**A report from the**
**Deloitte Center for Technology,**
**Media & Telecommunications**

### 2022 Digital media trends, 16th edition
##### Toward the metaverse


-----

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###### Contents

Introduction 2

The SVOD conundrum 4

How can SVOD providers keep subscribers around? 6

The shifting sands of media and entertainment 8

People are finding more relevant, engaging, and shared
entertainment on social media 9

Gaming draws younger generations more accustomed to
connected life 12

Toward the metaverse 16

Endnotes 17


-----

#### Introduction

HIS YEAR’S DIGITAL media trends survey

revealed that media companies in the United

States are now feeling more turbulence from

# Tthe deeper currents shaping consumer behavior.

After 15 years of growth, streaming video

on-demand (SVOD) services have successfully

unbundled video, lowered costs to consumers, and

ignited fierce competition among providers. Top

SVOD services are consolidating content and taking

the competition for subscribers into global markets.

But they face greater pressure to attract and retain

subscribers who have grown savvier about their

subscriptions and more cost-conscious.

###### SVOD services should be aware that more audiences are finding entertainment, community, and even meaning, elsewhere.

In that same 15 years, screen-based entertainment

has evolved beyond TV and movies. Streamers and

studios are challenged to attract and retain younger

generations who have grown up with smartphones,

social media, and video games, which deliver finely

tuned experiences that are social, interactive, and

immersive. So, while SVOD providers may have

disrupted TV and movies, the medium—and its

business models—still looks much the same as it did

when they were created 15 years ago.

Since then, social media has expanded and evolved

dramatically. Social media services now deliver


non-fungible tokens (NFTs) and cryptocurrencies,

digital life may be gaining on so-called real life.

Social media broke open the TV screen and made

fame much more accessible. Gaming enables us to

act in the movie. Media and entertainment

executives—and especially those in SVOD—should

be thinking hard about how people socialize

around entertainment and how entertainment

itself is becoming more personalized, interactive,

and immersive. The business models that have

brought them this far, and even the technologies

they have relied on, may not carry them through

the next wave of change.


seeing in the United States are echoed in these

countries, with the same generational contours.

Amidst a global pandemic that has constrained

in-person activity, people and companies are being

accelerated into digital life, setting the stage for the

current excitement about the metaverse—where

virtual spaces become common destinations for

work and play. But these shifts were already in place

before COVID-19. With millions recording

themselves doing the latest viral dance moves,

influencers driving sudden demand spikes for

products, top musicians delivering other-worldly

concert experiences to global gaming audiences, and

virtual goods becoming valuable and scarce with


finely tuned and personalized feeds of images,

video, music, news, gaming, and shoppable media

to billions of users, all lit up by social networking

and provided for free. Top services are adding new

lines of revenue by becoming retail destinations

and leveraging influencers and creator economies

to reinforce engagement and purchasing.

Meanwhile, thanks to smartphones, competitive

esports, and rich, Hollywood-level experiences that

cast the player as the star, gaming has gone global

and expanded across generations. Gaming may

have started as an individual experience, but it is

now highly social. And game companies have

evolved to monetize many aspects of gaming, from

subscriptions, in-game purchasing, and extensible

games that operate more like services, to

embracing the social experience of gaming with

multiplayer, branded content, and virtual goods.

Although SVOD broke apart the cable bundle,

since then, streamers and studios have mostly

focused their innovation strategies on content

delivery and licensing rights. Social media and

gaming companies have been quickly evolving their

business models and products, leveraging

technology, and capitalizing on behaviors. This

doesn’t mean all digital media must become social

and interactive. But SVOD services should be aware

that more audiences are finding entertainment,

community, and even meaning, elsewhere.

This year’s study expanded beyond the United

States: We also included the United Kingdom,

Germany, Brazil, and Japan—areas where media

and entertainment companies are competing for

digitally mature audiences. Overall, the trends we’re


###### Amidst a global pandemic that has constrained in-person activity, people and companies are being accelerated into digital life, setting the stage for the current excitement about the metaverse—where virtual spaces become


###### common destinations for work and play.


-----

#### The SVOD conundrum


**ABOUT DIGITAL MEDIA TRENDS**

The 16th edition of the Digital Media Trends survey was conducted by Deloitte’s Technology, Media
and Telecommunications (TMT) practice. The US survey was fielded by an independent research firm
in December 2021 and employed an online methodology among 2,000 US consumers. All data is
weighted back to the most recent Census data to give a representative view of consumer sentiment and
behaviors. The survey was also fielded in the UK (n=1,002), Germany (n=1,002), Brazil (n=1,000), and
Japan (n=1,000) in December 2021 and January 2022. All data from the global markets is weighted to be
nationally representative. For meaningful changes, we look for differences in year-over-year tracking
and generations of at least five percentage points. We define the five generations represented in the
survey below:


