Millennials' OTT Preferences Are a Major Threat to Pay TV

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The common wisdom is that young adults opt for lower-cost over-the-top (OTT) video services now, but as they start careers and grow families they'll move to traditional pay TV subscriptions. The common wisdom, says L.E.K Consulting, is wrong.

The London-based consulting firm has released a lifestyle study that examines how young people go from living with parents to student life, flat sharing, getting their own place, and starting a family. L.E.K.'s research finds that viewing preferences are consistent over time. What's more, those OTT preferences are spreading to older generations.

Millennials rate new viewing options, such as Netflix, Amazon, and YouTube, more highly than they do traditional brands. They also watch far less linear and recorded television than older adults (10 hours per week, compared to 20). That amount is almost the same for millennials with families (12 hours). Overall, young adults watch roughly the same amount of video per week as older adults, but get it from different sources.

The research also finds that young adults are devoted to YouTube, with 46 percent watching YouTube videos every day. Only 12 percent of older adults do the same. Young adults, even those with families, watch less than half of their video on a TV set. Also, young adults are more open to commercials if they're targeted to their interests.

Traditional television providers need to adapt to this new world quickly, says L.E.K., or they'll fall behind.

"New media companies in the TV industry are rapidly building wallet and mindshare amongst millennials and this is spreading to other generations," says Martin Pilkington, head of L.E.K.'s European media, entertainment, and technology practice. "Our research findings are a wake-up call to the traditional media players that the change in consumption habits is coming faster and is far more pervasive than they might have thought. Many organisations will need to adapt more rapidly to this fast-emerging new competitive environment."

For more, download the report, Perennial Millennials: A Viral Phenomenon, for free (no registration required).

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