Article 12 minute read -  14 April 2023

# 2023 Digital media trends: Immersed and connected

### Younger generations are weaving TV, gaming, and UGC into a tapestry of
 entertainment, community, and meaning.

Kevin Westcott
United States

Jana Arbanas
United States

Chris Arkenberg
United States

Brooke Auxier
United States

See more

Digital media can transport us to new places, allow us to forge bonds with people from across

the world, and help us feel part of something larger than ourselves. We can tap into creators,

trusted advisors, communities, and experiences from wherever we are with just a click or a

swipe. For many, these digital “places” are a very real part of their lives that can support their

social and emotional needs. Around one-third of people in the US consider online experiences

to be meaningful replacements for in-person experiences–but half of all Gen Zs and Millennials

feel this way (figure 1).

In this year’s Digital Media Trends, the changes roiling the media and entertainment industry

continue to be driven by the blended realities of younger generations. Almost half of Gen Zs

and Millennials in the US say they spend more time socializing with others in social media than

in the physical world, and 40% admit to socializing more in video games than in the physical

world.


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So, what might draw people in all generations to different types of digital entertainment

experiences—from watching TV shows and movies, or scrolling through videos in user
generated content (UGC) streams, to playing video games? What kinds of value are they finding

in these experiences?

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TV shows and movies have their own immersive qualities and communities, but they

increasingly live beside—and even within—social media and gaming. Video games and UGC

can deliver a blend of experiences and a diversity of content, from competition and

collaboration and grand adventures to music and shopping and seemingly endless personalized

content that can whirl up into viral moments. This variety can increase engagement and utility,


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to be entertained but also for social connection and a sense of immersion—that feeling of being

deeply engaged and even transported into the screen (figure 2). In contrast, Gen X and older

generations are likely to feel most immersed while watching TV shows and movies and are less

likely to feel a sense of community from any of these options. Notably, music is consistently

valued for all generations and often moves across TV, film, UGC services, and even gaming.

Rather than existing in silos, streaming video, social media, music, and gaming are weaving

together into a more interconnected and interdependent tapestry. What stands out most is that

younger generations may give their digital entertainment time more evenly to TV and movies,

video games, music, and UGC. How can media and entertainment companies better understand

these changes? And how can they consider leveraging those insights to reach and engage people

across media, deliver more value and enjoyment, and establish deeper relationships amidst so

much competition and change?

The value of streaming video may be under pressure


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Subscription growth has slowed, and more consumers are opting for cheaper ad-supported tiers

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that can lower subscription revenues. Watching TV shows or movies at home remains

dominant for the Gen X-and-older set, but across generations there are mounting frustrations.

Nearly half of consumers say they pay too much for the SVOD (streaming video on demand)

services they use and about a third intend to reduce the number they subscribe to.

Indeed, churn (when a subscriber cancels their subscription) persists (figure 3). Overall

subscriber churn for paid SVOD services over a six-month period is 44% according to our

survey. For Gen Z and Millennial consumers, those numbers jump to 57% and 62%,

respectively. Similarly, around a quarter of consumers have “churned and returned,” cancelling

a paid SVOD subscription only to renew that same subscription within a 6-month period.

Again, these figures jump by double digits for Gen Zs and Millennials, who often subscribe to

watch specific shows and movies and then cancel when they’re done—only to resubscribe to

watch a new season or film.


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US consumers have been frustrated by chasing content across multiple subscriptions and losing

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content to cancellations or expiring rights, but economic pressures seem to be growing as well.

Around half of consumers (47%) say they have made a change to their entertainment

subscriptions because of current economic conditions—like cancelling a service to save money,

switching to a free ad-supported version of a service, or bundling services. Around 60% of

households are now using a free, ad-supported streaming video service, and roughly 4 in 10 say

they watch more ad-supported streaming video than they did a year ago, whether paid or free.

In Deloitte’s 2023 Global TMT Predictions, it’s estimated that by the end of 2023 nearly two

thirds of consumers in developed countries will have at least one subscription to an ad
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supported video service. Subsidizing prices with ads could help acquire and retain more cost
sensitive subscribers, but it changes the economics of streaming video: If subscription prices

drop, revenues depend more on successful advertising.

## Millennials—thecanaryintheSVODcoalmine?


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fatigue and cost-sensitivity. The oldest among them turn 40 this year, and many may now have

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children, mortgages, and other financial obligations—including record household debt.

