Why Millennials Aren't 'Cutting The Cord' Yet

NEW YORK (TheStreet) - For all the hubbub about TV viewers "cutting the cord," or canceling more expensive cable or satellite subscriptions in favor of only Internet-based video streaming through Amazon (AMZN) , Netflix (NFLX) and Hulu, adult "millennials," the group most likely to do away with traditional services, haven't done so "en masse." At least not yet.

That's because shows on Time Warner's (TWX) HBO, Viacom's (VIA) Comedy Central and live sports keep them glued to their TV subscriptions, according to an April 2014 eMarketer report. EMarketer is a digital marketing, media and commerce research firm.

"The proliferation of digital video has raised the specter of large-scale 'cord cutting' by millennials," the report states. "The plausible premise is that millennials get so much video online that they see little incentive to pay for cable or satellite service, or for premium channels. However, buzz about this topic has gotten ahead of changes that may someday manifest in actual behavior."

To be sure, the age group is indeed more likely than older demographics to forgo pay-TV services, "as one would expect of people who have tight budgets and the technological savvy to access tons of free online video," but "they have yet to cut those cords en masse," the report said. A November 2013 poll by Verizon (VZ) Digital Media Services found that 13% of millennials, people ages 18-34, make do without any pay-TV service, which is higher than non-millennials (9%), but not high in absolute terms, eMarketer noted in the report.

They also spend less on their overall cable package because of the availability of digital video like Google's (GOOG) YouTube. The report cited a July 2013 survey by Altman Vilandrie, in which 47% of 18- to 24-year-olds and 40% of 25- to 34-year-olds said they spent less on cable due to digital video.

Still, Nielsen estimates that millennial viewers average more than 100 hours per month watching traditional TV shows, as of the fourth quarter of 2013. Popular TV series form a "major portion" of millennials' video viewing such as HBO's Girls, Pivot's hitRECord on TV, including sports and comedy shows, eMarketer said. The group may not be actually watching them on a TV set, but rather mobile devices.

Despite that, live TV is "far from dead" for the demographic, eMarketer noted. Approximately 60% of 18- to 24-year-olds and 72% of 25- to 34-year-olds "watch shows on TV during their normal broadcast time" at least weekly, the Altman Vilandrie survey found.

Cable companies are vying for viewership as price competition heats up, but it's content that they know will keep viewers watching. Time Warner reported first-quarter earnings of 91 cents a share that exceeded Wall Street estimates by 3 cents. Revenue climbed to $7.5 billion, also beating a consensus analyst estimate of $6.7 billion, fueled by top grossing The LEGO Movie at its Warner Bros. subsidiary and home video sales of Game of Thrones: The Complete Third Season boosting HBO's revenue for the quarter by 9% to $1.34 billion.

Time Warner also said that its cable-TV Turner unit, which includes TBS and TNT, reported a 5% gain in revenue to $2.59 billion, spurred in part by a particularly exciting NCAA men's basketball tournament.

--Written by Laurie Kulikowski in New York.

Follow @LKulikowski

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