Digital media segments: Looking beyond generations For media and entertainment companies, age really is only a number
Consumers now are in control of when, where, and how they view content. Tanya Ott joined Deloitte’s Jeff Loucks and Kevin Westcott to discuss how media and entertainment companies can meet consumers’ ever-rising expectations.
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TANYA OTT: Thanks for joining us today for the Press Room, Deloitte’s podcast about the issues and ideas affecting business today. I’m Tanya Ott. I've worked for media companies for almost three decades. I spent countless hours, thousands of them really, poring over audience data, and at my last job I could tell you the average age, the gender, the racial breakdown of my radio listeners by show, by station. And that's what we're talking about today on the Press Room. Demographics and the way media and entertainment companies are looking at their audiences.
Turns out—we may be doing it wrong. I recently talked to two guys who know a lot about this stuff. Jeff Loucks is the executive director of Deloitte’s Technology, Media, and Telecommunications Research Center. Kevin Westcott leads the US Telecom, Media, and Entertainment sector for Deloitte and works with media and entertainment companies ranging from cable and satellite businesses to Hollywood studios and game companies. I started the conversation with a story…
TANYA OTT: I know of one media company that I've consulted with that had paid such close attention to this stuff that they had a woman named Mary. And there was a picture of her on the wall and she was their average listener, and they knew she was in her early 50s and [that] she had two kids in college and she was a nurse. She lived in a specific city in the listening area. She, of course, didn't really exist—she was just sort of a composite for them, but they would put all kinds of decision-making through that lens of Mary. Like, how would we write this news story in order for Mary to understand what this is? Or, why would Mary care about this story? But you guys argue that for media and entertainment companies, demographics only tell part of the story and they may even be inaccurate. So … convince me that what I've spent almost 30 years looking at wasn't necessarily the right thing for “now.”
KEVIN WESTCOTT: Maybe I'll take a shot at this. We've been doing this research on media consumption now for 12 years, and we've always split up the results of that research by age. Our clients were always very interested in understanding what are millennials doing and what the Gen X is doing, and recently it's the Gen Z. And while that is very interesting, what we're seeing is that behaviors have actually started to commingle across generations. In our most recent research, Jeff actually coined the term “MilleXZial” and that's the millennial, the Gen X, and the Gen Z.
TANYA OTT: OK, MilleXZial.
KEVIN WESTCOTT: The reason we coined that term is [that] what we're starting to see is [that] there are behaviors that are spanning from the teenagers, through the 20s, even up into the 40s. We started looking at our research and saying, are there behaviors and groups of people who act similarly. So that's really what we started taking a look at: Can we address a larger segment of audience [without] trying to get down to that micro-demographic of those 22-year-olds, living in a specific DMA [designated market area]? Can we actually aggregate audiences in a slightly different way? So that was our approach this year.
TANYA OTT: So, Jeff, I'm in my late 40s. I have not had a home phone for more than a decade. I cannot tell you the last time that I watched “real television,” because for me it's all a variety of streaming services that I curate myself. What you're saying is that I might be one of those MilleXZials, and my media consumption habits are maybe much younger, if I want to think of it in a demographic age kind of way.
JEFF LOUCKS: Yes. And getting back to what you were saying before about Mary. If Mary is based upon basic things like age, gender, and how many children are in the household—I think if media companies are that focused on those basics [they] are probably missing a lot of nuance. So, when you were telling me about your own behavior—you do a lot of streaming, you curate it yourself—you could fit any number of the five personas that we have. But we need to know a little bit more about you. When you stream, do you prefer to do it on a phone or do you like to watch TV?
TANYA OTT: Neither, I stream on a laptop.
JEFF LOUCKS: OK, on a laptop. Tell me about how you are with sharing your personal data. Do you like to share it or would you really prefer to keep that to yourself?
TANYA OTT: I'm agnostic—I'm not going to go out and broadcast my personal data, but I actually truly don't pay a lot of attention to keeping it super private in more covert ways, like opting into things that would hide identity and all that kind of stuff.
JEFF LOUCKS: Now tell me—would you prefer to pay for a subscription in order to avoid ads? Or are you happy to have ads and trade that for access to content?
TANYA OTT: I don't like ads. I would pay for a subscription to be able to avoid ads.
JEFF LOUCKS: Last question before I go all the way: Do you like to watch on multiple devices—sometimes the smartphone, sometimes the laptop?
TANYA OTT: Yeah, that's probably true. I prefer the laptop because it's bigger, but if I have to I'll certainly watch something on my phone. I've got some of the major apps on my phone so that I can do that. And I have an iPad as well that I occasionally watch on.
JEFF LOUCKS: So, I would probably put you as a “Power Streamer.” These are people who watch almost exclusively streamed content, who want to avoid ads, and don't really want to share very much of their personal data online.
To come up with these different personas, we ended up taking a look at our digital media trends survey through three main customer behaviors that are disrupting the media and entertainment industry. And you talked about several of those. One of them is video streaming. How much of it do you do? Secondly, mobile video. How much mobile video do you watch and do you prefer the mobile device? And then finally, subscriptions to services. Would you rather subscribe to a service in order to avoid ads? Are you OK with ads and are you more likely to experience subscription fatigue? We ran all of our data through those main behaviors and we came up with five different personas.
