Gamers and movie watchers are binging on entertainment during the pandemic, and U.S. game companies and streaming movie services are vying to sign up consumers, according to Deloitte‘s 14th annual Digital Media Trends report. This data is a clue to habits being formed during lockdown, but the question is how long an expanded interest in gaming is going to last.
“We saw a surge in esports in terms of virtual games and virtual sports during the pandemic,” said Kevin Westcott, the vice-chair and leader of the U.S. telecom, media, and entertainment sector at Deloitte, in an interview with GamesBeat. “Do those become permanent parts of the entertainment package that people consume at home? Or is that really just a phenomenon of being locked at home and they had to find alternative entertainment? I expect that at least some portion of that will continue. We’re going to be watching very closely.”
Deloitte found in a survey of more than 2,000 people that 29% of consumers binge on games on a weekly basis, with the average session lasting 3.3 hours. But 38% of consumers said they binge-watch streaming video services, with the average session lasting 4.2 hours.
When Deloitte dug deeper into the data, it found that 52% of Gen Z consumers (born 1997 to 2006) and 46% of millennials (born 1983 to 1996) binged on games, while 46% of Gen Z consumers and 45% of millennials binge-watched video. This suggests that while streaming video is dominant now, it won’t be when demographics change in the future.
“A lot of this new generation is binge-watching content,” Westcott said. “And the social aspects of gaming have been increasing. People tell us they play games to connect with their friends and family.”
Earlier this year, 24% of consumers surveyed listed playing video games among their top three favorite entertainment activities. For Gen Z and millennials, it was 44% and 37%, respectively.
But since the crisis began in early March, nearly half (48%) of U.S. consumers have participated in some form of video gaming activity. For millennials it’s 69%, while for Gen Z it’s a whopping 75%. And 29% of U.S. consumers said they are likely to use their free time to play a video game rather than watch a video.
Seven percent subscribed to a video gaming service for the first time during the pandemic. Among those participating in video gaming activities during this period, 34% are playing more video games at home with their families, and 27% are playing to socially connect with others.
Deloitte surveyed 2,103 people in January and 1,101 consumers again in May to compare pre-COVID-19 numbers with sentiments during the pandemic. By the second survey, nearly 95% of the U.S. population had been under “shelter in place” orders, business activity had been widely restricted, and more than 20 million people in the U.S. had lost their jobs.
Increased subscriptions and cancellations
At the end of 2019, consumers were loading up on paid media subscriptions and sampling free services. They subscribed to an average of 12 media and entertainment services while also seeking more free and subsidized entertainment, such as ad-supported streaming video. With so many entertainment options, competition to attract and retain customers was fierce, and costs, competition, and subscription fatigue were already setting in.
Signups accelerated during the pandemic, as people found themselves in lockdown with more time on their hands. But COVID-19 has also accelerated cancellations as people face loss of income and economic uncertainty. While it’s too soon to say what trends will look like after lockdown, consumer choices today could shape the industry for the next decade, Deloitte said.
“The No. 1 reason people actually sign up for a service is for some exclusive content,” said Westcott. “So they’re chasing content someone has told them about. They go sign up for that. But then during the COVID-19 crisis, the No. 1 reason that people actually canceled services was either costs or the free trial ended. We continue to see a lot of new subscribers, but also we continue to see quite a bit of churn.”
Westcott said media consumption is now more fluid and round-the-clock. Customer acquisition has accelerated, especially in paid streaming video, music, and gaming subscriptions. People have more time on their hands to watch, listen, and play games, and they are adding services to get new content. Social viewing, livestreaming, and first-run movies that release directly to digital services have all shown strong engagement during shelter-in-place guidelines.
At the same time, it is harder to keep customers. Introductory offers of free or reduced rates, along with compelling original content, are attracting subscribers. But these subscribers are likely to cancel the service if content dries up and they can’t justify paying the full price. For instance, people might subscribe to Disney+ to watch The Mandalorian. But once they do so, they may quickly cancel.
“My expectation of the evolution of the streaming platforms is we will end up with a handful of dominant players who not only have their own exclusive content, but they’ll aggregate a lot of content,” Westcott said.