HE SHIFT TO streaming video has been

extremely successful at disrupting television,

though potentially far less profitable.[1] Like TV

# Tand movies before them, SVOD companies have

relied on the innate emotional and intellectual

value of their stories to engage audiences and

monetize their attention. But will people always

value this kind of passive, lean-back-and-watch

experience? That’s the big question. As more major

media providers launch their own streaming video

services, competition among them has heated up,

just as their value proposition to audiences may be

losing some of its luster.

For top SVOD services, growth in North American

subscribers has slowed.[2] As they pursue global

markets, and as those markets mature, they may

FIGURE 1


be facing the same challenge. For consumers,

getting their entertainment through the

fragmented SVOD landscape requires more effort

and, increasingly, nearly as much money.[3] Over the

past two years, US consumers have become

increasingly frustrated when they lose content to

other services, have to manage multiple

subscriptions, and receive poor recommendations.

These conditions lead to churn: when people

cancel, or both add and cancel, a paid SVOD

service. In the United States, the average churn

rate has remained consistent since 2020 at about

37% across all paid SVOD services (figure 1).[4] It

should be noted, however, that churn for a given

service might be significantly lower than the

overall average. In the United Kingdom, Germany,


**Churn for paid streaming video services remains high in the United**
**States—especially among younger generations**

Changes to paid streaming video services (percentage US consumers)

Added during the last six months Both added and cancelled during the last six months

Cancelled during the last six months Neither added nor cancelled during the last six months

**Total** **24%** **33%** **4%**

**Gen Z** **24%** **46%** **5%**


**Millennials** **28%**

**Gen X** **26%**

**Boomers** **20%** **12%**

**Matures** **11%** **15%** **5%**


**49%**


**3%**


**36%**


**4%**


**5%**


Note: N (All US consumers) = 2,000.

Source: Digital media trends, 16th edition (March 2022).


-----

#### How can SVOD providers keep subscribers around?

O RETAIN MORE subscribers, SVOD Streaming services can also use gated content to

providers are exploring ways to shift the offer consumers pricing tiers. Some companies are

value proposition in their favor. Offering experimenting with offering premium access to

# Tflexible pricing options could be the most direct everything at a higher price and cheaper options

path. Among consumers in all five countries for less content. Our global study found that many

surveyed, options that allowed people to watch ads respondents thinking of cancelling a paid SVOD

in exchange for lower costs—or at no cost—are the service would likely keep their subscriptions if they

most popular (figure 3). Ad-supported tiers could could get a discount. Some would be willing to

attract more cost-conscious subscribers. And even watch more ads, or less content, or wait 45 days to

when there are lulls in engaging content, watch a new release (figure 4).

subscribers may not cancel their subscription if the

cost is low enough.

FIGURE 3
**Across the countries we surveyed, more than half would favor an ad-supported**
**streaming video service**

Consumer preference for a new streaming video service model (percentage consumers)

|Col1|US UK Germany Brazil Japan|
|---|---|



**12 minutes of ads**
34 44 41 34 55
**per hour/no monthly fee**

**Six minutes of ads**
**per hour/monthly fee** 25 17 21 26 15
**($6/£5/€6/R$20/¥750)**

**No ad/monthly fee**
41 39 38 40 30
**($12/£10/€12/R$40/¥1,500)**

Notes: N (All US consumers) = 2,000; (All UK consumers) = 1,002; (All Germany consumers) = 1,002;

(All Brazil consumers) = 1,000; (All Japan consumers) = 1,000.

Source: Digital media trends, 16th edition (March 2022).


Brazil, and Japan, the overall churn rate is closer the United Kingdom, Germany, Brazil, and Japan,

to 30%. (This number varies for each country, around 22% overall have churned and returned.

largely driven by subscription penetration and Once again, the behavior is stronger among

number of SVOD services.) younger generations.