TANYA OTT: I want to talk about those personas, but first I have to come clean. I actually have a spreadsheet that tracks all of the programs that I like to watch, which streaming service they're on, and when the new season starts—which everybody completely harasses me about, but it keeps me organized. I'm not sure where that fits into it.
KEVIN WESTCOTT: You highlighted something that is actually a different, broader theme, which is, discoveries become very challenging. If somebody happens to really recommend a show [to] you, but they don't tell you what platform it's on or what service, it's not always easy to find. And that's why we actually expect to see some re-aggregation in terms of how do you find content in this world. And I think what you just described, for those folks that we put into those streaming categories, they're looking for a way to get to these things easily. You shouldn't have to have a spreadsheet to find all those.
I've shared with many people that, when I re-implemented my home entertainment system I also had to go find my spreadsheet. I had 16 different subscriptions I had to get my username and passwords for. It's an explosion of platforms and it's confusing the customer a little bit.
TANYA OTT: We can talk about the markets and the opportunities that confusion might open up, but first let's talk about those digital personas that you two have created out of all the data that you crunched. The first one is a “Mobile-First Viewer.” What is that and how should media and entertainment companies be looking at that person in terms of targeting ads at them?
JEFF LOUCKS: The mobile-first viewer is someone who really prefers to watch video content, even long-form content like movies and TV shows, on a mobile device. So about 30 percent of their movie watching and 25 percent of their TV shows they spend watching on a smartphone—which is, by far, the highest percentage of all the segments. They also spend a lot of time on social media platforms and they are very, very open to sharing personal information. They're also much more open to being targeted with ads. Those two things are important because ultimately media and telecommunications companies are going to make their money through subscriptions, they're going to make it through ads, or [through] some combination. What these personas help media companies to do is to understand, based on behavior, what type of service can be targeted at various types of viewers.
KEVIN WESTCOTT: The power streamers are folks who really want control over where and when they want to watch content. But they also do like watching it on a flat-panel television. They like the big screen. So, these are a lot of smart TV owners. They also watch live television. They watch about 16 hours. About half of them still have a pay TV subscription, but they do want to avoid ads and they're very suspicious of targeted ads. A lot of them have installed ad blockers. This is a really challenging group for people to reach. And interestingly, they skew [towards] just a little bit older—about 35 to 36 percent of them are Gen Xers, about a quarter of them are boomers, but also a quarter among millennials. As I was describing earlier, a lot of these personas span age. But targeting these folks who are already suspicious of ads and know that they want to have control over where and when they watch content is an interesting challenge. We have to think about subscription-type services that they'll be interested in getting.
We've also seen an increase recently around advertising using product placements. You have more subtle placements embedded within content. It's not an ad break or a pre-roll or post-roll. You actually see a product is integral to the story.
TANYA OTT: I'd be curious to know how many of these power streamers maintain that sort of traditional television subscriptions solely so they can watch live sports or maybe live news, but sports in particular. I know that's the case in our house.
KEVIN WESTCOTT: Yeah, news and sports have for a very long time been one of those points where people are retaining their pay TV subscriptions. We're starting to see a little bit of decline with that, with more and more live streaming contracts being done. The other reason, quite honestly, is that the way that a lot of the broadband providers have been bundling pay TV and your broadband subscription into the home makes it economical to continue to have that. If you go to cancel your pay TV subscription, but your broadband subscription is going to be almost the same price as paying for both, a lot of people tell us that they retain both so they have access to TV for things like live events and news.
JEFF LOUCKS: It's more economical to have them both together, but customers don't necessarily view it as very economical as a package. They feel that they don't get the value that they should out of either their pay TV subscription or their home internet, even though many customers are using both of those a lot. So, I think it's ripe for disruption for those who are willing to go in there with, let's say, connectivity that combines the mobile bill and the internet bill or that can sever the pay TV from the connectivity.
TANYA OTT: The next persona you have are the “Highly Subscribed.” These are people that are highly subscribed to a variety of different services—maybe even have a spreadsheet like me so they can keep track of it. What can you tell us about them?
JEFF LOUCKS: They're a little like you and they're a little bit like Kevin. Kevin was saying he has 16 services. Those who are highly subscribed have a lot of different services. They also tend to keep their pay TV subscriptions. They want to have both. They want to have the option. About 80 percent of [the] highly subscribed have both pay TV and video streaming subscriptions, and that's twice the average among all of our segments. And it's because they really want to make sure that they can get the content that they like. These consumers are the ones who really love watching live sports. And that is one of the reasons that they have that pay TV subscription as well. But it also gives advertisers an avenue to use TV ads with this group.
KEVIN WESTCOTT: And as one of those people myself, Jeff, I think you profiled it perfectly. I like watching sports. I try to avoid ads. I have all those different subscriptions because I want to get the specific pieces of content. And our research shows that over 50 percent of people have subscribed to a service for original content. So, if the content's only available in one of these platforms, people will subscribe to it.
