• by Ross Fadner , May 23, 2012

For cable and satellite TV providers like Comcast, DirecTV and Time Warner Cable, Millennials, or those young adults born between 1983 and 1997, represent both the greatest opportunity and biggest threat to their businesses.

This is the generation that really might cut the cord, yet at the same time, they could also become pay TV’s most lucrative subscriber segment as they start families of their own and their incomes increase. In fact, research from Nielsen shows that as teens turn into adults, they tend to watch more -- not less -- television.

Will Millennials be any different? That, to a certain extent, is the $70 billion question.

To be sure, some Millennials have already cut the cord. Dow Jones talks to a 29-year-old woman who cites “a costly monthly cable bill driven up by sports channels” as the catalyst for ditching her pay-TV subscription. Now, she subscribes to Netflix and Hulu Plus, which offer most of her favorite shows for much less per month.

A recent survey from Deloitte suggests that she is not alone: 19 percent of Millennials have considered canceling their pay-TV service, compared to just seven percent of their parents.

Moreover, according to Millennial researcher Ypulse, an important shift in TV consumption has already happened among Millennials ages 18 and older: 71 percent report watching TV via streaming, compared to 66 percent who watch TV on a regular TV set. By comparison, those under 18 are more likely to watch on a TV set (76 percent) than via streaming (49 percent). Ypulse says this is because -- unlike the 18+ crowd -- younger teens are less likely to own their own laptops, tablets or smartphones.

Understandably, these data points concern pay TV providers. As Marcien Jenckes, senior vice president and general manager of video services at Comcast, tells Dow Jones, Millennials "are the sweet spot of what media is trying to reach…We have to go to school on the ways consumers expect to get their content."

So-called “TV Everywhere,” which aims to give subscribers access to pay TV content on any device, is supposed to be the solution. But as All Things Digital’s Peter Kafka points out, these initiatives are beset by a tangle of measurement problems, which he suggests will compromise future advertising revenues from connected devices, even as consumers ramp up their overall media consumption.

As Jenckes says: "Whatever consumer experience there is, we have to make sure there are ways for the networks to monetize it.”

Meanwhile, Millennials will continue to consume what they want, when they want it. And if pay TV can’t offer them that, they may look elsewhere.