People are attracted to SVOD by the content, but Why do respondents say they churn and return?

they often leave due to cost. Generation Z Either a new season of their favorite show was

consumers are especially sensitive to services released, they got a free or discounted rate, or

being too expensive. It costs money to acquire content they wanted to watch moved to the

subscribers, so losing them too quickly can service. Around a quarter of people across the

hamper providers’ ability to recoup their countries we surveyed admit they routinely cancel

acquisition costs.[5] However, cancelling a service and resubscribe to manage costs. In every country

doesn’t mean they won’t return. One-quarter of we surveyed, consumers—particularly Gen Zs and

US consumers have cancelled a streaming video Millennials—are getting savvier about

service in the past 12 months and resubscribed to determining how much money they will spend on

the same service, with younger generations what content. As we have stated before, it looks

significantly more likely to return (figure 2). In like consumers are winning the streaming wars.

FIGURE 2
**Younger generations are also prone to canceling and then resubscribing**

Cancels and then renews paid streaming video service within the last 12 months (percentage consumers)

**Generation Z** **Millennials** **Generation X** **Boomers + Matures**

**US** **25%** **35** **38** **28** **7**


**Brazil**

**UK**

**Germany**

**Japan**


**33%**


**42** **39** **31** **21**

**44** **33** **23** **6**

**38** **34** **16** **6**

**24** **20** **11** **4**


**23%**


**19%**


**12%**


Notes: N (All US consumers) = 2,000; (All Brazil consumers) = 1,000; (All UK consumers) = 1,002;

(All Germany consumers) = 1,002; (All Japan consumers) = 1,000.

Source: Digital media trends, 16th edition (March 2022).


-----

#### The shifting sands of media and entertainment


FIGURE 4
**Annual subscriptions and ad-supported options might convince some global**
**consumers to stay**

Reduced cost options that might keep consumers from cancelling streaming video services
(percentage of consumers)

|Col1|US UK Germany Brazil Japan|
|---|---|



**No ads or restrictions on what I can**
**watch but requires an annual** 24 21 22 36 19
**12-month subscription**

**12 minutes of ads per hour but no**
18 11 10 16 12
**restrictions on what I can watch**

**No ads but must wait 45 days after**
**release date to watch premium** 12 14 10 13 13
**TV shows and movies**

**No ads and no access to live sports,**
**but can watch games** 9 10 10 11 5
**and highlights the next day**

**None of these options would**
37 44 48 24 51
**convince me to keep the subscription**

Notes: N (All US consumers) = 2,000; (All UK consumers) = 1,002; (All Germany consumers) = 1,002;

(All Brazil consumers) = 1,000; (All Japan consumers) = 1,000.

Source: Digital media trends, 16th edition (March 2022).

Bundles and perks can also support subscriber All of these pathways could reinforce the value of

retention. If US respondents were thinking about SVOD, help with retention, and even support

cancelling an SVOD service, 37% said that access to greater profitability, but they can also put different

first-run movies would convince them to stay, and pressures on revenues. However, SVOD itself may

34% would stay if a loyalty program were included. be facing a greater challenger in the evolving

Among Gen Zs and Millennials, about 51% would stay preferences of younger generations: Gen Z and

if their subscription included a gaming or music Millennial consumers who have grown up with

service or another SVOD service. social and interactive media.


VERALL, OUR SURVEY showed watching

TV and movies at home remains the

favorite entertainment activity, but this

# Otrend skews significantly toward older generations.

Across all five countries surveyed—the United

States, the United Kingdom, Germany, Brazil, and

Japan—Gen Z respondents cited playing video

_games as their favorite entertainment activity._

More generations may catch up. For UK

Millennials, gaming is a close second to watching

TV and movies at home, and Japanese Millennials

rank playing video games as second to browsing

the internet. Similarly, use of social media is high


and skews toward younger generations. Social has

become a gateway for video, music, news, gaming,

and the communities and content creators that

keep it all moving.

Social media and gaming further challenge retention

for SVOD services. Every time a streaming show

ends, a recommendation fails to engage, when

subscription costs mount, or even when attention

strays—these are moments when people may turn to

social media and gaming. Yet, larger generational

changes are likely underway, shifting the sands of

the media and entertainment landscape.


