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Streaming v the Metaverse: Deloitte publishes 2022 Digital Media Trends report

The report suggests a major shift is underway which could see the business models of streamers, social media, and gaming companies further disrupted by the emerging infrastructure of Web 3.0

Deloitte has published its 15th annual Digital Media Trends report, this year broadening the global footprint of responses from just the United States to include the United Kingdom, Germany, Brazil, and Japan.

This year’s report found a number of signs that streaming media might be vulnerable to competition from the metaverse, including a notable lack of loyalty to individual streaming services, which face high churn rates among younger subs, and the popularity of video games, which cut into the time audiences spend with streaming services and are beginning to expose younger audiences to the metaverse.

“While streaming video on-demand business models look much the same as they did when they were created 15 years ago, social media and gaming companies have quickly evolved their offerings, leveraging technology, and capitalising on behaviours,” said Jana Arbanas, vice chair, Deloitte LLP and US telecom, media and entertainment sector leader.

“Social media is free and available anywhere, anytime, offering both passive and interactive experiences with endless streams of personalised content, without the cost of a subscription. And more people are interacting and socialising in game worlds that host millions of users, brands and franchises, and major non-gaming events. SVoD companies aren’t just competing with each other for audiences, they are also competing with different, more social and immersive forms of entertainment.”

The report also found:

  • The average churn rate across all paid SVoD services in the UK, Germany, Brazil, and Japan is around 30 per cent, but in the United States it remains at 37 per cent.
  • In all five countries, Gen Z respondents prefer video games as their favourite form of digital entertainment. For older generations, watching TV and movies at home comes first.
  • In all five countries, Gen Z and Millennial gamers play an average of 11 hours a week. In the US churn is highest among the youngest generations as just over half of US Millennials (52%) and Gen Z (51%) have either canceled, or both added and canceled, an SVoD service within the last six months.
  • In the UK, Germany, Brazil and Japan, around 22 per cent of respondents have churned and returned to the same service in the past 12 months, compared to 25 per cent in the United States.
  • Cost is also a factor in retaining consumers who are thinking of cancelling. For a reduced cost, some would be willing to sign up for an annual subscription, watch more ads, or wait 45 days to watch a new release. Globally, many people prefer ad-supported options for streaming video that reduce or eliminate their subscription costs.
  • 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. This trend is also playing out in other markets, with just over half of gamers in the UK (55%), and just under half of gamers in both Brazil (45%) and Japan (44%) also trading other entertainment activities to play video games.

The report suggests a major shift is underway which could see the business models of streamers, social media, and gaming companies further disrupted—not just by younger generations, but also by the emerging infrastructure of Web 3.0.

Edge computing and 5G are delivering the next generation of computation and connectivity needed to unleash it all, said the report. “Billions of dollars are already flowing in to support this shift,” it added, “and yet, these trends toward decentralisation and user empowerment would seem to run counter to the goals of some platform companies racing to own the first billion metaverse users.”

The full report is available here.