The Quest for Connection: Younger Generations Look to User-generated Content and Video Games to Find Value, Meaning and Personal Fulfillment

Deloitte's 17^th annual "Digital Media Trends" survey shows that a personalized tapestry of immersive, social and vibrant experiences can be valuable to young people

NEW YORK, April 17, 2023 /PRNewswire/ -- 

Key takeaways

• Watching TV shows and movies at home is no longer the dominant, "go-to" activity it once was — especially with younger generations that are more evenly dividing their entertainment time across TV shows and movies, user-generated content (UGC) on social media services, and video games. They seek entertainment, connection, immersion and utility.
• Digital media are weaving together. More than half of consumers surveyed — and nearly three- quarters of Gen Zs and Millennials — often watch a TV show or movie on a streaming video service after hearing about it on social media. More than half of younger gamers decided to play a specific video game after watching a certain TV show or movie.
• About 50% of consumers say UGC videos help them to discover new products or services to buy, and around 40% of consumers say they are more likely to purchase a product after they watch a creator they follow review it.
• Competition, along with greater price sensitivity, is putting pressure on streaming video services. Overall subscriber churn for paid streaming video-on-demand (SVOD) services over a six-month period is around 40%, averaged across paid services. For Gen Z and millennial respondents, those numbers jump to 57% and 62%, respectively.

Why this matters
Deloitte's 17^th annual Digital Media Trends survey revealed that in the U.S., the digital media landscape may no longer be led by the dominance of TV shows and movies, as more people find additional value in social, interactive, and immersive entertainment. Consumers are feeling streaming fatigue, juggling multiple subscriptions, and facing pressure to reduce their monthly costs. Rather than existing in silos, younger generations are weaving a more blended and inter-dependent tapestry of entertainment including streaming video, social media, music, and gaming to maximize their digital experiences. How can media and entertainment (M&E) companies reach people across this inter-connected tapestry of digital media? M&E companies should be looking at how audiences engage with different digital media channels, how they move across them, and which kinds of value they seek in each.

The meaning of media: People seek connection, immersion and value

Deloitte's survey finds people are drawn to different types of digital entertainment depending on their age. In this competitive environment, consumers are learning what kind of value they place in various entertainment experiences and how each makes them feel. What stands out is that younger generations, such as Gen Zs and Millennials, spend their digital entertainment time more evenly across diverse experiences — on TV shows or movies, video games, music and UGC, in fact finding these experiences extremely valuable and meaningful substitutes for physical encounters. This is a notable and seemingly lasting shift from the past when TV shows and movies dominated across generations.

• Thirty-two percent of people surveyed in the U.S. consider online experiences to be meaningful replacements for in-person experiences. For Gen Zs and Millennials, it's 50%.
• Younger generations like Gen Zs and millennials seek more immersion and connection, drawing them to playing video games and watching UGC. Forty-eight percent of Gen Z and millennials spend more time interacting with others in social media than in the physical world; 40% of them socialize more in video games than in the physical world.

Key quote
"People have an expectation that their digital media will provide more than just entertainment — they also expect to find real meaning and fulfillment. Video games and user-generated content can offer more interaction, socialization and utility, and their popularity with younger generations could potentially transform the media and entertainment industry. Companies should better understand this evolving landscape so they can drive measurable value, foster brand loyalty and build deeper relationships."

— Jana Arbanas, vice chair, Deloitte LLP and U.S. telecom, media and entertainment sector leader

Should SVOD mean "streaming value on demand"?
Streaming video providers may face more challenges ahead. Subscription growth has slowed, competition is fierce, and more consumers are opting for cheaper ad-supported tiers that can lower revenue. Delitte's survey found that while watching TV shows or movies at home remains dominant for the Gen X and older set, there are frustrations with SVOD around mounting costs, having to juggle multiple subscriptions and chase content among all generations.