-----

#### People are finding more relevant, engaging, and shared entertainment on social media

OCIAL MEDIA SERVICES have become In contrast to SVOD services, social is full of content

increasingly dynamic spaces. For many that is bite sized, snackable, and highly personalized.

consumers, these services have offered People log onto these platforms regularly and they

# Sessential ways to connect, gather information, and can be entertained for a minute or an hour. In the

stay entertained. They provide both passive and United States, some 80% of social media users say

active experiences and offer up near-infinite they use social media services at least daily and

streams of personalized content—all lit up with 59% use these services several times a day.

swarming behaviors around trending content. And Across the United States, the United Kingdom,

it’s all free and available anywhere, anytime. Germany, Brazil, and Japan, Gen Z, Millennial,

FIGURE 5
**Across the countries we surveyed, people engage with social media for many**
**kinds of activities**

Top three most frequent activities on social media platforms (percentage consumers)

|Col1|US UK Germany Brazil Japan|
|---|---|



**Read or watch news** 27 26 41 44 52

**Listen to music** 28 28 26 41 29

**Watch TV shows and movies** 23 20 16 36 30

**Shop** 17 16 15 32 39

**Play video games** 22 19 16 25 15

**Watch sports** 13 12 8 15 11

Notes: Respondents were shown more response options that are not listed here.

N (All US consumers) = 2,000; (All UK consumers) = 1,002; (All Germany consumers) = 1,002; (All Brazil consumers) = 1,000;

(All Japan consumers) = 1,000.

Source: Digital media trends, 16th edition (March 2022).


and Gen X consumers are consistently more likely respondents say they watch more user-generated

to use these services. content than they did six months ago, and half say

they always end up spending more time watching

Another differentiator from SVOD: Social is user-generated content than they had planned (a

largely free. And the library of content is massive number that jumps to 70% among Gen Zs)

and seemingly never-ending. Users are listening (figure 6).

to music, reading and watching news, watching

TV shows and movies, and playing games, all in Rich troves of user data power algorithms that

one place. Their newsfeeds are personalized by continuously refine themselves to get the most

algorithms that serve up exactly what they want. compelling and engaging content, ads, and

No chasing content, and no subscription recommended user accounts in front of the right

needed (figure 5). audiences. In essence, the content discovers you.

And it’s competitive with the TV experience.

User-generated content—which is usually short- Around four in 10 US respondents say they spend

form and easily consumable—has been bolstered more time watching user-generated video content

by the rise and reach of video-centric, than they do TV shows and movies on video

algorithmically fueled social media services.[6] And streaming services—a sentiment that increases to

it’s often highly engaging. About half of US around 60% for Gen Zs and Millennials.

FIGURE 6
**In the US, younger generations spend more time than they intended engaging with**
**user-generated content—even more so than with SVOD**

Percentage of US consumers who agree with the following statements

Generation Z Millennials Generation X

**T O T A L**

50% 46% 41%

**70%** **66%** **54%** **59%** **63%** **56%** **57%** **60%**
**45%**


**I am spending more time**
**viewing user-generated**
**content online now compared**
**with six months ago**


**I spend more time watching**
**user-generated video content online**
**than TV shows and movies on**
**video streaming services**


**I always end up spending**
**more time watching**
**user-generated content online**
**than I planned to**

Note: N (All US consumers) = 2,000.


Source: Digital media trends, 16th edition (March 2022).


-----

#### Gaming draws younger generations more accustomed to connected life

UST AS SOCIAL media has enabled communities and women say they play, with half of smartphone

to create and interact around content, and even owners saying they play on a smartphone daily. As

reach the kind of stardom once reserved for we might expect, Gen Z and Millennial gamers play

## J

major celebrities, gaming has opened doors further, the most, logging an average of 11 and 13 hours per

empowering people to step directly into once week, respectively. Gen X gamers follow closely

impossible worlds. behind with around 10 hours of gameplay every

week (figure 7).

In the United States, a vast majority of respondents

are playing video games. Thanks to a range of The popularity of gaming is another global trend:

devices and content, more than 80% of both men Most respondents in the United Kingdom (75%),

FIGURE 7
**In the countries we surveyed, nearly all in the younger generations are gamers**

Consumers who play video games (percentage consumers)

Generation Z Millennials Generation X Boomers + Matures

Average gaming hours per week among gamers*

**11** **13** **10** **6** **12** **12** **9** **7** **11** **10** **10** **6** **12** **10** **9** **7** **12** **11** **8** **5**

**96%** **96%** **89%** **98%** **95%** **80%** **96%** **96%** **82%** **96%** **93%** **88%** **77%** **90%** **84%**
**69%**
**57%** **59%**
**46%**

**39%**


**US** **UK** **Germany** **Brazil** **Japan**

Notes: N (All US consumers) = 2,000; (All UK consumers) = 1,002; (All Germany consumers) = 1,002;

(All Brazil consumers) = 1,000; (All Japan consumers) = 1,000. *Among only those who are occasional or frequent “gamers”:

those who play more than “never” across multiple devices.

Source: Digital media trends, 16th edition (March 2022).


