Study shows decay in pay-TV subscriber rates among younger consumers

editor's corner

Jim O'NeilHere's a sentence from a recent study about cord cutting and its impact on pay-TV that should cause operators to lose just a little more sleep over the next few weeks: "The current model will remain viable for the next two to three years, at a minimum."

Viable for the next two to three years.

That's the somewhat tepid endorsement put forth by J.D. Power and Associates in its inaugural report on the industry, its 2011 U.S. Residential Pay-to-View Study.

J.D. Power's director of telecommunications, Frank Perazzini, wrote in the report that "just 3 percent of pay-to-view customers report having cut the cord and cancelling their television service in favor of other viewing options."

That's pretty much the good news, and it's a position industry wags and some analysts have been championing for the past year or two.

But the study also shows that the full picture about cord cutting tends to be a little less cheery as you drop from the Baby Boomer generation and into Generation Y and Generation X.

The study shows that younger viewers are more than twice as likely to cut the cord. While 2 percent of Baby Boomers have bailed, 6 percent of Gen Y said they've cancelled their service, and 4 percent of Gen X customers also have opted to cut their pay-TV service.

Perazzini said the study shows that "The predictions of the demise of television subscription service as we know it are clearly premature." But he goes on to back that up with this: "The popularity of services such as Netflix and Redbox is a clear indication that consumers are enjoying the availability of alternative viewing options."

And, he has a point. Subscription TV is here to stay. What kind of subscription, however, remains up in the air.--Jim