Younger viewers ditch traditional TV; pay TV drops 1.2M subs

That younger consumers are turning away from traditional delivery of TV is no surprise. It’s a trend that has been surfaced before and talked about ad nauseam. It’s something I’ve talked a lot about over the past five years in the quarterly Global Video Index. Especially  as we se an increasing migration to mobile devices for consumption of all OTT content, especially live sports. And I’ve warned that the generation following Millennials – Gen Edge – could  be even less TV-centric.

A new report shows the “Golden Age of Television” may be just that, a medium that’s far more attractive to older viewers than the most valuable demographic, 18- 35-year-old Millennials and members of the following Gen Edge. The Nielsen report says erosion of younger viewers from the traditional TV audience is happening at a faster pace in the past two years than in the previous two.

In 2014, the percentage of 18-34-year-olds watching TV – including DVR playback – in an average minute was 26.4%.

It’s been dropping annually, and in the first four weeks of October this year, it had dropped nearly 10 percentage points to 16.8%. That’s a drop of more than 36% in four years, and more than 15% in the past year (compared to 11% in 2017, 7% in 2016 and 8% in 2015).

Gen Edge outpacing Millennial defections

Gen Edge, meanwhile, has abandoned traditional TV in even bigger numbers, according to the report. The demo is down 48% since 2014 and 18% over the past year. Even older audiences, those 55 and above, saw a 2% dip between 2017 and 2018, admittedly small, but still worrisome.

“Younger generations are growing up with more choices at their fingertips,” Peter Katsingris, senior VP of audience insights at Nielsen, told USA Today.

And older viewers are starting to catch that wave, because streaming content to connected devices and to mobile phones continues to grow cross-generationally, as I’ve written in the Video Index.

Many of those defectors from traditional TV have come from pay-TV services. In Q3 operators watched as more than 1.2 million subscribers walked away. Some of that was offset, slightly, by the 75,000 new customers to virtual MVPDs. DirecTV Now added 49,000, and Sling TV added 26,000.

But that’s really just a drop in the bucket.

YouTube TV, PlayStation Vue, and Hulu’s Live TV don’t publicly report subscription numbers, but anecdotally I can tell you all three have seen steady gains and S&P Global posits the segment has gained 2.1 million subs this year.

Pay TV’s struggles

Overall, cable operators and telcos lost about 475,000 subs in the quarter.

The biggest loser was satellite. With DISH seeing 367,000 subscribers signing off in the quarter and DirecTV losing almost as many, 359,000.

That brings 2018’s total losses to more than 2.8 million, a significant acceleration over past years.

Those losses will continue, and accelerate, as more users become conversant in OTT and live linear increasingly takes a back seat to video on demand.

The bottom line

The end of appointment television has been looming like gray clouds on the horizon for many quarters. This is simply a reflection of that continued trend.

With Disney and Apple OTT services on the horizon to launch in 2019 the storm facing pay-TV providers will intensify.

eMarketer forecasts a 30% jump in cord cutting in 2018. It posits that 10% of the US population over 18 – about 24.9 million persons – will no longer have access to traditional pay TV.

It expects that number to more than double in the next five years to 21% or 55.1 million persons.

Just four or five years ago, streaming services were being labeled as supplementary to pay TV, an inexpensive add-on that would offer viewers alternative content.

The reality, now, is that OTT is on a decidedly upward trajectory while its competition is not. Current market pressures are increasing the cost of content at a time when original content is in demand, the basic law of supply and demand in action.

Stay tuned.

Jim O’Neill is Editor of Videomind and Principal Analyst at Brightcove. You can follow him on Twitter @JimONeillMedia and on LinkedIn