More millennials pay for online video than any other age groups but a majority still subscribe to pay TV, according to a new report from Parks Associates, which tracks the burgeoning online video space, also known in the industry as OTT, or over-the-top.
While 23 percent have cut the cord entirely and only watch video online, another 61 percent of young consumers in their 20s to 30s watch online and still pay for traditional TV, according to Parks survey of 10,000 U.S. broadband customers who are heads of households.
Both percentages are up from last year.
“I would say 23 percent is quite a bit. It’s one-fourth of all millennials we surveyed. They have no TV at all but considerably more have both,” said Ruby-Ren Bond, the Parks research analyst who oversaw the report. “One fourth of an entire generation choosing not have any pay TV is extremely significant.”
Comparably, 15 percent of U.S households with broadband service are exclusively online video users, while 52 percent use both OTT and pay TV.
Bond tracks more than 130 active online video services, including an upcoming one called VidGo, which aims to be a live-TV competitor to Sling TV, based in Douglas County. The top company, with more than 80 million customers, is Netflix, “by far the market leader. It has twice as many subscribers as its closest competitor” Amazon Prime, she said.
Douglas County’s Sling TV, an online-video service from Dish Network, is also popular because it tweaked the model by offering live broadcasts of traditional cable channels. A direct Sling competitor is Sony’s Vue, which launched in Denver in March.
But these “linear TV” services also stand out because of marketing and adapting — in addition to having live sports and entertainment broadcasts, Bond said.
“The one thing Sling has focused on is consumer awareness and brand awareness,” she said. “Really, Sling is just now beginning to make strides to be everything they’d hope to be. Both Sling and Vue have a lot of potential. And they still say ‘I don’t feel like we have the final product yet.’ Not to say that their product now is incomplete, but they are constantly changing their packages and listening to customers to figure out what they really want. They’re still a startup, really.”
Sling, for example, recently added a second monthly plan that allows users to share an account.
Nationwide, Parks research shows that 64 percent of U.S. broadband households now subscribe to some sort of Internet-based video service, up from 59 percent last year.
But with more than 100 options, consumers are still toying with the new offerings and mixing and matching the services to fit their lifestyle, Bond said. Excluding users in free trials, the report said 20 percent of U.S. households canceled an OTT service last year. Netflix had the lowest cancellations, at 5 percent.
But keep in mind, she added, that some millennials live with their parents and may count their parents cable subscription as their own. Plus, the cable TV industry has recently pushed slimmer cable TV plans that cost a bit less or toss in some TV channels with the price of broadband service.
“It’s booming. That’s the best word for it,” she said. “But the majority of Americans still have pay TV. The majority of millennials still have pay TV. When OTT-only overtakes the amount that has both, that is going to be our turning point.”