Millennials spend more than any other generation on paid streaming video services—an average

of USD$54 per month. They churn through SVOD services at the highest rates and are more

likely to cancel paid gaming and paid music services (figure 4). Streaming media providers

might hope that cheaper ad-supported options could retain these cost-conscious consumers, but

Millennial behaviors and preferences tend to skew closer to Gen Z’s. Will they put up with

subscriptions and traditional advertising? Or will they shift to spending more time and less

money on other digital media?

# Millennials churn through SVOD services at the highest rates and are more likely to cancel paid gaming and paid music services.


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Millennials may be reaching their SVOD limit, but social media services are happy to serve

their video needs. Half of Gen Zs and Millennials prefer user-generated video feeds to

streaming video services. Across all generations, a majority say they watch user-generated

videos—because they’re free to watch, videos they see are about topics they’re interested in,

they’re convenient to watch, and there’s always something new (figure 5). Like TV (streaming

or otherwise), top social media services now offer a more passive video experience. Unlike TV,

they deliver endless streams of shorter, user-generated videos that are personalized, interactive,

and social, at no cost.


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People are finding different kinds of value in different entertainment options

It’s not that SVOD experiences are in decline and social, user-generated videos are taking over.

But watching TV shows and movies at home may not be the dominant, “go-to” activity it once

was—especially for younger generations. People have more choices and seem to be dividing

their digital entertainment options more evenly based on the kinds of value they offer. For

many, digital media is not just entertaining but can also offer utility, foster community, and

support emotional needs.

Most gamers, for example, say that succeeding in a video game boosts their self-confidence.

About a third of gamers say they feel better about their self-image when they’re playing video

games, and many gamers agree that video games allow them to feel like they are part of the

story rather than just watching it They can be their own movie star the hero of grand


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many are willing to spend money on virtual enhancements and upgrades to help them succeed

or to express themselves with personalized, in-game appearances (figure 6).

# About a third of gamers say they feel better about their self- image when they’re playing video games, and many gamers agree that video games allow them to feel like they are part of the story rather than just watching it.


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Smartphones have led to a boom in the number of gamers—especially casual gamers who play

mostly puzzle and word games for less than five hours per week. In our study, casual gamers

are more likely to be females and people in older generations, and the games they play tend to

be puzzle and matching games that are typically single player. More committed gamers are

playing regularly on gaming consoles or computers, but also smartphones. They tend to play

more sports and racing games, competitive multiplayer games, and rich story-driven


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38% of them.

For gaming companies, gaining more committed gamers can be good for revenues and

retention. We found that committed gamers are more likely to spend money on video games,

attend live non-gaming events inside game worlds, and enjoy social and competitive gaming

that can reinforce personalization and customization of game avatars. They enjoy playing

games with their families and are far more likely than casual gamers to say that meeting up

with their friends in video games is an important way for them to spend time together (figure

7).

While gaming may have typically been seen as a male pursuit, rich story-driven games are more

universal: males and females are playing them in nearly equal amounts. Such games can bring

people into complex narratives and have recently featured more female leads and stronger

female characters, more balanced storylines, and crossovers with popular TV, movie, and

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literature franchises. With more women developing games and helping guide the industry,

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gaming could further expand its reach. Just as movies and TV shows have become more

representative of the many kinds of people that enjoy them, and social media has given more


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people into gaming–especially into social multiplayer worlds–the medium is seeing more

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interest from brands and advertisers.

## User-generated video feeds offer utility, community, and trust

Reaching people through video games may be one important part of the media tapestry.

Leveraging social media—and especially social media content creators—is another. For many,

the creators that fuel these services are not just entertainers but can become trusted guides and

intermediaries. Their followers also rely on them for product recommendations and reviews

and trust them for purchasing advice (figure 8). About 50% of consumers say UGC videos help

them to discover new products or services to buy, and around 40% say they are more likely to

purchase a product after they watch a creator review it. This may be, in part, due to the nature

of creator advertising, which can more frequently appear as product reviews or simply using the

product within a creator’s niche. Roughly four in 10 consumers agree that it’s hard to determine

when user-created videos are “sponsored” or contain an “advertisement.” Essentially, people

seem to be opting-in to this form of advertising when it’s coming from a creator they already

trust.


