Young and poor challenge traditional pay TV model

Young people and the poor--often synonymous but in this instance separate entities--pose the biggest risks to the pay TV service model as it exists today, a pair of reports claim.

Members of Generation Y--the young--have been well chronicled as cord cutters whose attention spans are being drawn by any number of new Internet-ready devices. According to a study by marketing consultants Ideas and Solutions!, traditional pay TV providers need to develop some nontraditional products, packages and messages to draw in and then retain members of this upcoming generation.

That may be the easiest job facing the pay TV industry. Sanford Bernstein analyst Craig Moffett has issued his own report that points to the pay TV industry's "poverty problem" among Americans who, even if the recession is over as many believe, can no longer afford pay TV costs that have continued to rise as programmers and broadcasters alike have demanded more bucks for their content.

"At the low end, customers aren't just choosing between one provider and another. They're often choosing between these services and a third meal," Moffett said. The most convenient choice for those who want entertainment, he said, might be to take the third meal and back off on the pay TV service in favor of Netflix (Nasdaq: NFLX), Hulu, YouTube and other over-the-top providers and "make do with a back catalog or off-the-run TV shows and movies."

For more:
- the Hollywood Reporter has this story
- see this release

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Study says subscribers aren't abandoning pay TV for over the top services
Analysts see slight rise in pay TV subscription numbers

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