Grappling With Millennial Age

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We’ve heard a lot about cord-cutting in
recent weeks. While the opinions shared by prominent
members of the industry regarding the reality of the
alleged phenomenon are many and varied, the overwhelming
majority of speakers have described the incidence
as minimal to nonexistent.

Some attributed the video-service disconnects suffered
to the sputtering economy. Others pointed to an
unsurprising roll-off of households that came to subscription
TV under a temporary, and now-expiring,
promotional offer during 2009’s transition to digital overthe-
air television.

The given explanations probably account for the vast
majority of the disconnects. Cable and satellite TV remain
terrific values for most Americans for the same
reasons that have held for a long time: great pictures,
a deep and diverse programming menu and exclusive
content, all presented on the screen of choice in the
comfort of the home.

On the other hand, wildly popular new media networks
operating entirely outside of cable
and evolving methods of consuming
“old” media make me wonder if we are
also beginning to experience the leading
edge of something new: a rejection
of the multichannel-TV subscription value
proposition by a significant percentage
of the next generation of would-be
subscribers, the “millennials,” i.e., the
30-and-under age group.

While the evidence is extremely limited
and mostly anecdotal, it is consistent
and troubling. As I talk to these
young consumers, I hear from some that
they’ve cut the cord because they don’t
think the value of “basic” cable and a settop
box justifies a price of $65 or more every
month. That’s meaningful in a starter
household and comes on top of the cost of
absolute necessities, including a mobile bill of at least $70
and an Internet charge of another $45.

The perception of a poor price-value equation is not
surprising when considered from the millennial point of
view. The breadth, diversity and exclusivity of the video
content package seems to resonate far less with these people
than with their parents. Vertically-programmed channels
of nearly on-demand weather, news, music videos,
sports scores, etc., are anachronisms to those who find
that and a lot more instantly on their phones, computer,
and iPads. More than enough of their favorite shows are
available over the air and online (legitimately and not-solegitimately)
and they’re free of charge!

On the other hand, this group that grew up purchasing
individual songs doesn’t seem to mind buying some video
content if it is able to choose exactly, and only, what it
wants via DVDs, Windows Media Center, iTunes, Netflix,
etc. The inability to do that on cable and the perception
that they are paying for dozens of channels they don’t
want lead to a relatively logical conclusion that cable
and satellite are out of date, and perhaps gouging them.
Meanwhile, nascent alternatives promising personal
selectivity power announce launch plans continuously:
Google TV, Roku, Xbox 360 and Apple TV among them.

Acknowledging and accepting that the coolest new
content of recent years — Facebook, Twitter, Foursquare,
GetGlue, etc. — isn’t even on cable or satellite is sobering.
Social networking is very important to millennials,
and so far, at least, multichannel TV delivers little value
in that content arena.

Time will tell whether or not the millennial generation
gravitates to cozy chair, big screen, lean back and
chill out behavior when the demands of adult life fully
set in. For now, these are lean-forward consumers. They
are perfectly comfortable spending hours engaged in the
smaller screens and responsive keyboards of computers
and mobile phones.

This group grew up in control of their entertainment
sessions, whether using video games, DVDs, downloads
or websites. Millennials expect to watch what
they want when they want. And, often, to talk about
what they’ve seen. But they don’t wait
to share their stories at the office water
cooler. That’s an ongoing process
via texting and the social media applications
to which they devote hours
each week —and which don’t require a
cable or satellite-TV subscription.

According to current research from
Horowitz Associates, as many as 25%
of millennials would consider canceling
their TV subscriptions in the near
future.

How might multichannel TV get its
millennial mojo back? Some immediate
steps seem obvious. Together,
programmers and distributors could
create a path to offering a smaller, lessexpensive,
but still very high-value,
entry-level programming package. A
one-size-fits-all basic package with ever-escalating license
fees doesn’t seem sustainable much longer.

Giving the customer real personal power in selecting the
programming he or she will receive and pay for beyond the
new basic seems a competitive necessity as well. Cableoriginated
content, enabled in large part by license fees,
needs to be protected, and the customer supporting it must
have easy access, live and on-demand, via TV Everywhere.

If the industry is to remain as dominant a video delivery
system as it is today, it must soon infuse the multichannel
TV experience with the empowering individual control of
the web by offering new, innovative, and interactive content
applications; a nimble and dynamic user interface;
and web-enabled technology and devices.

If cable doesn’t give millennials what they want, others
will.

Michael Egan, senior founder and principal of multichannel
industry consulting firm Renaissance Media Partners,
is a former executive with Cablevision Industries and was
the co-founder of MSO Renaissance Media Holdings.

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