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Creators and influencers can establish and build trust, grow communities, and drive awareness

and excitement for brands, products, and content. Notably, the trust that creators accrue can

transfer to the brands they represent. Nearly half of consumers say that if an online creator they

trust has reviewed a brand’s product, they are more likely to trust that brand. These sentiments

are especially strong for Gen Zs and Millennials, showing the importance of brand-creator

partnerships for reaching and building relationships with these youngest Americans so used to

connecting online. Around 40% of those in these generations are more influenced by being part

of community of followers of a creator or brand than by reviews on a shopping site. These

trends may have big implications for the future of advertising.

## Designing discovery and buzz

Advertising may face more disruption and innovation ahead, but savvy brands should sharpen

the art of social persuasion. Beyond selling and shopping, social media is a nexus for virality


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example, more than half of all consumers—and nearly three quarters of Gen Zs and Millennials

—often watch a TV show or movie on a streaming video service after hearing about it on social

media (figure 9). Half of Gen Zs and Millennials also report discovering music through videos

on a UGC service, while less than 30% of them discover music on a streaming music service.

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Of course, a hit TV show or movie can also ignite renewed passion for a song or video game.

Digital media has been growing more interconnected—and interdependent. Not only do people

move across TV and movies, social media videos, and video games, so does content, IP, and

franchises. More than half of younger generations decided to play a specific video game after


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cultural moments, and expand monetization opportunities. So, while these experiences look

and feel like entertainment, they often deliver much more—from product recommendations and

trusted sources of information to more social and emotional value. Savvy media and

entertainment companies should be looking across these media channels, honing their

engagement strategies to reach broader audiences and deliver more opportunities to get fans

excited about their favorite series or franchise, even in the “off season.”

Navigating the interconnected tapestry of digital media

People, creators, and content move between TV, movies, user-generated video streams, and

video games. M&E companies should as well. Depending on the size of a given company, the

shape of their strategy, and where they play in the media ecosystem, content executives should

consider how best—and at which scale—they should be participating across this tapestry.

Regardless of where their content originates, how can they optimize and monetize it on all these

channels? How can content, fandoms, and digital media come together to build stronger

franchises? How can executives develop multichannel strategies that deliver more social and

emotional value that may better engage and retain?

M&E companies don’t need to be everywhere all at once, but they should think strategically

about how to add value to audiences increasingly moving across these digital media. Streaming

video providers may need to spend more—to retain subscribers with compelling new content,

expand and enter new markets through acquisitions, and build out ad platforms that generate

better targeting and conversions. How they approach, measure, and even define advertising

may require more innovation and more understanding of UGC creator communities that

combine entertainment, information, and trust. Older generations and fans may pay more for

premium SVOD subscriptions and benefits. But streamers should also strengthen their

relationships with younger generations in younger media that can deliver more interaction,

immersion, and social benefits.

For streamers, studios, and brands, standing out amid so much competition can rest on

effectively driving awareness and buzz through savvy engagement with social media creators,

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fan communities, and within popular social games. Paying attention to these communities can

also surface fast-moving entertainment trends and emerging celebrities. TV and movie studios

can bring popular game IP into their programming and export their own IP into gaming

experiences. Gaming companies can also think across media by developing game IP with an eye

towards film and TV, and to the creators, influencers, and fan communities they hope to inspire

as ambassadors. Music, licensing, and physical and digital merchandise can flow through all

these blended channels.


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should strengthen their relationships with content creators and influencers, double-down on

supporting their communities and fandoms, and take a stronger lead in determining how

interactive and immersive online experiences should evolve to meet behaviors and deliver more

value. At the heart of it is the user experience: how audiences engage with different digital

media, how they move across them, and how those experiences deliver value. For more people,

the digital and physical are likely becoming equally real and meaningful. More of their

emotional, social, and informational needs are being served by the digital milieu. And more of

them seem to be weighing the relative benefits against their costs.

Still, it’s hard to avoid the generational story at the heart of these changes. Generation Z is the

first generation to grow up with smartphones, social media, and always-on access to the

internet. Their brains and behaviors are being shaped equally by the physical and digital

worlds, further invoking the nascent metaverse. They may hold the keys to the future of media

and entertainment: It’s likely that their behaviors are an early glimpse of connected and

immersed generations that follow them. For media and entertainment companies hoping to lead

the way into a rapidly unfolding future, it may be pivotal to understand how people fulfill their

needs by moving between media, how they increasingly exist in a world that blends physical

and digital domains, and how these behaviors are seeking more immersive, social, and valuable

digital media experiences.