Much of this user-generated content is fueled by

the creator economy and so-called influencers—

users whose large followings enable them to

monetize their content through brand

partnerships on these platforms.[7] Following

influencers helps users connect with communities

of like-minded people—an affordance not easily

replicated on SVOD services. Seventy percent of

US respondents say they follow an influencer, and

one-third say these online personalities influence

their buying decisions—a figure that increases to

more than half for US Gen Zs and Millennials.

The appeal of influencers is a global trend: 88% of

survey respondents from Brazil follow an

influencer, as do 79% of respondents from Japan.

People worldwide, especially younger ones, are

drawn to influencers—from the content they post,

to the lifestyles they promote, to the communities

they create—and often relate to them on a

personal level.

With such large global audiences, social media

services are becoming shoppable retail

destinations, enabling businesses big and small to


reach new audiences and potential customers.[8 ]

Leveraging the same data and algorithms, these

services can deliver ads and product placements

that are highly targeted and personalized. More

than half of US respondents and around 40% or

more in the United Kingdom, Germany, and

Japan say they see ads on social media for

products or services they have been looking for—a

number that increases to 72% in Brazil. These

sales are highly profitable for social media

services: In addition to making money on the ads

they sell, they can also take a percentage of the

sale price when a product is purchased, expanding

their revenues beyond advertising.

With hundreds of millions—even billions—of users,

social media services and the brands they support

can capitalize on fast-moving trends. Indeed, some

reports show sudden spikes in demand for

products that have gone viral on top social media

services.[9] So, while the audience for SVOD is

larger than ever, experiences that are social,

interactive, and shoppable are competing for more

of our time, attention, and money.


-----

Germany (78%), Brazil (89%), and Japan (63%) play

video games regularly. In all of these countries,

younger generations are also more likely to be

gamers, with Gen Z and Millennial gamers spending

an average of 11 hours per week playing.

Whether they are simple, time-filling mobile games

or rich, immersive, and social games drawing in tens

of millions of players, gaming competes for screen

time. Streaming video providers should note that

about half of all US gamers say that playing video

games has taken time away from other

entertainment activities; unsurprisingly, these

percentages increase for younger gamers. Other

markets appear similar: Just over half of gamers in

the United Kingdom, and just under half of gamers

in both Brazil and Japan are also sacrificing other

entertainment activities to play video games.

FIGURE 8


This stickiness may be due, in part, to the network

effects enjoyed by social games. People play with

friends, against strangers, and in front of audiences

on social streaming services, reinforcing

engagement while also satisfying more emotional

needs. About half of US gamer respondents say that

playing video games helps them stay connected to

other people, and a similar share say making

connections is important to them while gaming—

sentiments that emerge at a higher level for men.

Overall, more than three-quarters of US gamers

surveyed also say that gaming helps them relax,

while nearly 60% report that gaming helped them

through a difficult time. And these games are

supporting identity: 61% of US gamers say that

personalizing their game character or avatar helps

them express themselves. Many of these sentiments,

like the importance of making connections with


other players, personalizing their game character or

avatar, and finding relaxation through gaming, also

emerge globally (figure 8).

Video games offer people an outlet for self
expression, immersion, connection, and relaxation,

and game companies have monetized these

qualities quite effectively. Amid lockdowns and

social distancing requirements, the pandemic has

only underscored the value of socialization in

digital worlds. But virtual worlds can bring the

downsides of physical life with them: Bullying and

[harassment have become a larger problem.[10] These](https://problem.10)

negative experiences can tarnish games, provoke

regulators, and threaten revenues. Worse, social

games can become toxic, with women and

[minorities often being targeted.[11 ]](https://targeted.11)

With large, global audiences aggregated and

engaged on top gaming platforms, advertisers are

working to access and influence them. As game

worlds become more dynamic and customizable,

in-game advertising and branding opportunities

get more creative. Top social games support greater

personalization by offering digital clothing, skins,

and gestures that increasingly include branded

FIGURE 9


[virtual goods.[12] Imagine sprucing up your avatar’s](https://goods.12)

appearance with a pair of your favorite brand of

sneakers or buying a designer handbag you’ve

always dreamed of.

