L.E.K. Consulting launches first in-depth analysis of U.K. millennials' media habits by life stage, from living with their parents to starting their own families

Preferences broadly consistent across life stages and spreading to older generations

Media participants need to adapt more rapidly to the new reality

London — January 13, 2016 — Major U.K. 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. Forty-five percent 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 U.K. millennials' media consumption, covering six life stages, from living at home with parents, to flat-sharing after being a student, through to starting a family1. 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 behavior 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 organizations will need to adapt more rapidly to this fast-emerging new competitive environment."

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

  • New broadcasting brands are rated far more highly by millennials than traditional industry brands. Amongst the millennial generation, brands such as Google, YouTube, Amazon and Netflix have twice the affinity rating of even the strongest traditional TV brands. Amazon stands out as the only new media brand that maintains this high affinity across both millennial and non-millennial age cohorts.
  • Millennials spend far less time than non-millennials consuming traditional linear and recorded TV, including pay TV (10 hours a week versus 20 hours), although overall video consumption is similar (24 versus 27 hours per week). The consumption of traditional TV does not increase significantly for millennials with families (12 hours vs. 10 on average for the millennial cohort).
  • Millennials spend twice as much time as non-millennials on new media, such as online video services (11 versus 5 hours per week) and social media (7 versus 3 hours per week), even though both groups spend about the same time consuming all media (54 versus 56 hours per week). Millennials across all life stages have much higher penetration of online video subscription services: 38% for millennials pre-family and 32% for millennials with kids versus 15% for non-millennials.
  • Free online video, especially YouTube, is a vital channel for millennials; nearly half of them (46%) use YouTube every day versus 12% of non-millennials. Again, this is the same pattern across life stages with no significant reduction for the older millennials with families.
  • Less than half of millennials' video viewing is on the TV as they prefer to watch on other devices (PC, laptops, tablets and mobile) and this continues for millennials with families. It drops to 28% for students and flat sharers but is still only 47% for millennial families versus 74% for non-millennials.
  • It's not just about digital. Millennials attend live events, from music festivals to the theater and sports games, far more frequently than non-millennials. This behavior continues for millennials with children. In a digital world, millennials want live experiences that they can post and share on social media.
  • Levels of trust in advertising are similar but millennials are more open to adverts than non-millennials, provided they are targeted to their interests and needs, and they are more willing to trade their personal information for discounts, better products or more targeted offers. However, they are also more likely to avoid adverts by not watching 'linear' TV or by using ad-blocking software.
  • While there are more similarities than differences between millennials across life stages, there are some behaviors that change significantly. For example, earlier life-stage millennials (At Home with Parents and Students) spend more time consuming free online video (5 hours per week versus 3 hours per week for millennials with children). Music streaming and social media are also more important for earlier life-stages (5 and 9 hours per week respectively versus 2 and 5 for millennials with children). The importance of alternative social media platforms also differs between life stages. While Facebook use is similar between younger and older millennials, uptake of newer platforms, e.g. Instagram and Snapchat, is significantly higher for earlier life-stage segments. Thirty-four percent of At Home with Parents and Student millennials use Instagram at least daily versus 22% for millennials with children. The difference is greater for Snapchat with 33% for earlier life-stages and 13% for millennial families.

Pilkington adds: “This new environment will be become tougher for traditional media companies to monetize 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 behavior 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."

Appendix: See attached chart.

1The 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).

About L.E.K. Consulting:
L.E.K. Consulting is a global management 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 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 www.lek.com.

James Lloyd
L.E.K. Consulting
+44 (0) 20 7389 7456
Simon Barker
Barker Communications
+ 44 (0) 7866 314331