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NAB 17: As Cord-Nevers Get Older, They Still Don't Want Pay TV

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The pay TV industry could be in serious trouble, warned Glenn Hower, senior analyst for Parks Associates. The common wisdom has been that young adults might say no to cable or satellite subscriptions now, but as they get older and have higher incomes, they'll sign on. The common wisdom, however, appears to be wrong.

Debuting fresh research at an NAB 2017 presentation, Hower revealed that as millennials age they show the same lack of interest in pay TV subscriptions. This shows a "reluctance to buy into the pay TV system," he said, adding, "There might be this danger of once a cord-never, always a cord-never."

In 2016, nearly a quarter of U.S. broadband-enabled houses didn't have a pay TV subscription. Under 10 percent of homes are cord-shavers, having reduced their pay TV offerings, and those consumers tend to be younger.

The other big finding from Parks is that over-the-top (OTT) free trial services are effective. One-third of OTT trials converted to paid subscriptions, Hower said, and only one percent of consumers are "serial trailers," going from one free trial to the next and never paying. Free trials are "probably not to bad from a marketing standpoint," he said, noting that there's little cost to offering them and the results are strong. "That's a pretty big deal to be able to get those kinds of numbers."

"TV is still king," Hower proclaimed at the beginning of the session, saying that people want video available on multiple devices, but mobile viewing hasn't cannibalized from the living room TV. Parks finds only a slight decline in TV viewing. Viewers tend to watch short-form content on mobile devices, saving long-form premium programs for living room viewing. "The consumption has mostly been additive," he said. "The best experience comes from the biggest screen in the household."

While the past years have seen big growth in the release of new OTT services, that seems to be leveling off. In 2015, 43 new OTT services hit the market; in 2016, only 33 new services were debuted. "There's still growth, there's still more services in the market," Hower said, but that growth has begun to slow.

One thing that's expanding is the number of OTT services that households subscribe to: In Q1 2017, two-thirds of U.S. broadband-enabled households subscribed to at least one service. Of that group, one-third subscribed to two or more services, a group that's growing dramatically. Parks calls this "service stacking," and says consumers are trying to build a personal OTT experience. 

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