Gaming and music also appear closely linked:

About half of US gamers in our survey say they

often discover new music while playing video

games. Some of the largest social games are

featuring new releases from top artists, debuted on

in-game radio stations and paired with branded

[virtual goods.[13] And some games are offering](https://goods.13)

[major musicians their own storylines.[14] Top](https://storylines.14)

musicians have delivered larger-than-life

experiences in game worlds that let them perform

[for tens of millions globally.[15] Live in-game events](https://globally.15)

present a unique opportunity for brands,

franchises, and performers. About a quarter of US

gamers say they have attended an in-game event

in the last year, with Millennials and men being

the most likely attendees. Remarkably, 82% of

those attending live in-game events also made a

purchase because of the event: 65% purchased

digital goods and 34% purchased physical

merchandise, reinforcing the steady blurring

between the real and virtual (figure 9).


**Gaming supports social and emotional needs and takes time away from other**
**entertainment**

Gamers who agree with the following statements (percentage gamers)

|Col1|US UK Germany Brazil Japan|many Brazil Japan|
|---|---|---|



**Playing video games helps me relax** 78 74 69 84 53

**Personalizing my game character or**
61 54 43 69 39
**avatar helps me express myself**

**Video games have helped me**
59 57 40 73 33
**get through a difficult time**

**Playing video games help me stay**
53 52 38 69 35
**connected to other people**

**I often discover new music while**
51 50 35 71 41
**I’m playing video games**

**Making connections with others while**
48 50 39 61 31
**playing video games is important to me**

**Video games have taken time away from**
49 55 35 45 44
**my other entertainment activities**

Notes: N (US gamers) = 1,624; (UK gamers) = 749; (Germany gamers) = 783; (Brazil gamers) = 884; (Japan gamers) = 627.
Source: Digital media trends, 16th edition (March 2022).


**Gamers engaged in live in-game events are spending money for merchandise**

Percentage of US gamers making purchases in a live in-game event

**TOTAL** **Generation Z** **Millennials** **Generation X**

Yes (Net) **82** 64 88 92

Yes, I purchased digital merchandise **65** 47 71 76

Yes, I purchased physical merchandise **34** 27 39 35

No **18** 36 12 8

**82%**

**18%**


Note: N (US gamers who attended a live event inside a video game) = 373.

Source: Digital media trends, 16th edition (March 2022).


-----

#### Toward the metaverse


Gaming allows people to become part of the story,

gives them autonomy and a chance to win, enables

them to share rich experiences, and it can support

their emotional needs. Games companies

capitalized on this with freemium mobile games

and gaming subscriptions, in-game purchases of

new content, and an economy of virtual goods that

has drawn in more brands and franchises. As


consolidation heats up in the games industry,[16 ]

streaming video providers may face even greater

competition for younger audiences who have

grown up with smartphones, social media, and

video games. Will Millennial and Gen Z consumers

and those that follow move away from

entertainment that isn’t social or interactive in

some way?


IVEN THE RAPID global adoption of social

media and the steady drive toward more

complex and social gaming experiences,

# Git’s understandable that the metaverse has

become such a big priority for leading

[companies.[17 ]Technology has advanced to enable](https://companies.17)

greater immersion and interaction across digital

systems. Many businesses and economies exist in

both real life and online. People have been

building their digital lives for a few decades now,

with social media and gaming expanding our

sense of self into digital representations. And

now, two years into a pandemic that has urged us

to maintain physical distance, more aspects of

our lives have become digitalized and virtualized.

The web and all it may entail is no longer just a

destination or a place we sometimes opt into. It’s

become a routine part of our lives—enough to feel

just as real for many people. Our smartphones

have become more of an extension of ourselves

than an independent tool we use. The metaverse

may be riding a hype cycle because we already

spend much of our lives there.

Here’s just one example of an activity that could

happen in a consumer metaverse: Shopping for

virtual clothes to wear when we join our friends for

a concert in the game world. But for that to happen,

deeper questions about ownership, rights,

interoperability, monetization pathways, and

partnerships would have to be answered. It’s

further complicated by the ongoing empowerment

of users, influencers, and content creators who can

aggregate their own loyal audiences, attract

advertisers, and wrestle more of the customer


relationship away from businesses. What will this

look like if we move further into virtual worlds

architected to engage, empower, and monetize?

A major shift is underway, one that could radically

recompose internets and economies. In the

integrated marketplace of the future, streamers,

social media, and gaming companies could see

their business models further disrupted—not just

by younger generations, but also by the emerging

infrastructure of Web 3.0. Activity is heating up,

with innumerable cryptocurrencies conferring

specialized rights to niche communities; NFTs

giving weight and scarcity to digital goods; and

distributed ledgers such as blockchain working to

decentralize assets and distribute trust. Social

game worlds built on blockchains and NFTs are

attracting users—and celebrities—and monetizing

[the new digital scarcity.[18] Edge computing and 5G](https://scarcity.18)

are delivering the next generation of computation

and connectivity needed to unleash it all. Billions

of dollars are already flowing in to support this

shift. And yet, these trends toward decentralization

and user empowerment would seem to run counter

to the goals of some platform companies racing to

[own the first billion metaverse users.[19 ]](https://users.19)

For now, streaming video, social media, and

gaming are all very successful without full

immersion, tokenized economies, and universal

interoperability. But the twin engines of capital

and human behavior may be moving irrevocably

toward that kind of unlimited reality. Media and

entertainment companies may need to

collaborate more to create a future where they

remain at the center.


