appetite for subscription TV. It has been a standard pattern for some time that older people subscriber at higher rates than younger people.

Some might attribute at least part of that to lower typical incomes for younger age cohorts, and that is a reasonable enough assumption. But evidence is growing that even households with no apparent inability to pay.

For starters, Millennials watch less traditional television than any other demographic, suggesting they find the product less engaging than older people might.

Some 13 percent of 18 to 34 year olds (8.6 million) who already have broadband service are committed to a broadband-only existence, with no plans to buy a subscription TV service.

In addition, many consumers who do buy service are at least considering dropping their entertainment video service (17.9 million 18-34s, as well as 32 million 18-49s).

Perhaps 7 percent of potential churn candidates indicate they would consider keeping their TV subscriptions if offered programming streamed live and on demand, anywhere.

More significantly, 58 percent of broadband-only subscribers would consider subscribing to TV for a bundle of networks from their broadband provider, streamed live and on demand.

The study, sponsored by programming channel Pivot, was conducted by Miner & Co. Studio in association with Beagle Insight.

The point is that demand for subscription TV is on the wane among younger consumers.

Edited by Alisen Downey

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