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Cable television broadcasting industry

Cable TV Industry Shifts as Millennials Lead Small-Screen Viewing Trend

Strategic Insights

— 2 min read

Millennials are revolutionizing the way they consume video content, leading cable TV companies to focus on the younger generation. According to Wunderlich Securities analyst Matthew Harrigan, millennials have the propensity for over-the-top viewing and prefer smaller form-factor devices like laptops and mobile phones. This shift comes as the average pay TV bill reaches $99, prompting consumers to "cut the cord" and opt for cheaper a-la-carte web-based alternatives like Netflix and Hulu.

Key Takeaways:

  • Millennials account for only 20% of total pay TV subscribers, but their viewing habits are driving the industry's focus on the younger generation.
  • Wunderlich Securities analyst Matthew Harrigan notes that millennials have the propensity for over-the-top viewing and prefer smaller form-factor devices like laptops and mobile phones.
  • The average pay TV bill has reached $99, prompting consumers to "cut the cord" and opt for cheaper a-la-carte web-based alternatives like Netflix and Hulu.
  • Cable companies are launching new streaming services to appeal to millennials, including Comcast's Stream and Dish's Sling TV.
  • The cable industry's largest stocks, including Comcast and Charter, have shown constructive chart action and have gained 12% since the start of the year.
  • The proposed merger between Charter and Time Warner Cable has been filed with the FCC, with Dish expressing concerns that it could limit consumer access to online video programming.
  • Liberty Global is Charter's largest shareholder and has taken a 3.4% stake in Lions Gate Entertainment.
  • Altice has agreed to acquire Cablevision Systems for $17.7 billion, and AT&T has closed its $49 billion acquisition of DirecTV.
  • Analysts say that the proliferation of over-the-top competition is a major challenge for the cable industry, with multiple streaming services emerging to compete with traditional pay TV.
  • Apple is working on an a la carte streaming solution, but content companies are reluctant to provide shows at a discount, and the amount of data-center capacity required to stream content nationwide is a concern.
  • YouTube and Facebook are also emerging as threats to traditional pay TV and radio programming through cable and satellite providers.

Statistics:

  • 72.6% of downstream Internet traffic in North America during peak hours comes from real-time entertainment, including streaming, on-demand video, music and gaming services. (Source: Sandvine's Global Internet Phenomena Report)
  • 36.5% of downstream Internet traffic in North America during peak hours comes from Netflix alone. (Source: Sandvine's Global Internet Phenomena Report)
  • The average pay TV bill has reached $99. (Source: Leichtman Research Group)
  • 12% of the Telecom Services-Cable/Satellite industry group has gained since the start of the year. (Source: IBD)
  • Comcast has a market capitalization of $151 billion. (Source: Comcast's Q3 report)
  • Charter and Time Warner Cable have a combined 15.3 million subscribers. (Source: Charter's Q3 report)
  • Netflix has over 42 million subscribers. (Source: Netflix's Q3 report)

Sources:

  • Leichtman Research Group
  • Sandvine's Global Internet Phenomena Report
  • Wunderlich Securities
  • Comcast
  • Charter
  • Time Warner Cable
  • Dish
  • Liberty Global
  • Discovery Communications
  • Altice
  • AT&T
  • Google-owner Alphabet
  • Facebook
  • Jefferies
  • Investor's Business Daily

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