Ideas & Solutions! announced that, according to its latest survey, Pay-TV providers are at risk of losing Generation Y subscribers to alternative viewing platforms.

For more information visit: www.Ideasolutions.com

Unedited press release follows:

Pay-TV Providers at Risk of Losing “Gen Y” Subscribers to New Viewing Options, Finds Ideas & Solutions!

Study shows cable, telecom, satellite companies need to develop more products, packages and marketing messages that are relevant to young consumers

LOS ANGELES, June 1, 2011 — Pay-TV providers are at risk of losing “Generation Y” subscribers who are less attached to traditional television and more prone to finding a greater cost-benefit equation with alternative viewing platforms, according to a survey, “Must Choose TV: What Gen Y Thinks About Pay-TV and Cord-Cutting.” The report was conducted in February and March of this year by an independent research group for Ideas & Solutions!, a marketing consultancy.

In an integrated qualitative and quantitative study of 500 people aged 18-29, current Gen Y pay-TV subscribers were segmented into three groups — “Loyalists,” “Leaners,” and “At-Risk” — each of whom is characterized by distinct demographics, media behaviors, and attitudes. In this highly influential and fluid age group, the customers deemed least likely to cut their pay-TV service represented the largest segment (40%). The remaining 60% of respondents were either leaning toward or seriously considering “cutting the cord” to their pay-TV subscriptions.

“While the media has focused much of its reporting on the extent of cord-cutting overall, there is little mention of the behaviors and attitudes of vulnerable groups within this key constituency. This is the demographic that completely transformed the music and the phone business and has already started to dramatically reshape the pay-TV ecosystem,” noted Glen L. Friedman, president and founder of Ideas & Solutions!

Those who considered “cutting the cord” were more likely to be early adopters of new technology (and thus less hesitant to experiment with online video services such as Hulu and Netflix) and displayed a strong desire to control their TV viewing by using a DVR as well as on-demand services.

“You have to look at the trends and young consumers’ comfort zone in getting their media from a wide array of sources. Clearly, the population that is emerging — and it is a large and dynamic group of more than 70 million consumers — is going to be more receptive to alternatives and much less prone to automatically subscribing to cable. It’s not that the sky is falling, but it certainly warrants a lot of attention, and the subscription-based pay-TV providers, along with the programmers who rely on them for distribution, should really invest the time and the resources to get to know this audience better,” Friedman said.

Despite fragmentation in viewing habits, the survey also determined some positive findings for pay-TV providers, including the following:

• Fans of sports programming were much more likely to be loyal customers.

• Convenience factors ranked as a major reason for many subscribers to keep their service. Viewers prefer paying their bills in a single lump sum and enjoy the “communal” aspects of pay-TV, as well as the “stumble upon” experience of browsing the channels.

• In qualitative interviews, many of those who have already moved away from pay-TV said they may, in fact, return if their lifestyle situations changed and providers were more attuned to their preferences.

• With a large number of loyal subscribers still in the fold, pay-TV marketers can take steps to increase their numbers in the category. They must actively respond to the needs and habits of “At-Risk” and “Leaner” 18- to 29-year-olds by emphasizing the services and features that this group embraces.

“You have to examine the right audience. If you look at the overall numbers people might say there’s a small number of cord-cutters. But if you look inside certain segments, it’s much larger,” Friedman said.

Respondents most likely to go away from the traditional model indicate that the most unattractive aspect of subscription-based pay-TV is its cost-benefit equation. In fact, 69% of the “At-Risk” responders and 61% of the “Leaners” cited the expense as the main reason they would consider discontinuing their pay-TV service. That reason was cited far more than “Other ways I can watch entertainment content,” which was given by 36% and 35% of the “At-Risk” and “Leaner” respondents, respectively.

Those surveyed considered most likely to cut their pay-TV service — from cable, telecom or satellite providers — are, not surprisingly, the strongest consumers of alternative viewing options. Of those deemed most at risk of cord-cutting, nearly 50% use Netflix and Hulu. Conversely, only 29% of “Loyalists” use Netflix and 25% watch TV via Hulu. Among “Leaners,” 42% use Netflix and Hulu.

So how do pay-TV providers stem possible defections and move customers away from the “At-Risk” and “Leaner” segments? Friedman advises pay-TV marketers to begin by segmenting their subscribers more effectively into behavioral segments and then marketing to them accordingly. For example, those identified as more “At-Risk” showed less interest in watching scripted TV shows at their appointed times. To them, cost and service, as well as advanced DVR and on-demand features, were paramount.

Providers also need to be cognizant of their pricing and packaging models and face the challenge that many “Gen Ys” want the features they need at affordable price points because they are willing, ready and able to turn to alternative options, no matter what their level of loyalty to pay-TV.

Ideas & Solutions! is a Los Angeles-based consultancy that specializes in guiding media and technology companies in a rapidly changing business landscape; most recently it has provided expertise on mobile video and the new frontier of Over the Top Television. The company offers objective analysis as well as actionable plans and programs to clients while working closely with leading research, marketing and communications firms.

Founder and President Glen L. Friedman has been on the front lines of major media change for more than three decades. Recognized as a Cable Pioneer, he was a key architect in the launch strategy for DIRECTV, worked closely with XM Satellite Radio from its inception and was actively involved in the launch of high-speed Internet services. He also worked in senior positions at what are now Time Warner Cable as well as Century Cable.

“Must Choose TV: What Gen Y Thinks About Pay-TV and Cord-Cutting” is available for purchase. Contact Jill Williams at 310-286-1006 for more information.