One-Quarter of Millennial-Led Households Are OTT-Only: Parks
In a troubling sign for the pay TV industry, research from Parks Associates shows that 23 percent of millennial-led households are OTT-only. The U.S. average is 15 percent for broadband-enabled homes, so this shows a willingness by young adults to cut the cord—or never sign up in the first place.
Further, 61 percent of millennials subscribe to both pay TV and OTT services, which is higher than the national average of 52 percent. According to Park research analyst Ruby-Ren Bond, young adults have a higher-than-average appreciation for popular culture, premium movie channels, and children's programming.
Looking at the OTT market, Parks says that 60 percent of OTT video services require a subscription, and 64 percent of broadband-enabled U.S. households subscribe to an OTT video service (up from 59 percent last year).
Churn is high with subscription services: Roughly 20 percent of U.S. broadband-enabled homes cancelled at least one OTT video service last year.
Looking at how people access that video, Parks found that viewers don't stream as much video over gaming consoles as they used to.
“Gaming consoles were once the dominant platform for accessing online content, but today, only 32 percent of U.S. broadband households with at least one internet-connected CE device use their gaming console as their primary platform,” says Barbara Kraus, director of Research at Parks. “Gaming consoles are still in the lead, but smart TVs are a close second at 28 percent, with streaming media players third at 26 percent.”
Younger viewers especially get much of their live video from online sources. Pay TV customers need to shift their offerings to stay relevant.
While mobile video viewing is on the rise, unlimited data plans no longer get subscribers to switch. Carriers now offer OTT services as extras.
The OTT market is booming, as 69% of broadband households now have a subscription, and many subscribe to 3 or more services.
Young adults watch videos on their own schedule, but are open to sharing information with advertisers if it means more relevant ads.
When deciding on a streaming video service, Americans look to the big three first, with few ignoring them in favor of niche content providers.
The cable and satellite industries have a problem, Parks Associates warns: Fresh research says once a cord-never, always a cord-never.
"Service stacking," where households sign up for more than one over-the-top video service, is about to become the new normal.
There's a vast generation gap in how Millennials, Gen Xers, and Baby Boomers access and enjoy online video, so what will the area look like when Millennials get older?
Sling TV makes a big jump in the top 10, but skinny bundles in the works from DirecTV and Hulu are certain to shake things up.
The biggest growth area is in viewers who subscribe to two OTT services, which could show an emerging trend in interest for niche offerings.
U.S. viewers are testing the waters, sampling streaming video services quickly then moving on to try something else.
Many Americans will find a set-top box under the tree this year. Roku is the category leader, followed by Chromecast.
A study of set-top box adoption finds that Roku has a commanding lead, thanks to an association with Netflix and a smart product strategy.