Millennials just don’t feel the need to subscribe to cable anymore — here’s why.
The number of households cutting the cord accelerated in 2016. The pay-TV industry lost 1.7 million, or 1.7%, of its customers in 2016, according to MoffettNathanson analyst Craig Moffett. That’s up from 1.1 million in 2015.
One of the biggest pain points for cable companies is Millennials. A recent survey from Videology found just one-third of Millennial males plan to pay for television this year. That number is shrinking as 9% of Millennials plan to cancel their cable subscriptions this year, according to a survey from Magid Advisors.
But Millennials aren’t all debt-strapped cheapskates looking to save a few bucks every month. Less than one-third of Millennials said cost was a reason for canceling cable. Here’s the real reason more Millennials are cutting the cord.
They don’t need cable
The biggest reason Millennials are canceling their cable subscriptions is because they’re getting enough entertainment from over-the-top streaming services like NetflixÂ (NASDAQ: NFLX), Amazon.comÂ (NASDAQ: AMZN) Prime and Hulu. Over half of respondents said they were satisfied with what’s available a la carte.
All three major streaming services have been stocking up on premium content over the last few years. Netflix’s budget ballooned to $6 billion this year, and its slate of original productions is winning Emmys and Oscars. Likewise, Amazon doubled its content spend in the second half of 2016, and it too brought home more than a few trophies this award season. Meanwhile, Hulu has forged some major content dealsÂ and provides the unique offer of new television episodes for many major networks.
For customers looking for more, Time WarnerÂ (NYSE: TWX) offers HBO Now and CBSÂ (NYSE: CBS) offers Showtime OTT and CBS All Access.
There’s a growing number of options for streaming video, and each option keeps getting better.
Can the cable industry fight back?
Cable has a few options to combat the rise of over-the-top streaming video services. Many providers have introduced skinny bundles in recent years. Magid Advisor Mike Vorhaus sees skinny bundles as a key part of the solution to keep customers that would otherwise leave.
But skinny bundles suffer a few problems. First, it’s really difficult to create a compelling bundle of a few channels since a handful of media companies control the hundred-or-so cable networks. If a cable provider wants one channel, they have to take a whole group of channels from the media company. Moreover, skinny bundles simply focus on price, not the major conveniences of over-the-top services.
One big advantage of services like Netflix is subscribers can watch what they want where they want on any device they want. Most pay-TV providers make consumers jump through hoops in order to watch programming on their mobile devices, and some channels…