Multimedia Millennials: Cable operators offer more apps and streaming services to young consumers

According to Pew Research, one-in-seven Americans are television “cord cutters”, Millennials’ (18 – 34 year olds) are leading the way in bypassing traditional TV viewing with video streaming services, leading to a generation of cord cutters and cord nevers. According to new research from The Diffusion Group, a majority of Millennial Cord-Nevers – young adult broadband users that have never signed up for a pay-tv service — believe that subscription streaming services like Netflix and Hulu adequately satisfy their video needs. Consequently, they feel little need for a traditional cable, satellite, or telco-TV service.

A parallel scenario to this is a cutover from traditional phones services to cellular plans. About 45 percent of U.S. households use only cellphones. Even among households with wired phone service, according to a government study in 2015, about half of them have already foregone landlines for an Internet-based phone service sold by phone and cable companies along with other bundled TV services.

Viewers (of all ages) have been watching less traditional TV over the past few years, resulting in a drop in the number of minutes viewed. According to Nielsen’s Total Audience report, Teens (12-17), younger Millennials (18-24) and older Millennials (25-34) have reduced traditional TV viewing over the past five years.

Figure 1: Traditional TV viewing by age group

Source: Nielsen Q12016

So, where is that time formerly reserved for TV viewing being spent? On another screen — with mobile apps! Apps now reign supreme as the top media channel in the United States, even without the help of a mobile browser. For the first time ever in 2015, time spent inside mobile applications by the average US consumer has exceeded that of TV, according to Flurry Analytics.

Figure 2: Percentage time spent on TV and Mobile Apps (US Daily Average in Minutes)

This growth of Internet video is also reflected in the Cisco Visual Networking Index (VNI) study. Globally, Internet video (including fixed and mobile) traffic will grow 4-fold from 2015 to 2020, a compound annual growth rate of 31% where Internet video traffic will reach 127.8 Exabytes per month in 2020, up from 33.7 Exabytes per month in 2015.

Deployment of higher speed broadband is key to this trend. There is a strong correlation between average broadband speeds and number of video minutes viewed per viewer, according to the Cisco VNI study (Figure 3). As average speeds increase in each country, the number of video minutes that each viewer is able to consume also increases.

Figure 3. Increase in Average Speeds (Mbps) Increases Internet Video Viewership (Minutes)—2016

Cable operators have a lot to gain from bringing streaming apps onto their platforms (capitalizing on this shift in video consumption). While the set top box continues to have a prominent role in the American home, service providers and cable operators are well aware of the need to address the preferences of the next generation of consumers that consume their video content on a plethora of devices at any place and at any time. Comcast for example will soon let its customers bypass the cable box and get Xfinity service directly on their television sets or streaming media gadgets. The new Comcast app will transform Samsung smart TVs and Roku devices into quasi cable boxes (read more about Comcast’s streaming app strategy). Media outlets such as ESPN are also making their content accessible on computers, smartphones, tablets and streaming devices to fans who receive their video subscription from an affiliated provider. ESPN also plans to launch a digital streaming service online (read more about ESPN’s transformation and challenges). Millennials are clearly reshaping the video landscape. For cable operators and their content/media partners, now is the time to find the right blend of traditional TV programming and mobile app experiences to meet the demands of a new generation that prefers not to be tied to a cable or even a living room couch.