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Millennial blues

Kate BulkleyOK I’m going to admit something personal to you all – I’m not a millennial. And, guess what? Neither are most of the bigwigs in the cable and satellite industry. Maybe this is the reason why it has taken until early 2016 for a company as large as Liberty Global to get a handle on what these young ’uns are getting up to on their mobile devices.

We’ve known that TV – or maybe we should always just call it ‘video’ from now on – viewing has been changing for the last few years, and that’s about how long John Malone’s company has been doing a takeover-come-merger dance with Vodafone. The largest cable operator outside the US and the world’s biggest mobile operator have been looking at ways to join together for their mutual benefit at the speed of two giant oil tankers slowly altering course.

Meanwhile, those millennials have been sprinting all over the place. I loved a recent Enders Analysis report that said consumers in their 20s change platform 27 times per hour, implying that millennials are shifting from YouTube to Facebook to Instagram to Spotify to Snapchat to WhatsApp at almost one platform every two minutes. Talk about attention deficit disorder. How do you make them stay, and if you are Twitter, Facebook or any of the digital giants, how do you make them pay?

Mobile is a big part of the answer. Mobile advertising now represents a whopping 80% of all Facebook advertising and was the principal driver behind the stronger profit margins that were reported by the social media giant for the last quarter of 2015. Facebook gets much better pricing for ads on smartphones because these appear inside users’ newsfeeds, where Facebook can charge more.

So hallelujah that last month Liberty Global and Vodafone finally agreed to embrace, albeit in a limited way, by agreeing to merge their Dutch assets into a €19 billion mobile-and-cable operator, leveraging each other’s assets to create a true quad-play giant.

Given that Liberty Global CEO Mike Fries says that Europe is becoming a quad-play market where bundling TV, broadband, telephone and mobile is fundamental for growth, the Dutch merger is likely to be a precursor of similar deals to come.

Who knows, given the pace at which the cable industry works, where the video-on-mobile market will be by the time the pair finally join forces in fully functioning completeness, but you can bet it won’t be less significant. Global mobile data traffic rose 65% in Q4 of 2015 compared to the same period the year before, according to Ericsson, and a big portion of that is mobile video.

Liberty Global wants to tackle cord-cutting. The company lost 400,000 video subscribers in 2015 across its operations. It’s not alone in this, nor in its strategy to address the problem. Elsewhere, Vodafone has invested in cable. In the UK fixed-line giant BT recently spent £12 billion (€15 billion) on the purchase of mobile operator EE. Other consolidation moves are also in the works, although they are provoking concern among European regulators that fewer communications companies will mean higher prices for consumers.

However, it’s not just cable and telecom operators that are trying to get to grips with the millennials and lure them back to their platforms. Pay TV operator Sky will launch a virtual mobile network in the UK some time this year. I can’t imagine that its sister operations in Germany and Italy won’t follow suit.

And don’t forget the likes of Netflix and what it might do. A recent report by analyst group IHS says the integration of this OTT service on pay TV platforms is proving to have a “net positive” effect on subscriber numbers. But if the kids watch Netflix more and more on their mobile devices, how’s that going to work in the future?

Basically, the millennials are different to anything the media business has ever seen, and understanding them is taking quite a long time. Perhaps Liberty Global’s Dutch merger with Vodafone could be a tipping point for a wave of consolidation that will ultimately help both pay TV platforms and mobile platforms capture the kids, but then again perhaps it all comes back to that old phrase “content is king”. Last October, Liberty Global took a US$10 billion (€9 billion) stake in the UK’s Bigballs Media, the parent company of Copa90, a YouTube fan-focused football channel, while in the US, AT&T recently penned a deal with US multichannel online video network Fullscreen. These deals are about finding content that is mobile-friendly and works across platforms.

Maybe Liberty Global’s affection for Bigballs will serve as a template. Among Bigballs’ original content is a comedy drama made in conjunction with Working Title TV called You, Me and the Apocalypse. It aired on Sky and NBC and it’s about what you would do if you had only 34 days to live. Isn’t this the kind of show that is a win-win for everyone including the millennials? It might even help avoid the cord-cutting apocalypse.

Kate Bulkley is a broadcaster and writer specialising in media and telecommunications. [email protected]

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