-----

###### Endnotes

1. _Economist, “Disney, Netflix, Apple: Is anyone winning the streaming wars?,” February 12, 2022._

2. Hannah Avery, “Fight to retain subscribers heats up as streaming growth stalls in the US,” Kantar, November 3,
2021.

3. Tmera Hepburn, “The average U.S. household spends $47/month on streaming service subscriptions,” Cord
_Cutters News, February 1, 2021._

4. Our consumer churn rate is the percentage of people who have cancelled, or both added and cancelled, a paid
SVOD service in the last six months. While churn numbers for individual SVOD services are much lower, the
37% figure represents an aggregate percentage of consumers who cancelled, or both added and cancelled, any
one of those specific services.

5. Chris Arkenberg et al., Digital media trends: How streaming video services can tackle subscriber churn, Deloitte
Insights, January 19, 2021.

6. Kevin Sebastian, “Short form is the new norm and here’s why it’s dominating the Digital Space,” PC Mag, April
20, 2021.

7. Jade Scipioni, “Here’s how many social media followers you need to make $100,000,” CNBC, April 30, 2021.

8. Pamela N. Danziger, “Social commerce is a $1.2 trillion opportunity and the next global shopping revolution,”
_Forbes, January 27, 2022._

9. Terry Nguyen, “How online shopping became unavoidable,” Vox, March 24, 2021.

10. Anti-Defamation League, “Free to play? Hate, harassment and positive social experience in online games 2020,”
November 2020.

11. Ian Sherr, “Gaming can be toxic toward women and minorities. Electronic Arts wants to help fix that,” CNET,
June 13, 2019.

12. Jennifer Barton, “Luxury fashion brands turn to gaming to attract new buyers,” Wired, May 18, 2021.

13. Austen Goslin, “Bruno Mars and Anderson .Paak’s music duo Silk Sonic coming to Fortnite,” Polygon, February 3,

2022.

14. Christian Eede, “Dr. Dre releases six new tracks through Grand Theft Auto Online,” DJ Mag, December 16, 2021.

15. Rob LeDonne, “‘Limits are non-existent in the metaverse!’ Video game concerts become big business,”
_Guardian, August 7, 2021._

16. Tae Kim, “The great video game consolidation is just beginning,” Washington Post, February 1, 2022.

17. Bloomberg, “Metaverse may be $800 billon market, next tech platform,” December 1, 2021.

18. Kate Irwin, “Someone paid $450K to be Snoop Dogg’s metaverse neighbor,” Decrypt, December 4, 2021.

19. Owen Poindexter, “Epic CEO: Metaverse could be ‘multi-trillion’ industry,” Front Office Sports, November 18,
2021.


###### Acknowledgments

The authors would like to thank Akash Rawat, Shreyas Waikar, and Sayantani Mazumder for their

work in analyzing survey data and highlighting insights, as well as their contributions to shaping the

direction of the overall global study. We would like to thank Ankit Dhameja for his support with

insights development through industry research and Gautham Dutt for his design and visualization

support. We would also like to thank Susanne Hupfer and the various subject matter experts in the

United Kingdom, Germany, Japan, and Brazil for their assistance and guidance with the global study.

Artwork by Jaime Austin & Alexis Werbeck.


-----

###### About the authors

**[Kevin Westcott | kewestcott@deloitte.com](mailto:kewestcott@deloitte.com)**

Kevin Westcott is a principal and leads the US Telecom, Media & Entertainment practice as well as

serves as the global Telecommunications, Media and Entertainment (TME) practice leader. He has

more than 30 years of experience in strategic and operational planning, as well as implementing global

business change and technology projects for major media organizations. His industry experience spans

film, TV, home entertainment, broadcasting, publishing, licensing, and games. Westcott is an author of

Deloitte’s Digital Media Trends Survey and a coauthor of Deloitte’s Digital Media Maturity Model.

