Why millennials are increasingly cutting the cord

Why millennials are increasingly cutting the cord

A family of six sits crouched over a tiny 13-inch screen. Ed Sullivan — charming and poised — speaks directly to what felt to be all of America. Television programming was conceived to bring families together.

And at the time, that was exactly what we needed. It was revolutionary for millions of households across the country to feel like a single, cohesive unit, reacting in unison. From 1950 to 1960, the number of American households with a television set climbed from 9% to 90%. Today, however, the trend is reversing.

We live in a world of chaos, clutter and chatter. Our minds work differently now, and we require more and more to catch our attention. “Watching television” is a phrase in flux; especially for millennials who are tech-savvy, thrifty and demand instant gratification, the way they consume content is changing.

Josh Bernoff, senior vice president of idea development at Forrester Research, said in 2005, “The future is about whatever I want, wherever and whenever I want it … and the more ways you do that, the more revenue there is for everybody in the business.” Indeed, Bernoff’s projection was correct.

Are you cutting the cord?

Many millennials find themselves simply fed up with their cable companies, for myriad reasons -– the service, the plan, the price. And so, we’ve seen an interesting shift towards alternative television and what’s been termed “cord-cutting.”

A recent survey conducted by Frank N. Magid Associates showed that among 18-to-34 year olds, TV as the primary medium for entertainment is down 40% to 21%. At the same time, those who can’t live without their smartphones is up from 22% to 50%. A shift that demonstrates where priorities lie. And while this distaste for traditional television increases, so does the amount of “over-the-top” content, and 76% of cord-cutters are simply satisfied with the content that they’re getting OTT.

We’ve seen, too, that adults who watch video in tablets or smartphones are 1.5x as likely, those who stream video on a TV are 3.2x as likely and those who use a TV solely for online video streaming are 5.7x as likely. And seeing as how 68% of millennials consume their media on a computer, 29% from a tablet and 31% from a smartphone, it’s easy to imagine why this younger generation is more prone to seek out other forms of media consumption. Since 2013, the pay-TV industry has lost more than 2.2 million customers, according to Nielson.

millennials aren’t cutting the cord simply because of medium preference, but also due to increasing prices. The average cost of an expanded basic cable service has increased an average of 6.1% annually since 1995, up to about $65 a month (lower than many cable television services, according to the NPD Group). AT&T’s U-Verse and FiOS have both reported that there will be a rise in 2015. And when subscriptions or streaming services or alternative television packages are more than half the price of standard cable (even when combined), why wouldn’t you ditch the traditional? Even a combination of several streaming options ends up costing less than traditional cable.

Live television isn’t dead yet

But it’s not that millennials are completely done with live television -– no, they’d just rather find a more accessible, cheaper option. Forty percent want access to live TV online, desiring real-time experiences rather than on-demand.

Mitch Lovett, professor of marketing at Simon Business School at the University of Rochester, says that most people are still watching many hours on a traditional TV format. “However, as options become better for the live events, the bundled ‘must-view-live’ and ‘happy-to-delay’ programming will be broken. This is on the horizon. This change is likely to have profound impacts on viewing and content creators.”

We can’t deny the incredible popularity of subscription on-demand services like Netflix, Hulu and Amazon, but these streaming sites can’t completely compete with live television. There’s something special about watching content as it airs, while thousands of others are tuned in at the same time. And for millennials in particular who are constantly connected to social media, it’s especially hard to avoid spoilers from those who did watch live.

Indeed, televisions aren’t going away completely. Around half of digital media player owners say that they use devices in addition to their regular live TV viewing, which is larger than the proportions that use these devices as a substitute.

President of HuffPost Live Roy Sekoff agrees that the “death of the TV” has been exaggerated. “We are certainly seeing a seismic shift in the way people consume content –- and a trend towards cord-cutters and cord-nevers. But millions and million of people still watch what we’d think of as traditional TV,” he says. “In the end, it’s all about great content –- who really cares if it comes to you via broadcast, cable, satellite, the Internet, OTT or beamed directly into your brain (that’s coming soon, right?)”

And it’s true. Regardless of where you’re getting your content, content is still king. The numbers are showing a 4% drop in total viewing for traditional TV, including live programs, however, says Co-CEO of PM Digital Chris Paradysz. “But viewers aren’t approaching television from this standpoint — they just want to make use of the most accessible means of consuming the content they crave.”

What everyone can agree on is that we’ve reached a pivotal point where this shift to OTT on TV screens will surely impact the entire entertainment industry, pay-TV, cable networks and online providers alike. Let’s stay tuned.


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