The Perfect Storm of Change for Cable. CTAM Looks at Millennials

Change is happening to all facets of our media industry but when hardware and infrastructure is impacted, it is more difficult to react to change quickly. So the recent CTAM Think conference focusing on how MVPDs can respond to the transitioning market in an era of smart TVs and cord cutting, shaving and nevers was especially poignant.

There are two major stresses on the current MSO business model - technology and changing consumer demographics.  Here is an overview of both:

Changing Technology
The technological change in the cable ecosystem over the past decade was provided by Craig Moffett, Senior Research Analyst for MoffettNathanson LLC.  "For the last ten years we believed that the Telcos would overbuild cable with fiber on a large scale. But now that is largely behind us. Actually Only 20% of US will be overbuilt. Telcos have largely gone negative. Operators in the latest quarter are more than 100% of the market growth share."

Moffett also spoke about usage based pricing and the notion of a transport charge. “It is not a new idea but ten years later, it is an unusual mechanism in the industry.” For the first time I heard it confirmed that cord cutting is real. According to Moffett, “The data didn't show cord cutting until 2010 but previously it did not offset household growth. But now there is some loss in the ecosystem. The last three quarters have seen a huge increase in new household formation according to the U.S. census. Yet at the same time there has been no improvement in pay TV subscriptions.” Offering one bright spot he added, “The rate of cord cutting getting worse compared to last year but rate of decline is slowing.”

The business model is also stressed by declining usage. Moffett reported that, “Live plus 7 viewing across every age demo has experienced huge declines, except among older viewers. There are ratings pressures among A18-49 prime c3 rating with long term ratings declines.” So if the challenge is to increase among non-users, know that this group is old, poor, uneducated and doesn't own a computer. 

Changing Consumer Demographics
The ideal target consumer group is the Millennials who are young, tech savvy and have years of potential spending potential ahead of them. But they are hard to reach and are not necessarily subscribing to cable according to Jason Dorsey, CSO for the Center for Generational Kinetics and a Millennial himself. 

What are the trends according to Dorsey?

      Parenting style matters - “What really shapes identity in a group is parenting. How you are raised is the greatest indicator of what you will do. Our parents are boomers and parenting leads to behaviors.” Millennials are late bloomers compared to their Boomer parents. “What age do you consider someone to be an adult - when you are no longer supported by your parents, hold a job and start your own household?” he asked the audience. Some said 18, other said 21. But according to Dorsey, “Millennials say age 30. They are five years older than Boomers were in starting their first job. They are entering workforce later than before and starting households later. Today's 28 year olds are three years behind where other generations where at age 28.

      

      Technology – “We have different relationships with technology by how we age and it is hidden until we have to interact. My daughter will think that the Jetsons are the past. She will never know a time when you could not see the person who you are talking to on the phone.”

          Delivery matters - For cable operators, Dorsey cautions, “I would need to learn a new skill to use the technology the way you are delivering it. You are serving five generations at one time. That has never happened before. It has created all types of new issues.”

Communication styles differ - The ways to communicate with Millennials are different from other groups. “We can’t read cursive,” Dorsey said “So we send you a text.” Millennials want short, fast and easy. “We don’t do phone calls. It is an invasion of privacy. A five minute voice mail is like a podcast.

          Unique mindset - “Millennials are driving change but it is not change to us. We don't think we are a part of a generation. We are special and unique. We have gotten ribbons for 12th place.”

           Diversity - Millennials are the most diverse generation in U.S. history. “We don't see diversity until it is absent.”

      

      Upside potential - “We have more college degrees than any other generation and more college debt which affects future decisions. We are the fastest growing generation in the workforce and the largest generation in the workforce. Our generation is entering wealth accumulation phase. We are 25% of all new millionaires. We are poised to outspend boomers in 2017.” 

      Different spending patterns - But the spending patterns of today’s 18-34s are different from past generations. Dorsey explained, “The 18-34 demo is based on the life stage of that group in 1963 when you had two kids and a mortgage. We are 26 and we bought one car and our mom helped. We are still sampling.” 

Tech dependent - Despite the perception that Millennials are tech savvy, according to Dorsey, they are not. “Millennials are not tech savvy. They are tech dependent. This is a critical distinction. We don't know how tech works but we know we can’t live without it. Boomers invented the mobile phone. The tech savvy generation is Gen X because they were there when the hardware and software came together. By the time tech got to Millennials, it was how simple can you make it so it just works with the fewest number of clicks possible. Text most preferred method of communication.”

