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Pay-TV operators at risk of losing Gen Y subscribers, says survey

Editor’s note: To listen to a podcast interview with Glen Friedman, president of the company responsible for the study, see “Younger adults more likely to cut the cord, says Friedman.”

Members of Generation Y, the group of people who upset the music industry apple cart and helped to make cell phone use ubiquitous, aren’t overly attached to pay-TV and on the whole are likely candidates to cut the cord and take advantage of over-the-top television delivery, a new study from marketing consultancy firm Ideas & Solutions! released June 1 has found.
The survey, conducted by marketing consultancy Ideas & Solutions!, finds that pay-TV providers are at risk of losing Gen Y subscribers to new viewing options.

The survey found participants fell into one of three categories: “loyalists,” who were determined to be least likely to discontinue their pay-TV subscriptions; “leaners,” who were leaning towards cutting their cord; and “at risk,” those who are seriously considering discontinuing their pay-TV subscriptions. The former group fell into the loyalists category, while the remaining 60 percent were leaners or at risk.

"While the media has focused much of its reporting on the extent of cord-cutting overall, there is little mention of the behaviors and attitudes of vulnerable groups within this key constituency,” said Glen Friedman, president and founder of Ideas & Solutions!.

Those willing to be early adopters of online video services, like Hulu and Netflix, were more likely to consider cord cutting. Of those deemed most at risk of cord-cutting, nearly 50 percent use Netflix and Hulu. Conversely, only 29 percent of loyalists use Netflix, and 25 percent watch TV via Hulu. Among leaners, 42 percent use Netflix and Hulu.

"You have to look at the trends and young consumers' comfort zone in getting their media from a wide array of sources. Clearly, the population that is emerging — and it is a large and dynamic group of more than 70 million consumers — is going to be more receptive to alternatives and much less prone to automatically subscribing to cable,” Friedman said.

While the sky is not falling for pay TV providers, the findings deserve attention, he said. The study shows cable, telecom and satellite companies need to develop more products, packages and marketing messages that are relevant to young consumers.

For the survey, "Must Choose TV: What Gen Y Thinks About Pay-TV and Cord-Cutting," Ideas & Solutions! polled 500 people aged 18-29 who are current pay-TV subscribers.