How entertainment services vary across generations

Kevin Westcott, U.S. technology, media & telecom leader at Deloitte, discusses the firm’s latest edition of its Digital Media Trends Survey, which breaks down how consumers of different ages are engaging with various entertainment options.

Video transcript

MYLES UDLAND: Deloitte's 15th Digital Media Trends Survey is out, and the results reflect a lot of the changes we are, of course, living in our personal lives, we're living here at Yahoo Finance as we do this broadcast now from our living rooms. Joining us to discuss everything happening in the media and streaming space is Kevin Westcott. He is the US Technology, Media, and Telecom Leader over at Deloitte.

Kevin, thanks for jumping on this morning. Headline that certainly caught our attention as we talked about this report this morning, 10% of Gen Z respondents say that watching TV at home is their favorite way to pass the time. We're a staff of millennials and up. It caught us by surprise. How are you guys thinking through, you know, the results that we got back from-- from those youngest consumers?

KEVIN WESTCOTT: Well, this was the first time ever we've seen this kind of a trend. It's very interesting. All of us, millennials and older, all grew up watching television and movie-- and movies as their primary source of entertainment. What the Gen Zs tell us now is that their primary source of entertainment is video games.

And that's followed by listening to music, and playing on social media, and browsing the internet. So a huge change in terms of what the primary activity is. And we'll see how that actually plays out as those Gen Zs age a little bit. But video games have really broken out during the pandemic as their primary source of entertainment.

JULIE HYMAN: You know, Kevin, it's Julie here. The other thing sort of as a companion to that piece of data about how few of those people are watching TV is that when people are making streaming decisions that cost is one of the primary factors, especially as we get this proliferation. So when you take these two pieces of data together, I mean, what does that mean for streaming services as they vie for eyeballs?

KEVIN WESTCOTT: So over the last few years, everybody talked about the streaming wars. And streaming wars were all about acquiring customers. And the number one attraction for why would you pick a specific streaming service before the pandemic was always about content. But during the pandemic and up to now, cost has become a major contributor to that. So now it is cost and then-- and then content.

As I look at how they tried to attract consumers, you see-- you see many different ways of their business models put out there. But I think one of the most important things they have to do is think about not just about how do I attract the consumers, but how do I retain them? How do I get the-- how do I expose them to new content so that they're not just doing what we call the hit and run, which is joining to watch a hit, and then canceling the service. And that's one of the biggest challenges today.

MYLES UDLAND: And you know, Kevin, as we show that graphic on the screen, I mean, that's-- that's at least a dozen different services. Certainly, I'm sure folks that you guys are talking to or working with are thinking about the future of-- of putting some of these back together. I mean, how far away are we from-- from that point in time when there's a re-bundling of the unbundling? And what are the implications maybe of those kinds of things?

KEVIN WESTCOTT: Well, I actually prefer to use the word re-aggregation, because bundling has a little bit of a negative connotation to some people, because it was more of a situation where here's what you must buy. I think about re-aggregating all these types of platforms, and I expect to see somewhere between half a dozen and maybe a dozen major players. We're going to bring together all of these services.

Last time we actually did a full count, there were over 300 video on demand platforms available in the United States. And with the average household only subscribing to four, you can see that there's definitely an oversupply, in some cases, of the number of platforms out there. So I do expect to see these things being re-aggregated by the largest digital platforms, where I can get all the entertainment I want from-- from one or two sources and not have to subscribe to 20 different types of things to get everything I want.

JULIE HYMAN: I like that-- re-aggregation branding. Getting back to the video games for a moment, that one surprised me as well, especially the finding that folks in my generation, X that is, 67% of them playing video games, I believe, on a daily basis. Now, how are you defining video games, I guess we should ask as well? Like is it my crossword on my smartphone? Is it any game on a phone? And were you surprised by some of those numbers too?

KEVIN WESTCOTT: I was-- I was surprised by the-- by the numbers a bit. But yes, we define video gaming as-- as social games, console games, any type of digital gaming. So any of those types of games we consider to be there.

What was very interesting is, yes, there was a big uptick in gaming during-- during the pandemic, but it wasn't-- it was not a huge increase amongst the older generations. Some of us who are maybe in the Xers or boomers grew up playing the early versions of video games and now they're more accessible. But the thing that I did find most interesting, which is kind of a departure from the past, is people say that video games are actually a very social environment for them.

And if you happen to watch, as I do, my children play, they're playing with friends all the time. If they're on a tablet, they're playing with the neighbors across the street. So the games have evolved into becoming a social connected-- connectivity for the younger generation. And we see that through the-- all of the different types of technologies being used to connect players during games.

MYLES UDLAND: You know, Kevin, I have about 30 seconds left. I'm curious as you look at this survey if that notion we would have discussed last summer 10 years of change in one year as a result of that pandemic, does that ring true as you look back at what these results spat back at you guys?

KEVIN WESTCOTT: Absolutely. We've looked at-- what we did when we-- we did the survey, actually, three times last year just because the pandemic was causing so much change and so-- and that changed so quickly. What it really did is accelerated a lot of trends we knew were there. And I'll pick on one specifically, which was ad-supported VOD. We believed that ad-supported VOD was going to be introduced in 2020 and over the next few years start to get more and more traction.

What happened is ad-supported VOD was introduced in a big way during the pandemic, and we saw usage skyrocket, over 60% of the population has tried ad-support VOD. And that obviously was a lot more time in the household, but also cost became a big issue. So ad-supported at a either reduced or a free platform became very popular. So we saw this happen very-- very quickly, a lot of different trends that we saw accelerated during the pandemic.