Do millennials want pay-TV or don't they? This is one of the most hotly-debated topics in the video industry today. The "don't" camp is well-represented by Charlie Ergen, head of DISH Network, who recently said, "We’re losing a whole generation of individuals who aren’t going to buy into that model because they only want one particular show or they want to watch the show wherever they can or they want to watch it on their schedule and so that generation is not signing up to satellite or cable or phone video today."

Last week, Ergen and DISH took an important step toward re-imagining pay-TV to make it more relevant to millennials by securing OTT distribution rights to key Disney/ESPN channels.  Bloomberg reported that a new OTT service from DISH could sell for $20-30/month, far less than today's typical pay-TV bundle. BTIG's Rich Greenfield subsequently fleshed out what a new lower-priced personal subscription service or "PSS" could look like: a limited access one-stream-at-a-time model geared to single-adults or light TV viewers.

Assuming DISH (and possible others) could pull together a compelling bundle of content, a $20-30 PSS seems to make a lot of sense: a lower-priced, flexible, Netflix-like approach to pay-TV that keeps younger viewers engaged in the ecosystem and potentially on a pathway toward more expensive, conventional unlimited viewing subscriptions down the road.

While this type of PSS will almost certainly make sense in the long-term, it's debatable whether the time is right to introduce such a service now. In other words, is the evidence sufficiently clear that millennials don't want conventional pay-TV service? New data released last week seems to suggest pay-TV is actually holding its own pretty well with millennials and that a PSS-style offering could be premature.

First, Verizon released a millennials-focused study indicating that 87% of the cohort still subscribes to pay-TV. While lower than the 91% subscription rate for non-millennials, it's a take rate many other industries would envy. And even though live TV accounts for just 41% of millennials viewing time, many pay-TV operators are addressing their growing tastes for alternative like online viewing (34%) via TV Everywhere, DVR viewing (15%) via widespread DVR/TiVo functionality and On-Demand viewing (10%) via growing VOD libraries. Though pay-TV is unquestionably a big-ticket monthly item, pay-TV operators are adding as much value as they can, such as with platforms like Comcast's X1, to justify the expense.

In addition to the Verizon study, Nielsen also released its latest Cross-Platform report last week, which painted a relatively healthy picture for conventional TV. Among 18-24 year-olds, traditional TV viewing in Q4 '13 accounted for 111 hours, 20 minutes, down just a bit from Q4 '12's 113 hours, 14 minutes, but for 25-34 year-olds, traditional TV viewing actually rose, from 130 minutes, 57 seconds, to 136 minutes, 10 seconds. Meanwhile, watching video on the Internet for 18-24 year-olds dropped a bit from 15 hours, 8 minutes to 13 hours in Q4 '12 to 13 hours, 14 minutes in Q4 '13, while rising a bit for 25-34 year-olds from 11 hours, 4 minutes to 11 hours, 20 minutes. Net, net, there are some shifts happening between TV and online video among millennials, but TV is hardly going off a cliff.

Keeping pay-TV relevant in the online era is critical for pay-TV providers. But as the data above shows, it's not quite clear what the optimal product strategy is: lower-priced, limited service bundles, as DISH seems to believe, or more fully-featured conventional pay-TV subscriptions, as operators like Comcast seem to believe? Long-term the DISH strategy has a lot of merit, but short-term, the Comcast approach still appears to have room to run.