Life-Stage Analysis of Millennials Highlights Major Threat to Traditional TV

Major UK TV companies face the growing threat of the millennial generation's preference for new media channels, according to research by L.E.K. Consulting, the global strategy consultancy. One of the most important challenges comes from millennials' planned reduction in spend on pay TV and switch to internet-based 'Over-the-Top' (OTT) services like Amazon Prime and Netflix. 45% of millennials pre-family and 56% of millennials with children currently have a pay TV subscription, and 45% of them either have or expect to have an OTT subscription in the next year, with two thirds of those planning to cancel or reduce their pay TV spend.

Major UK TV companies face the growing threat of the millennial generation's preference for new media channels, according to research by L.E.K. Consulting, the global strategy consultancy. One of the most important challenges comes from millennials' planned reduction in spend on pay TV and switch to internet-based 'Over-the-Top' (OTT) services like Amazon Prime and Netflix. 45% of millennials pre-family and 56% of millennials with children currently have a pay TV subscription, and 45% of them either have or expect to have an OTT subscription in the next year, with two thirds of those planning to cancel or reduce their pay TV spend.

L.E.K.'s analysis, The Perennial Millennial, is the first in-depth review of UK millennials' media consumption, covering six life stages, from living at home with parents, to flat-sharing after being a student, through to starting a family^[1]. The research shows that media consumption trends are broadly consistent throughout the life stages of the millennial generation (people aged 16-34 in 2015). Their behaviour is also viral and spreading to non-millennial families and older generations.

Martin Pilkington, Head of L.E.K.'s European Media, Entertainment and Technology practice, said: "Our research has shattered the common assumption that once millennials are older and have their own children they revert to more traditional media consumption patterns. New media companies in the TV industry are rapidly building wallet and mindshare amongst millennials and this is spreading to other generations. 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."

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1. The six millennial life stages are: At Home with Parents, Students, Flat Sharing, 'Getting Your Own Place', Young Families (Parents Younger than 25), Young Families (Parents 26 - 34).

Further highlights of L.E.K.'s research:

Pilkington adds: "This new environment will be become tougher for traditional media companies to monetise as the internet brands muscle in more and more. One response by the pay TV players has been to launch cheaper 'slim bundles' to attract and hold on to subscribers.  However, there needs to be far further and faster innovation to develop propositions that capture the interest and behaviour patterns of the millennial generation.

"In this increasingly 'on demand' world, the quality of content will be more important than ever before. The race is already on; a good illustration of the new dynamic being the very high level of investment in original content by Netflix and Amazon.

"We can expect to see further entrants into the OTT market, especially to serve specialist interests, such as individual sports, ethnic markets and specific demographics such as children. And it's likely that some 'filler' free-to-air and pay TV channels will disappear as people are able to see what they really want, when they want it. There is also a large untapped market opportunity for media content owners to develop live events around their brands."

Research methodology 

For The Perennial Millennial L.E.K Consulting conducted online research of 1,308 Millennials and 685 Non-millennials living across the UK. The research took place in September 2015.

About L.E.K. Consulting 

L.E.K. Consulting is a global strategy consulting firm that uses deep industry expertise and rigorous analysis to help business leaders achieve practical results with real impact. We are uncompromising in our approach to helping clients consistently make better decisions, deliver improved business performance and create greater shareholder returns. The firm advises and supports global companies that are leaders in their industries - including the largest private and public sector organizations, private equity firms and emerging entrepreneurial businesses. Founded in London more than 30 years ago, L.E.K. employs more than 1,000 professionals across the Americas, Asia-Pacific and Europe. For more information, go to http://www.lek.com .