**[Jana Arbanas | jarbanas@deloitte.com](mailto:jarbanas@deloitte.com)**

Jana Arbanas is vice chair and Deloitte’s US Telecom, Media & Entertainment (TM&E) sector leader. She

is also a principal in Deloitte and Touche’s Risk and Financial Advisory practice. Arbanas has more than

20 years of experience in serving large, multinational technology companies to help them address

enterprise risk. She has leveraged her risk advisory capabilities to lead engagements for digital

platform companies, helping them navigate evolving regulatory requirements and business

transformation.

**[Jeff Loucks | jloucks@deloitte.com](mailto:jloucks@deloitte.com)**

Jeff Loucks is the executive director of Deloitte’s Center for Technology, Media & Telecommunications,

Deloitte Services LP. In his role, he conducts research and writes on topics that help companies

capitalize on technological change. An award-winning thought leader in digital business model

transformation, Loucks is especially interested in the strategies organizations use to adapt to

accelerating change. His academic background complements his technology expertise. Loucks has a

bachelor of arts in political science from the Ohio State University, and a master of arts and PhD in

political science from the University of Toronto.

**[Kevin Downs | kdowns@deloitte.com](mailto:kdowns@deloitte.com)**

Kevin Downs is a senior manager in Deloitte Services LP and the sector specialist for the US Telecom,

Media & Entertainment sector. He has more than 23 years of systems, operations, and management

consulting experience implementing business-driven technology transformation and digital

modernization programs for clients in TMT and the public sector.


**[Chris Arkenberg | carkenberg@deloitte.com](mailto:carkenberg@deloitte.com)**

Chris Arkenberg is a research manager with Deloitte’s Center for Technology, Media &

Telecommunications. His focus is on how people and organizations interact with transformational

technologies. Arkenberg is also an avid video game enthusiast, stomping the virtual grounds since the

days of the 2600.

**[Brooke Auxier | bauxier@deloitte.com](mailto:bauxier@deloitte.com)**

Brooke Auxier is a research manager with Deloitte’s Center for Technology, Media &

Telecommunications. Her research focuses on media, entertainment, and consumer technology. She

has a PhD in journalism from the University of Maryland.


-----

###### Contact us

_Our insights can help you take advantage of change. If you’re looking for fresh ideas to address your_
_challenges, we should talk._

**Practice leadership**

**Kevin Westcott**
Vice chair | US Technology, Media & Telecommunications leader | Deloitte LLP

[+1 213 553 1714 | kewestcott@deloitte.com](mailto:kewestcott@deloitte.com)

Kevin Westcott is a principal and leads the US Telecom, Media & Entertainment practice. He has more
than 30 years of experience in strategic and operational planning, as well as implementing global
business change and technology projects for major media organizations.

**Jana Arbanas**
US Telecommunications, Media & Entertainment sector leader | Deloitte & Touche LLP

[+1 415 987 0436 | jarbanas@deloitte.com](mailto:jarbanas@deloitte.com)

Jana Arbanas is vice chair and Deloitte’s US Telecom, Media & Entertainment (TM&E) sector leader. She
is also a principal in Deloitte and Touche’s Risk and Financial Advisory practice.

**Mic Locker**
US Consulting leader, Telecommunications, Media & Entertainment | Deloitte Consulting LLP

[+1 203 423 4727 | miclocker@deloitte.com](mailto:miclocker@deloitte.com)

Michal (Mic) is a principal in Deloitte Consulting LLP and the National Sector leader for the

Telecommunications, Media & Entertainment practice for US Consulting.

**Janet Moran**
US Tax leader, Telecommunications, Media & Entertainment | Deloitte Tax LLP
[+1 212 436 7516 | jmoran@deloitte.com](mailto:jmoran@deloitte.com)

Janet Moran is a principal for Deloitte Tax LLP and leads the US Media and Entertainment Tax practice.

**Darren Wilson**
US Tax leader, Telecommunications, Media & Entertainment | Deloitte Tax LLP
[+1 212 436 2739 | darwilson@deloitte.com](mailto:darwilson@deloitte.com)

Darren Wilson is an Audit & Assurance partner at Deloitte & Touche LLP and leads the firm’s Telecom,
Media & Entertainment (TM&E) Audit & Assurance practice.


**Deloitte Center for Technology, Media & Telecommunications**

**Jeff Loucks, PhD**
Executive director | Deloitte Center for Technology, Media & Telecommunications |
Deloitte Services LP

[+1 614 477 0407 | jloucks@deloitte.com](mailto:jloucks@deloitte.com)


-----

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