Young adult Americans living with their parents are more likely to subscribe to an online video service like Netflix or Hulu once they leave home than a traditional pay-television service. That is the conclusion of a report from TDG Research on Late Millenials: A study in media behaviour. Yet these people may grow up to become more like their parents than they imagine.
TDG surveyed 2,000 adult broadband users between the age of 18 and 24, half of them living at home with their parents. Of those living with their parents, 49% said they were highly inclined to sign up for an online video subscription service when they move out, compared to 31% who said they would subscribe to a traditional pay-television package.
Among those that were more neutral, 37% said they would sign up with an online service, while 44% said they would subscribe to traditional service. 14% said they were highly disinclined to sign up for an online service, compared to 25% who said that of a traditional pay-television offering.
“Much has been said about younger adults and the choices they may make about their home TV services once they leave their parents’ home” notes Michael Greeson, president and principal analyst for TDG. “Yet little research has been offered up to support the various hypotheses.”
“While this data can be spun to rationalize a number of arguments, the simplest insight may be the most profound,” notes Greeson. “The very fact that young consumers perceive online video services as somehow more desirable or necessary than incumbent pay-TV services says volumes about the future of video.”
For some, this will be seen as support for the view that over the top online video services will overtake traditional service provider channel packages.
However, such a conclusion should be treated with caution. Young people are unlikely to aspire to pay for television and often have different priorities to their parents but as they grow older they tend to become more like them than they might have imagined.
As Michael Greeson notes, their views may change over time if online video services are unable to acquire the content that these consumers will want as they marry, have children, and move up the career ladder. “In the end, it will still be less about the conduit and more about the content and value the service provides.”
Yet this ignores the role of traditional channels in producing, packaging and promoting programming that people will want to watch and the habitual nature of television viewing.
Netflix and Hulu Plus may be more of a substitute for the video store than traditional television channels.
In any case, these services will be delivered over a broadband connection and that will become the main reason that younger people subscribe to a communications service provider.
It seems likely that television and video services will evolve to embrace the next generation much as they have over previous decades. That will mean offering the flexibility of viewing that users appreciate with online video services, together with programming that they have come to expect from television.
Reed Hastings, the chief executive of Netflix, has said his goal is to “become HBO faster than they can become us”.
The challenge for traditional channels will be to evolve fast enough to remain relevant to their next generation of viewers.