The emergence of free, ad-supported alternatives makes it even more critical for subscription services to deliver value, especially since they’re up against growing competition from livestreaming video services and video gaming, Westcott said. Cost is a big issue here — 39% of COVID-19 survey respondents reported a decrease in their household income since the pandemic began.
These consumers have been adding and canceling subscriptions in search of entertainment and savings. For example, 20% of U.S. consumers made changes to their streaming music subscriptions: 12% added at least one service, 5% canceled at least one, and 3% added some and canceled others. This means they’re searching for new entertainment but staying conscious of costs, Westcott said.
In the pre-COVID-19 survey, 27% of U.S. consumers said they had planned to add a new streaming video service in the coming year. Since the pandemic began, 23% have added at least one new paid streaming video service. With this leap, 80% of U.S. consumers now subscribe to at least one paid streaming video service, up from 73% in the pre-COVID-19 survey.
Subscribers now have an average of four paid streaming video subscriptions, up from three in the pre-COVID survey. Not only do more consumers have streaming video services, the average streamer pays for more services than ever. However, as more media providers join the fray — including Disney+, Apple TV+, and HBO Max — competition is putting pressure on content and pricing.
When things open back up
Once lockdown restrictions are lifted, consumers may reduce their subscriptions, as Deloitte found the top reason consumers added a streaming video service during the crisis was having more time to watch shows and movies. When consumers return to more normal routines, they may likely have less time for entertainment, Westcott said.
To win subscribers rapidly, many streaming video services are offering low introductory rates and free trials. But with cheap trials and easy cancellations, consumers can binge-watch their favorite shows, cancel the subscription, and then return when the next season drops — essentially, “renting” services instead of joining them.
This underscores the difficulty providers face with retention, as well as their growing focus on content libraries and original programming. When Deloitte asked consumers why they subscribed to a specific streaming video service, their answers revealed that content is still king. Consumers are drawn to streaming video services that offer a broad range of shows and movies and content they can’t get anywhere else — both originals and old favorites.
For nearly a quarter of consumers, a free or discounted rate was a big factor in choosing a paid streaming video service. To decide if they should keep the service once the full price kicks in, consumers will likely evaluate whether it delivers enough high-quality content for the new price. Indeed, streaming video subscribers are canceling more services: the pre-COVID-19 survey found that 20% of subscribers had canceled at least one streaming video service in the previous year.
In the few months since COVID-19 began, 17% of subscribers had canceled a service. When Deloitte asked consumers why they canceled, 36% said the service was too expensive. Consumers who lost income during the COVID-19 pandemic were more than twice as likely to cancel a service because of cost compared with those whose income was unchanged.
Prior to COVID-19, 25% of consumers watched livestreamed and recorded video of others playing games. For millennials and Gen Z, that number was around 50% and continues to hold strong during the pandemic.
Twitch, the top livestreaming service for gaming, has seen 50% growth in hours watched during the pandemic. For both watching and playing games, it’s unclear how much of this growth will remain after lockdowns are lifted. And yet the phenomenon of playing, streaming, watching, and socializing in and around video games will likely continue to expand after the crisis has passed, Deloitte said.
The pandemic has created conditions and opportunities for people to try new things, but will these interests fade? Or are we seeing the beginnings of new markets? During the pandemic, 38% of consumers surveyed have tried a new digital activity or subscription for the first time.
The most popular are viewing livestreamed events and watching video with others through a social platform, web application, or video conference. More than two-thirds of respondents said they are likely to continue their new activity or subscription. Media and entertainment companies may not have anticipated videoconferencing as a new form of content, but these are times of great change.
With no new live sports to watch, many fans are going elsewhere — 46% of sports viewing respondents are watching their favorite shows and movies, and 11% have been watching virtualized sporting events. Many sports and auto racing leagues have broadcast some sort of competition in a simulation of their sport.
Any content is replaceable in the consumers’ eyes, Westcott said.
“But if you have multiple members of the family using the platform for multiple types of genres of entertainment, it makes it much more sticky, and it makes people want to retain it as something for the long-term,” he said.
Westcott believes new types of creative content, whether short-form videos (like offered by Quibi) or other new programs, will be more likely to catch on now.
“I’m really hoping to see an explosion of storytelling,” Westcott said.
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