Q&A With Char Beales - CTAM

Char Beales has had many roles in her illustrious career from public television station intern, to a media buyer at JWT, researcher at WBBM CBS O&O and WRC NBC O&O and NCTA. From there she moved to CTAM where as President and CEO she has expertly steered the organization thought he myriad of changes in the television landscape since the 1990s.  The one role that she has not mentioned in her linkedin page is that of role model as one of the few female CEOs and Presidents in the television industry. It is that role for which I personally will miss her as she transitions into retirement at the end of the year. 

In this fascinating interview, Char talks about her tenure at CTAM, opportunities and challenges for MSOs, the impact of Smart TVs, measurement issues, the rate of change in the industry and the future of television.

The four videos of the interview are as follows:

Subject                                                 Length (in minutes)

Background                                                      (3:38)

CTAM                                                                 (7:09)

Opportunities and Challenges                      (5:52)

Predictions                                                        (4:39)

Charlene Weisler interviews CTAM CEO Char Beales who talks about her background in this 3:38 minute video:

CTAM CEO Char Beales talks to Charlene Weisler about the CTAM organization - its history and purpose - in this 7:09 minute video: 

What are the opportunities and challenges for today's operators? Char Beales gives her viewpoint to Charlene Weisler in this 5:52 minute video:

Charlene Weisler interviews CTAM CEO Char Beales who offers some insights into the road ahead for media  in this 4:39 minute video:

Insights, Meditations and Just Pure Happiness

I spent part of my week last week in the happiest place in the world – Disney in Orlando. I was not exactly in the Disney theme parks though. I was at the annual CTAM Insights Conference. Although no theme park, this year’s conference had a compelling theme – embracing change in research approach, methodology, marketing and even personal growth. 

In Sunday’s opening night dinner, Nat Geo Brain Games host Jason Silva rapped poetic about “Radical Openess.” Alternately described as a futurist, filmmaker, epiphany addict, ecstatic truth lover, techno optimist and performance philosopher, Jason is an evangelist of technology as a form of enlightenment.

According to his website, Jason believes that “the rapid, exponential growth rate of technological development is transforming our world, disrupting established industries and leading us towards a radical transformation in many key areas. There are three overlapping revolutions occurring in biotechnology, nanotechnology and artificial intelligence, all of which game-changers.” I see all three areas impacting how we conduct, analyze and receive research in the coming years. 

Jason’s frenetic talk on the subject set the stage for this year’s CTAM conference where speakers on neuroscience discussed how we can use bio metrics and eye tracking to monitor and gauge content.

Monday’s opening speaker, Shawn Achor from Good Think Inc, took us further along the path of corporate enlightenment. He spoke of a Happiness Advantage which is a modern take on the power of positive thinking. The basic premise is that “75% of our job success is predicted not by intelligence, but by your optimism, social support network and the ability to manage energy and stress in a positive way.” He offered daily exercises to raise our positive thinking for those of us who get bogged down in the stressful minutia of daily living. 

From there, much of the conference helped frame innovative ways to conduct and present research. ESPN’s Barry Blyn gave a welcomed presentation on the value of “research to know not research to show” which points out the intrinsic value of less-than-stellar research results as improvement tools. Negative research results from a study have enormous value – it highlights where things can be improved. Unfortunately there are some executives who only want to hear the good news so it is refreshing to hear that, at ESPN, “research to know” is treated as an opportunity and not as a report card.

A session on neuroscience, which included demonstration on biometric and eye tracking testing, demonstrated how the brain responds to content and how we can interpret these responses to form a more engaging viewer experience.  It could be the next step in content measurement. According to Laurie Kaman from EyeTrackShop,  “Eye tracking and other forms of biometric research will grow increasingly more important to advertisers as they seek to learn more about what consumers are actually seeing, how they are reacting to those stimuli and what they are taking away from those experiences.” 

So where do we think TV and research are headed in the next three years? What are the challenges / changes? I asked a group of attendees and their video’d responses are: 

Kaman believes that “the greatest challenge to television is and will continue to be finding creative, new ways to deliver integrated content that will be relevant to a variety of groups of consumers and that will work together across the multiple screens to further engage those audiences. It's going to become increasingly more important that consumers are able to interact in a meaningful way with that content and with the advertisers that are attached to the content.”

In looking at the industry environment, Cathy Hetzel of Rentrak summed it up: “I think the greatest challenge and also the greatest opportunity for television is ‘change’.  We are moving to a world of accountability and performance based metrics, including advanced demographics about the products that consumer use and the cars they drive.  The opportunity is to target and sell advertising in brand new ways, including branded entertainment, which for the first time can now be measured, but the industry has to embrace the change in order to capitalize on it!”