According to Deloitte’s 19th annual Digital Media Trends survey, the media and entertainment (M&E) industry is at a crossroads. Gen Zs and millennials are increasingly turning to social platforms for entertainment, drawn by data-driven personalised recommendations and a myriad of free, ad- supported content. Meanwhile, the percentage of paid TV (such as cable or satellite) or live-streaming TV subscriptions in the home remains relatively flat. This shift presents a challenge to traditional studios and streaming services, asking them to rethink their strategies to deliver both compelling content and value in a rapidly evolving landscape.

In addition, Deloitte’s new Digital Media Monitor has launched alongside the report. Updated regularly, it provides a longitudinal view of US consumers’ engagement and spending on M&E products, services, and subscriptions to further explore this dynamic on an ongoing basis.

Consumers weigh rising costs and value-priced alternatives

With subscription prices rising on average to $16 (€14.79) per month for ad-free SVoD services, consumers appear to be feeling a pinch, and younger generations surveyed are especially prone to canceling services or choosing less expensive, or even free, ad-supported alternatives. While streaming services initially disrupted the cable model, they are now facing similar pressures as prices climb and perceived value diminishes, particularly among younger viewers.

· Media and entertainment costs are rising. Cable or satellite TV subscribers surveyed report spending $125 per month on average for that service, while the average SVoD subscriber has four paid streaming services totaling $69 per month—a 13 per cent year-over-year increase overall and a 20 per cent increase among Gen Z and millennial consumers.

· Premium streaming services may struggle to find an ideal price point with little flexibility to raise prices without further alienating customers. On average, consumers consider $14 per month to be ‘just the right price’ for their favourite ad-free streaming services, while the current market average is $16. Prices above $25 per month are seen as too high. For a favourite ad- supported service, the ideal price for respondents is around $10, with $9 being the current market average, and anything above $19 is considered too expensive.

· Despite streaming providers’ efforts to minimise churn, 39 per cent of consumers have canceled at least one paid SVoD service in the last six months, a rate that has remained relatively stable in recent years. This figure jumps to over 50 per cent for Gen Zs and millennials surveyed. Additionally, the phenomenon of ‘churn and return’ – where consumers cancel and then renew the same subscription within the last six months – also remains consistent, with 24 per cent of all consumers doing so in the past six months. This number rises to 40 per cent for Gen Z and 35 per cent for millennial respondents.

· Financial concerns may be playing a role as ad-supported tiers continue to gain traction. Some 54 per cent of SVoD subscribers surveyed have at least one ad-supported tier of a paid service, up from 46 per cent last year. This rises to 58 per cent among both Gen Xs and Boomers.

“The data is clear: Entertainment providers should embrace innovation and agility to help them thrive. This means understanding the nuances of younger audiences, leveraging technology to personalise content and advertising, and exploring new avenues for distribution and monetisation. The status quo is likely no longer an option,” commented Doug Van Dyke, vice chair, Deloitte LLP and US telecom, media and entertainment sector leader.

Personalised content drives Gen Zs and millennials to social platforms

Powered by AI, social media platforms now deliver highly personalised content and ads tailored to individual interests. Traditional and streaming media may face challenges in replicating this experience and should look to more effectively leverage data to align with users’ preferences to make their content more relevant and impactful.

· Gen Zs surveyed spend 54 per cent more time – or about 50 minutes more per day – than the average consumer on social platforms or watching user-generated content, and 26 per cent less time – or about 44 minutes less per day – than the average consumer watching TV and movies.

· Younger generations (56 per cent of Gen Zs and 43 per cent of millennials) find social media content to be more relevant than traditional content like TV shows and movies.

· While 43 per cent of younger viewers (Gen Zs and millennials) surveyed say they are willing to pay more for streaming video subscriptions with live sports, they also seek alternative ways to access this content. A third of Gen Zs don’t subscribe to these services to access live sports because they instead watch sports clips and highlights on social media.

Creators in control: Driving engagement and shaping viewing habits

Social media creators continue to be powerful influencers, forging authentic connections with their audiences and shaping purchasing decisions.

· Around half of Gen Zs (52 per cent) and millennials (45 per cent) surveyed feel a stronger personal connection to social media creators than TV personalities or actors.

· While 29 per cent of consumers overall (and 49 per cent of Gen Zs and 40 per cent of millennials) would be more willing to watch TV shows or movies starring their favourite online creators, a significant concern about authenticity exists. Another 30 per cent of consumers believe creators lose their authenticity when featured on traditional TV.

· Creators provide powerful word of mouth: 56 per cent of younger generations surveyed watch TV shows or movies on SVoD after hearing about them from creators online, and 53 per cent say they get better recommendations on what to watch from social media.

“AI is revolutionising the future of entertainment, unlocking unprecedented possibilities. It can empower media and entertainment companies to better understand audience preferences at the next level, delivering hyper-personalised content and experiences that help foster deep engagement. As traditional advertising models are re-imagined, TV and streaming services may struggle to retain ad dollars. Those who harness the capabilities of AI can define the next generation of entertainment, and those who don’t may be at risk of losing an entire generation of viewers,” said China Widener, vice chair, Deloitte LLP and US technology, media and telecom leader

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Categories: Articles, Broadband, Consumer Behaviour, Research, Social Media, VOD

Tags: Deloitte, Gen Z, social media, sports, svod