Rise of the Millennials: The Perfect Storm of Change for Cable

There are two major stresses on the current MSO business model technology and changing consumer demographicsamp160 Here is an overview of bothChanging TechnologyThe technological change in the cable ecosystem over the past decade was provided by Craig Moffett Senior Research Analyst for MoffettNathanson LLCamp160 quotFor the last ten years we believed that the Telcos would overbuild cable with fiber on a large scaleamp8221 he said amp8220But now that is largely behind us Actually only 20 of the US will be overbuilt Telcos have largely gone negative Operators in the latest quarter are more than 100 of the market growth sharequotMoffett also spoke about usagebased pricing and the notion of a transport charge amp8220It is not a new idea but ten years later it is an unusual mechanism in the industryamp8221 he explained For the first time I heard it confirmed that cordcutting is real amp8220The data didn39t show cordcutting until 2010 but previously it did not offset household growthamp8221 Moffett continued amp8220But now there is some loss in the ecosystem The last three quarters have seen a huge increase in new household formation according to the US census Yet at the same time there has been no improvementamp160in pay TV subscriptionsamp8221 Offering one bright spot he added amp8220The rate of cordcutting is getting worse compared to last year but the rate of decline is slowingamp8221The business model is also stressed by declining usage Moffett reported that amp8220Live plus 7 viewing across every age demo has experienced huge declines except among older viewers There are ratings pressures among adults 1849 prime C3 rating with long term ratings declinesamp8221 So if the challenge is to increase among nonusers know that this group is old poor uneducated and doesn39t own a computerChanging Consumer DemographicsThe ideal target consumer group is the Millennials who are young tech savvy and have years of spending potential ahead of them But they are hard to reach and are not necessarily subscribing to cable according to Jason Dorsey CSO for the Center for Generational Kinetics and a Millennial himselfWhat are the trends according to DorseyParenting style matters amp8220What really shapes identity in a group is parenting How you are raised is the greatest indicator of what you will do Our parents are Boomers and parenting leads to behaviorsamp8221 Millennials are late bloomers compared to their Boomer parents amp8220At what age do you consider someone to be an adultamp8221 he asked the audience amp8220When you are no longer supported by your parents hold a job and start your own householdamp8221 Some said amp822018amp8221 others amp822021amp8221 But according to Dorsey amp8220Millennials say age 30 They are five years older than Boomers were in starting their first job They are entering the workforce later than before and starting households later Today39s 28 year olds are three years behind where other generations were at age 28amp8221Technology amp8220We have different relationships with technology by how we age and it is hidden until we have to interact My daughter will think that the Jetsons are the past She will never know a time when you could not see the person who you are talking to on the phoneamp8221Delivery matters For cable operators Dorsey cautioned amp8220I would need to learn a new skill to use the technology the way you are delivering it You are serving five generations at one time That has never happened before It has created all types of new issuesamp8221Communication styles differ The ways to communicate with Millennials are different from other groups amp8220We canamp8217t read cursiveamp8221 Dorsey said amp8220so we send you a textamp8221 Millennials want short fast and easy amp8220We donamp8217t do phone calls It is an invasion of privacy A five minute voice mail is like a podcastamp8221A unique mindset amp8220Millennials are driving change but it is not change to usamp8221 Dorsey noted amp8220We don39t think we are a part of a generation We are special and unique We have gotten ribbons for coming in 12th placeamp8221Diversity Millennials are the most diverse generation in US history amp8220We don39t see diversity until it is absentamp8221 Dorsey saidUpside potential amp8220We have more college degrees than any other generation and more college debt which affects future decisionsamp8221 he explained amp8220We are the fastest growing generation in the workforce and the largest generation in the workforce Our generation is entering the wealth accumulation phase We are 25 of all new millionaires We are poised to outspend Boomers in 2017amp8221Different spending patterns But the spending patterns of todayamp8217s 1834s are different from past generations Dorsey explained amp8220The 1834 demo is based on the life stage of that group in 1963 when you had two kids and a mortgage We are 26 and we bought one car and our mom helped We are still samplingamp8221Tech dependency Despite the perception that Millennials are tech savvy according to Dorsey they are not amp8220Millennials are not tech savvy They are tech dependent This is a critical distinction We don39t know how tech works but we know we canamp8217t live without it Boomers invented the mobile phone The tech savvy generation is Gen X because they were there when the hardware and software came together By the time tech got to Millennials it was how simple can you make it so it just works with the fewest number of clicks possible Text is the most preferred method of communicationamp8221The opinions and points of view expressed in this commentary are exclusively the views of the author and do not necessarily represent the views of MediaVillageMyersBizNet management or associated bloggers

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Rise of the Millennials: The Perfect Storm of Change for Cable

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