They may not be as big or have as much impact upon American culture as the Baby Boomer generation, but Millennials (a.k.a. Gen Y, Generation Net, Generation Me and Echo Boomers) are likely to have a huge impact on the pay-TV industry and on the continuing adoption of online video.
Many analysts and industry pundits have regularly disputed whether cord cutting is actually a trend or just an aberration in the norm caused by the struggling economy, à la Bernstein analyst Craig Moffett.
But there have been several who've pointed out that the bigger issue may not be today's cord cutters or cord shavers (cable subscribers who are looking to reduce entertainment costs) but tomorrow's: the "never-weres."
Those consumers are defines as never having had a pay-TV subscription. The norm? College students, recent college grads, children who've graduated high school and are still living at home, those Echo Boomers who have grown up getting their entertainment from Google's (Nasdaq: GOOG) YouTube and, more recently, Netflix (Nasdaq: NFLX), Hulu, Amazon (Nasdaq: AMZN), Vudu and elsewhere on the Internet.
Conventional wisdom, as recently as two years ago, was that those consumers, once they'd been out in the "real world" for a while, would gradually adopt the ways of their parents, settling into a home with a significant other, raise a family, and, along the way get a pay-TV subscription.
As one analyst said to me, when I suggested that my college-aged sons had no interest in pay-TV, getting all of their entertainment online, "Where will they watch sports?"
I asked him in return, "What kind of phone does your kid have?"
The non sequitur left him nonplussed for a moment. My point was that even a decade ago, we almost all had landlines, and that, as recently as two or three yeas ago most of us still got our news every morning in a newspaper, and caught up with the 11:00 p.m. news on TV.
Those business models suddenly have crumbled.
In Michigan, where I live, the largest newspaper chain in the state just announced it was cutting home delivery to three days a week, and increasingly would be focusing its efforts online. My landline, like yours, is long gone.
Surprise. Change happens.
This week, Credit Suisse analyst Stefan Anninger weighed in with an opinion on the future of pay-TV that may surely caused some pay-TV execs to sputter in their morning coffee.
Anninger said pay-TV numbers would drop 200,000 in 2012, rather than gain 250,000 as he had forecast earlier.
The reason? Kids.
"They are growing up in an Internet-based video culture in which the mantras of 'why would I pay for TV?,' 'pay-TV is a rip-off' and, 'I can find that for free on the web' are getting louder," he wrote. "We fear that some of these consumers will find pay-TV far less relevant to their lives than do today's adults."
He described pay-TV industry beliefs that the trend in declining subscriber numbers would change with a renewed economy as "Pollyannaish," saying it "overlooks the longer-term behavioral shift that younger consumers are undergoing."
Anninger advised the industry to craft smaller, cheaper programming packages as one way to help attract younger viewers.
I'd advise them to find a way to embrace online video, which, according to comScore set new records for viewership in October.-- Jim