• Around half of consumers say they pay too much for the SVOD services they use and about a third intend to reduce their number of entertainment subscriptions.
• Overall average subscriber churn for paid SVOD services over a six-month period is around 40%. For Gen Z and millennial consumers, those numbers jump to 57% and 62%, respectively.
• Nearly 45% of millennials have "churned and returned" with a paid SVOD service, cancelling a paid subscription only to renew that same subscription within a six-month period.
• Around half of consumers (47%) surveyed say they have made at least one change to their entertainment subscriptions because of current economic conditions — such as cancelling a paid service to save money, switching to a free ad-supported version of a service, or bundling services. Millennials are the most likely to have made changes to digital media subscriptions due to economic pressures.
• Millennials spend more than any other generation on paid streaming video services — an average of $54 per month, compared to the overall average of $48 per month. They churn through SVOD services at the highest rates and are more likely to cancel paid gaming services (26%) and paid music services (39%).

Key quote
"With so many options for entertainment, streaming providers should fight harder to retain subscribers and deliver more variety and value. Streamers are under pressure to reinforce their core offerings, but they should also be leveraging gaming and social media, especially considering the behaviors we are seeing in younger generations. To stay competitive, SVOD providers should seriously consider how to engage broader audiences, play across diverse media properties that add value, and advance their ad platforms to better support advertisers."

— Kevin Westcott, vice chair, Deloitte LLP and U.S. technology, media and telecom leader

Gaming gets high scores
Survey respondents who are gamers agree that playing video games provide social and emotional value and makes them feel like they are part of the story rather than just viewers. Companies can create more meaningful consumer relationships through interactive and immersive experiences. In fact, most gamers say that succeeding in a video game boosts their self-confidence.

• More than a third of gamers say they feel better about their self-image when they're playing video games. In addition, almost half of Gen Z and millennial gamers say they socialize more in video games than in the physical world.
• Notably, men and women gamers are playing rich story-driven games in nearly equal amounts. Such games have recently featured more female leads and stronger female characters, more balanced storylines, and crossovers with popular TV, movie and literature franchises.
• A majority of Gen Z and millennial gamers wish more of their favorite movies and TV shows also had video game experiences.

User-generated content (UGC) — advertising or entertainment?
Social media services deliver seemingly endless streams of user-generated videos that are personalized, interactive, social and free. Across all generations, a majority say they watch UGC videos on social media — and many watch because it's free, delivers videos on topics they're interested in, is convenient, and there's usually something new to watch. Leveraging social media — and especially social media content creators — is another benefit. The content creators that fuel these services are not just entertainers but can become trusted guides and intermediaries in a purchasing journey, improving customer experiences and driving business through tailored, data-driven insights.

• Nearly 70% of Gen Zs and millennials say they always end up spending more time watching UGC than planned.
• Half of Gen Zs and millennials report discovering new music or artists through videos on a UGC service.
• Roughly 4 in 10 consumers agree that it's hard to determine when UGC videos are "sponsored" or contain an "advertisement." Nearly half of consumers (46%) say that if an online creator they trust has reviewed a brand's product, they are more likely to trust that brand.

The "Digital Media Trends," 17^th edition, survey was fielded by an independent research firm in November 2022 among 2,020 U.S. consumers, ages 14 and older. For additional details on the findings, visit here. Connect with us on Twitter: @DeloitteTMT, @kwestcott911, @Jeff_Loucks; or on LinkedIn: @KevinWestcott, @JanaArbanas; #digitalmedia, #tmttrends.

About Deloitte
Deloitte provides industry-leading audit, consulting, tax and advisory services to many of the world's most admired brands, including nearly 90% of the Fortune 500® and more than 7,000 private companies. Our people come together for the greater good and work across the industry sectors that drive and shape today's marketplace — delivering measurable and lasting results that help reinforce public trust in our capital markets, inspire clients to see challenges as opportunities to transform and thrive, and help lead the way toward a stronger economy and a healthier society. Deloitte is proud to be part of the largest global professional services network serving our clients in the markets that are most important to them. Building on more than 175 years of service, our network of member firms spans more than 150 countries and territories. Learn how Deloitte's approximately 415,000 people worldwide connect for impact at www.deloitte.com.

Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee ("DTTL"), its network of member firms, and their related entities. DTTL and each of its member firms are legally separate and independent entities. DTTL (also referred to as "Deloitte Global") does not provide services to clients. In the United States, Deloitte refers to one or more of the US member firms of DTTL, their related entities that operate using the "Deloitte" name in the United States and their respective affiliates. Certain services may not be available to attest clients under the rules and regulations of public accounting. Please see www.deloitte.com/about to learn more about our global network of member firms.

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