TANYA OTT: The next persona is the “Hybrid Adopter.”
JEFF LOUCKS: Hybrid adopters, as the name suggests, really shuffle between devices and services to get access to the content that they want. Most of them will depend on pay TV for TV content, but they might also use a combination of over-the-air antenna or skinny bundles or streaming services as an alternative. They also use their smartphones a fair bit to watch short-form video content. This is a group that, like the mobile-first viewers, use their phones a fair bit but they are more welcoming to ad content [and] sharing their data, and when it comes to the tradeoff—do you pay for a subscription or do you embrace ads in order to get your content—they're more heavy in the receptiveness to ads.
TANYA OTT: Do they tend to skew a little bit younger because they're just more price-sensitive? Is that what it is?
JEFF LOUCKS: They don't necessarily skew younger than the mobile-first adopters, but price sensitivity is one of the big issues that we found here. Those who are more willing to watch ads or be exposed to ads, they understand that there's a tradeoff and they're willing to make it to save money.
TANYA OTT: Got it. And then the final persona is the “Linear TV Consumer.” Is this my parents, who watch everything on their regular television and don't even really know what a subscription is?
JEFF LOUCKS: It is your parents. That's exactly right. This is a group that does skew comparatively much older than the others. If the first four are different blends of MilleXZials, with a little bit of boomers spread in there, the Linear TV Consumers are older consumers who are just maintaining the habits that they've always had. They watch TV on a TV through pay TV services. They use landline phones where available. They subscribe to newspapers and they know what they like and they like what they know.
TANYA OTT: So, media companies and advertisers don't really have to adjust things too much for them in order to get a message in front of them.
JEFF LOUCKS: That's right.
TANYA OTT: How do we see these behavior-based personas influencing the strategy moves that media and entertainment companies are making right now?
JEFF LOUCKS: You can see some of the upheaval in the last couple of years borne out by the behaviors of these personas. But then you can also see how certain things like skinny bundles have been a response to these types of behaviors.
TANYA OTT: And a skinny bundle is kind of like a pared-down, less costly subscription, just a small group of channels?
JEFF LOUCKS: The way we use the term, a skinny bundle is a smaller bundle of pay TV channels that are usually delivered through an internet-based service or even a mobile service. So, if you think about something like Sling TV or Hulu—you've got a smaller group of stations that are part of a subscription.
TANYA OTT: Got it. OK. So skinny bundle is one of these strategies that's come out of this recognition of behavior patterns?
JEFF LOUCKS: That's right. And a skinny bundle is going to be very well-suited to a power streamer who wants a streaming service, and also a mobile-first viewer, many of whom area O going to be getting a lot of their content through the mobile device and through a service provider. You’re starting to see the service providers add video content to their subscriptions in order to get these types of viewers.
TANYA OTT: Got it. What other strategies are you seeing that are kind of interesting?
JEFF LOUCKS: One thing that companies are going to need to do is to understand where they can pitch ad-supported content and where they're going to have to make more of their money through subscriptions. Of course, there's going to be a blend of this, but if you're trying to pitch an ad-heavy service to a power user, you're not going to get anywhere. The same is likely true of someone who's highly subscribed. They'd like to avoid ads where possible and they are willing to do that through subscription services. Hybrid adopters—they are cost sensitive, they're willing to share their personal data, so they're going to be more likely to use an ad-supported service. It's a matter of knowing what your customers are willing to do and where they sit on a spectrum between being "adlergic", where they really dislike ads, [and] where they're going to be stressed out by lots of subscriptions.
TANYA OTT: It's that sort of sweet balance there.
JEFF LOUCKS: But for some of these consumers there isn't a balance at all. The mobile-first viewer is going to be very happy with ads and ads-supported, but you wouldn't want to target them exclusively with streaming services.
TANYA OTT: Where does this local network affiliate channels on the television spectrum live in that sort of landscape?
JEFF LOUCKS: For local channels, it's more difficult, because the local channels are part of the big TV networks, who are having their own challenges. And they're also very ad-driven. If you're an ad-driven local media company, it is more difficult to compete because you're competing with the big digital advertisers. Let's say a Google and Facebook. They're getting a lot of the digital-ad revenue, and as ad revenue moves from TV to digital, there are a handful of big companies who are really benefitting, and those companies can claim that they can reach the local market just as well if not better as a local TV company because so many people are online.
TANYA OTT: And they can be geo-targeted online.
JEFF LOUCKS: They can be geo-targeted. They can be targeted through their devices. They end up knowing a lot more about the consumer than the local TV company does, and that is the real problem. They can't segment the ads the way people watch.
TANYA OTT: Jeff Loucks is the executive director of Deloitte’s Technology, Media, and Telecommunications Research Center and Kevin Westcott leads the US Telecom, Media, and Entertainment sector for Deloitte. Their article on Digital Personas includes a look at the different business models that can flourish in this evolving media landscape and ways business leaders can think about tailoring their products and services based on those needs. You’ll find it all at deloitte.com/insights.
I’m Tanya Ott for the Press Room. Thanks for listening!
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