Methodology

Digital Media Trends, 17th edition, is conducted by Deloitte’s Technology, Media, and

Telecommunications (TMT) practice. The survey provides insight into how people in the US,

ages 14 and older, are interacting with media and entertainment offerings—including streaming

video, gaming, streaming music, user-generated content, social media, and emerging

technologies.

The US survey was fielded by an independent research firm in November 2022 and employed

an online methodology among 2,020 US consumers. All data is weighted back to the most

recent census data to give a representative view of consumer sentiment and behaviors.

Throughout this report, we reference generations. Our generational definitions are as follows:

Gen Z (1997-2009), Millennial (1983-1996), Gen X (1966-1982), Boomers (1947-1965), and

Matures (1946 and prior).

 Endnotes


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in Article

2. [Lucas Shaw, “After rough year, streaming services are off to a slow start,” Bloomberg, March 5, 2023; Max](https://www.bloomberg.com/news/newsletters/2023-03-05/after-rough-year-streaming-services-are-off-to-a-slow-start)

[Willens, “The age of AVOD is coming,” Insider Intelligence, December 1, 2022.](https://www.insiderintelligence.com/content/age-of-avod-coming) View in Article

3. [Alicia Wallace, “US consumers remain wary of the economy, new survey shows,” CNN Business, January 31,](https://www.cnn.com/2023/01/31/economy/consumer-confidence-index-january/index.html)

2023. View in Article

4. [Jeff Loucks, Paul Lee, Kevin Westcott, Everyone’s watching: AVOD finds an increasingly receptive audience,](https://www2.deloitte.com/us/en/insights/industry/technology/technology-media-and-telecom-predictions.html#everyones-watching)

Deloitte Insights, November 30, 2022. View in Article

5. [Gina Heeb and Anna Maria Andriotis, “Americans in Their 30s Are Piling On Debt,” The Wall Street Journal,](https://www.wsj.com/articles/americans-in-their-30s-are-piling-on-debt-dda97270)

February 25, 2023. View in Article

6. [Tristan Jurkovich, “The 20 Best Open World Games With Female Protagonists (According To Metacritic),”](https://gamerant.com/best-open-world-games-with-female-protagonists-metacritic/)

GameRant, June 6, 2022. View in Article

7. [Alexandria Dale, “15 of the best video games made by women, for women,” Glamour, February 11, 2022.](https://www.glamourmagazine.co.uk/gallery/best-games-for-women)

View in Article

8. [Sharnelle Earle, “The Best Video Game Character Creators Of All Time, Ranked,” TheGamer, May 21, 2022.](https://www.thegamer.com/video-game-best-character-creators-ranked/)

View in Article

9. [Chris Morris, “You’re about see a lot more ads in video games,” Fast Company, April 22, 2022.](https://www.fastcompany.com/90743977/sony-advertising-platform-video-games) View in Article

10. [Carrie Battan, ““Running Up That Hill” with Kate Bush, Again,” The New Yorker, June 13, 2022; Hirun](https://www.newyorker.com/culture/culture-desk/running-up-that-hill-with-kate-bush-again)

[Cryer, “The Last of Us sees sales surge as high as 322% following TV show debut,” GamesRadar, January 23,](https://www.gamesradar.com/the-last-of-us-sees-sales-surge-as-high-as-322-following-tv-show-debut/)

2023. View in Article

11. Keza MacDonald, “Video games introduced me to the Chemical Brothers - now teens find music through

Fortnite,” The Guardian, September 29, 2022. View in Article

 Acknowledgments

The authors would like to thank Akash Rawat for his work in analyzing survey data and highlighting insights, as well as his

contributions to shaping the direction of the overall study. We would also like to thank Ankit Dhameja for his support with insights

development through industry research, Gautham Dutt for his design and visualization support, and Prashant Raman for assisting

with data analysis and storyline ideation.

Cover image by: Alexis Werbeck.

## Telecommunications Media&Entertainmentindustry


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identify new opportunities, maximize growth and avoid potential pitfalls. From mobile

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professionals with meaningful, hands-on experience. Our specialists are versed across a number

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and vertical-market opportunities.

Kevin Westcott
Vice Chairman | US Tech, Media & Telecom Leader
[kewestcott@deloitte.com](mailto:kewestcott@deloitte.com)

[+1 213 553 1714](tel:+1%20213%20553%201714)


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