• Entertainment companies face a Gen-Z problem as they bet their futures on streaming.

• Young people prefer social video over TV shows and movies, new Deloitte research found.

• They’re also more influenced by ads on social media than streaming.

Entertainment companies from Disney to Warner Bros. Discovery have a looming Gen-Z problem as they bet their futures on streaming.

They’re spending billions to replicate the TV model with streamers, but their future customers may not want what they’re selling.

New research from Deloitte shows members of Gen Z prefer to watch social video and livestreams (47%) about twice as much as TV shows (24%) and four times as much as movies (11%).

The difference is even starker than it is for millennials, 33% of whom have a preference for social and livestreams, compared with 27% for TV shows, and 18% for movies.

And when they do turn on streaming services, Gen Z is more likely than not to watch something based on social-media creators’ recommendations, not the streamer’s algorithm, Deloitte found.

The sobering findings come from Deloitte’s 18th annual Digital Media Trends Survey, which was published on March 20. The online survey of 3,517 online consumers was conducted online in October 2023.

Their findings suggest a brighter future for YouTube than for Netflix and other streamers

It’s no surprise Gen Z prefers social media, given it’s the first cohort to be raised on it. Those preferences could change as Gen Z ages, but that would mean changing not just what they watch, but what they watch it on. Other research has suggested that the device people grew up on is the one they end up preferring.

“They grew up with screens in their hands; they were growing up with user-generated content,” said Jana Arbanas, Deloitte’s US telecom, media, and entertainment sector leader. “So I expect that behavior will persist. Over time, the streamers will start to lose that population.”

Besides viewing preferences, the survey had more bad news for streamers.

The major streamers are increasingly turning to advertising to cover the high cost of shows and movies, but it might not be the most effective way for brands to reach Gen Z. Deloitte found that Gen Zers were three times more likely to be influenced by ads on social media (59%) than streaming (18%).

Deloitte

Beyond Gen Z, the streamers also have to contend with the fact that many people of different age brackets are questioning the value of streaming media, where subscription prices have been on the rise; and about half feel it’s hard to find something to watch, the survey found.

So, streamers need a strong social-media strategy to hook Gen Z. Maybe MrBeast could help capture the audience’s attention. Amazon sure seems to think so. And perhaps a more personalized or creator-focused approach to ads? What’s becoming increasingly clear is that relying on the old TV model isn’t going to cut it.

Read the original article on Business Insider